HOUSE BUSINESS AND INDUSTRY COMMITTEE SUBSTITUTE FOR
HOUSE BILL 784
49th legislature - STATE OF NEW MEXICO - first session, 2009
AN ACT
RELATING TO TAXATION; PROVIDING CORPORATE AND PERSONAL INCOME TAX CREDITS FOR BIOGAS FUEL PRODUCTION FACILITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] BIOGAS FUEL PRODUCTION INCOME TAX CREDIT.--
A. The tax credit provided in this section may be referred to as the "biogas fuel production income tax credit".
B. A taxpayer who holds an interest in a qualified biogas fuel production facility in New Mexico and who files an individual New Mexico income tax return may claim a biogas fuel production income tax credit in an amount equal to two dollars ninety-two cents ($2.92) for every one million British thermal units of biogas produced by the facility, subject to the limitations imposed in this section.
C. Any person holding an interest in a biogas fuel production facility may request certification of eligibility for the biogas fuel production income tax credit from the energy, minerals and natural resources department. The energy, minerals and natural resources department shall determine if the facility is a qualified biogas fuel production facility and the annual production potential of the facility, which shall be the limit of that facility's biogas fuel production eligible for the tax credit for the taxable year. The energy, minerals and natural resources department may estimate the annual biogas fuel production potential of a facility for the purposes of this section. The energy, minerals and natural resources department may certify the eligibility of a qualified biogas fuel production facility only if the total amount of biogas fuel that is produced annually by all qualified biogas fuel production facilities that are certified pursuant to this section and pursuant to the Corporate Income and Franchise Tax Act will not exceed a total of one million seven hundred fifty thousand million British thermal units. If the requirements of this subsection are satisfied, the energy, minerals and natural resources department shall issue a certificate to the applicant stating that the facility in which the applicant holds an interest is a qualified biogas fuel production facility, and stating the maximum amount of biogas fuel production income tax credit for which the facility is eligible for the taxable year.
D. A taxpayer may be allocated all or a portion of the right to claim a biogas fuel production income tax credit without regard to proportional ownership interest if:
(1) the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership;
(2) the business entity:
(a) would qualify for the biogas fuel production income tax credit;
(b) owns an interest in a business entity that is also taxed for federal income tax purposes as a partnership and that would qualify for the biogas fuel production income tax credit; or
(c) owns, through one or more intermediate business entities that are each taxed for federal income tax purposes as a partnership, an interest in the business entity described in Subparagraph (b) of this paragraph;
(3) the taxpayer and all other taxpayers allocated a right to claim the biogas fuel production income tax credit pursuant to this subsection own collectively at least a five percent interest in the biogas fuel production facility;
(4) the total of all of the allocated rights to claim the biogas fuel production income tax credit with respect to a biogas fuel production facility do not exceed one hundred percent of the amount of biogas fuel production income tax credit for which the facility is eligible for the taxable year;
(5) the business entity provides notice to the taxation and revenue department, in a format prescribed by the department, of the allocation to the taxpayer of all or a portion of the right to claim the biogas fuel production income tax credit; and
(6) the taxation and revenue department acknowledges in writing the allocation to the taxpayer.
E. A taxpayer may claim the biogas fuel production income tax credit by submitting with the taxpayer's New Mexico income tax return the certificate of eligibility issued by the energy, minerals and natural resources department pursuant to Subsection C of this section, documentation of the taxpayer's interest in the facility, the acknowledgment by the taxation and revenue department pursuant to Subsection D of this section of the amount of the credit allocated to the taxpayer, if applicable, and any other information the taxation and revenue department may require to determine the amount of the tax credit due the taxpayer.
F. If the requirements of this section have been complied with, the department shall approve the biogas fuel production income tax credit; provided that the total credit approved for all taxpayers for a taxable year with respect to a qualified biogas fuel production facility shall not exceed the maximum amount certified by the energy, minerals and natural resources department with respect to that facility; and provided that the total amount of biogas with respect to which a biogas fuel production income tax credit or a biogas fuel production corporate income tax credit is approved in a taxable year will not exceed a total of one million seven hundred fifty thousand million British thermal units. The biogas fuel production income tax credit may be deducted from a taxpayer's New Mexico income tax liability for the taxable year for which the credit is claimed. If the amount of tax credit exceeds the taxpayer's income tax liability for the taxable year, the excess may be carried forward for a period of ten taxable years. The biogas fuel production income tax credit is not refundable.
