HB0222

HOUSE BILL 222

50th legislature - STATE OF NEW MEXICO - first session, 2011

INTRODUCED BY

Brian F. Egolf

AN ACT

RELATING TO TAXATION; ADJUSTING CERTAIN TAXES AND TAX CREDITS TO REDUCE UNEQUAL TREATMENT OF SIMILAR TRANSACTIONS; CONVERTING CERTAIN EXEMPTIONS TO DEDUCTIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 7-9-4 NMSA 1978 (being Laws 1966, Chapter 47, Section 4, as amended) is amended to read:

"7-9-4. IMPOSITION AND RATE OF TAX--DENOMINATION AS "GROSS RECEIPTS TAX".--

A. For the privilege of engaging in business, an excise tax equal to [five and one-eighth] four and seven-eighths percent of gross receipts is imposed on any person engaging in business in New Mexico.

B. The tax imposed by this section shall be referred to as the "gross receipts tax"."

SECTION 2. Section 7-9-7 NMSA 