G. Once a taxpayer has been granted a biogas fuel production income tax credit for a given facility, that taxpayer shall be allowed to keep the facility's original date of application for tax credits for that facility until either the facility goes out of production for six months or the facility's ten-year eligibility has expired.
H. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the biogas fuel production income tax credit that would have been allowed on a joint return.
I. A taxpayer claiming the biogas fuel production income tax credit pursuant to this section is ineligible for any other credit pursuant to the Income Tax Act or the Corporate Income and Franchise Tax Act with respect to the same biogas fuel production facility.
J. As used in this section:
(1) "biogas" means a gas that is derived by processing a qualified energy source and that contains at least fifty percent methane;
(2) "qualified biogas fuel production facility" means a facility located in New Mexico that begins production between July 1, 2011 and July 1, 2013 and:
(a) uses anaerobic digesters, gasification or other biological, chemical or thermal processes to convert a qualified energy source into biogas; and
(b) the biogas output of which is: 1) marketed through interconnection with a natural gas distribution or transmission pipeline; or 2) reasonably expected to be used in a quantity sufficient to offset the consumption of five thousand million British thermal units annually of commercially marketed fuel derived from coal, crude oil, natural gas, propane or other fossil fuels;
(3) "qualified energy source" means:
(a) manure of agricultural livestock, including litter, wood shavings, straw, rice hulls, bedding material and other materials incidentally collected with the manure; or
(b) any nonhazardous, cellulosic or other organic agricultural or food industry byproduct or waste material that is derived from renewable biomass, wastes or byproducts from fermentation processes, ethanol production, biodiesel production, slaughter of agricultural livestock, food production, food processing or food service, or other organic wastes, byproducts or sources, but does not include methane collected in or from landfills or landfill waste; and
(4) "renewable biomass" means feed grains, other agricultural commodities, algae or waste material, such as crop residue, animal waste and byproducts, including fats, oils and greases, and food waste."
Section 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:
"[NEW MATERIAL] BIOGAS FUEL PRODUCTION CORPORATE INCOME TAX CREDIT.--
A. The tax credit provided in this section may be referred to as the "biogas fuel production corporate income tax credit".
B. A taxpayer that holds an interest in a qualified biogas fuel production facility in New Mexico and that files a New Mexico corporate income tax return may claim a biogas fuel production corporate income tax credit in an amount equal to two dollars ninety-two cents ($2.92) for every one million British thermal units of biogas produced by the facility, subject to the limitations imposed in this section.
C. Any person holding an interest in a biogas fuel production facility may request certification of eligibility for the biogas fuel production corporate income tax credit from the energy, minerals and natural resources department. The energy, minerals and natural resources department shall determine if the facility is a qualified biogas fuel production facility and the annual production potential of the facility, which shall be the limit of that facility's biogas fuel production eligible for the tax credit for the taxable year. The energy, minerals and natural resources department may estimate the annual biogas fuel production potential of a facility for the purposes of this section. The energy, minerals and natural resources department may certify the eligibility of a qualified biogas fuel production facility only if the total amount of biogas fuel that is produced annually by all qualified biogas fuel production facilities that are certified pursuant to this section and pursuant to the Income Tax Act will not exceed a total of one million seven hundred fifty thousand million British thermal units. If the requirements of this subsection are satisfied, the energy, minerals and natural resources department shall issue a certificate to the applicant stating that the facility in which the applicant holds an interest is a qualified biogas fuel production facility, and stating the maximum amount of biogas fuel production corporate income tax credit for which the facility is eligible for the taxable year.
D. A taxpayer may be allocated all or a portion of the right to claim a biogas fuel production corporate income tax credit without regard to proportional ownership interest if:
(1) the taxpayer owns an interest in a business entity that is taxed for federal corporate income tax purposes as a partnership;
(2) the business entity:
(a) would qualify for the biogas fuel production corporate income tax credit;
(b) owns an interest in a business entity that is also taxed for federal corporate income tax purposes as a partnership and that would qualify for the biogas fuel production corporate income tax credit; or
(c) owns, through one or more intermediate business entities that are each taxed for federal corporate income tax purposes as a partnership, an interest in the business entity described in Subparagraph (b) of this paragraph;
(3) the taxpayer and all other taxpayers allocated a right to claim the biogas fuel production corporate income tax credit pursuant to this subsection own collectively at least a five percent interest in the biogas fuel production facility;
(4) the total of all of the allocated rights to claim the biogas fuel production corporate income tax credit with respect to a biogas fuel production facility do not exceed one hundred percent of the amount of biogas fuel production corporate income tax credit for which the facility is eligible for the taxable year;
(5) the business entity provides notice to the taxation and revenue department, in a format prescribed by the department, of the allocation to the taxpayer of all or a portion of the right to claim the biogas fuel production corporate income tax credit; and
(6) the taxation and revenue department acknowledges in writing the allocation to the taxpayer.
E. A taxpayer may claim the biogas fuel production corporate income tax credit by submitting with the taxpayer's New Mexico corporate income tax return the certificate of eligibility issued by the energy, minerals and natural resources department pursuant to Subsection C of this section, documentation of the taxpayer's interest in the facility, the acknowledgment by the taxation and revenue department pursuant to Subsection D of this section of the amount of the credit allocated to the taxpayer, if applicable, and any other information the taxation and revenue department may require to determine the amount of the tax credit due the taxpayer.
F. If the requirements of this section have been complied with, the department shall approve the biogas fuel production corporate income tax credit; provided that the total credit approved for all taxpayers for a taxable year with respect to a qualified biogas fuel production facility shall not exceed the maximum amount certified by the energy, minerals and natural resources department with respect to that facility; and provided that the total amount of biogas with respect to which a biogas fuel production corporate income tax credit or a biogas fuel production income tax credit is approved in a taxable year will not exceed a total of one million seven hundred fifty thousand million British thermal units. The biogas fuel production corporate income tax credit may be deducted from a taxpayer's New Mexico corporate income tax liability for the taxable year for which the credit is claimed. If the amount of tax credit exceeds the taxpayer's corporate income tax liability for the taxable year, the excess may be carried forward for a period of ten taxable years. The biogas fuel production corporate income tax credit is not refundable. G. Once a taxpayer has been granted a biogas fuel production corporate income tax credit for a given facility, that taxpayer shall be allowed to keep the facility's original date of application for tax credits for that facility until either the facility goes out of production for six months or the facility's ten-year eligibility has expired.
H. A taxpayer claiming the biogas fuel production corporate income tax credit pursuant to this section is ineligible for any other credit pursuant to the Corporate Income and Franchise Tax Act or the Income Tax Act with respect to the same biogas fuel production facility.
I. As used in this section:
(1) "biogas" means a gas that is derived by processing a qualified energy source and that contains at least fifty percent methane;
(2) "qualified biogas fuel production facility" means a facility located in New Mexico that begins production between July 1, 2011 and July 1, 2013 and:
(a) uses anaerobic digesters, gasification or other biological, chemical or thermal processes to convert a qualified energy source into biogas; and
(b) the biogas output of which is: 1) marketed through interconnection with a natural gas distribution or transmission pipeline; or 2) reasonably expected to be used in a quantity sufficient to offset the consumption of five thousand million British thermal units annually of commercially marketed fuel derived from coal, crude oil, natural gas, propane or other fossil fuels;
(3) "qualified energy source" means:
(a) manure of agricultural livestock, including litter, wood shavings, straw, rice hulls, bedding material and other materials incidentally collected with the manure; or
(b) any nonhazardous, cellulosic or other organic agricultural or food industry byproduct or waste material that is derived from renewable biomass, wastes or byproducts from fermentation processes, ethanol production, biodiesel production, slaughter of agricultural livestock, food production, food processing or food service, or other organic wastes, byproducts or sources, but does not include methane collected in or from landfills or landfill waste; and
(4) "renewable biomass" means feed grains, other agricultural commodities, algae or waste material, such as crop residue, animal waste and byproducts, including fats, oils and greases, and food waste."
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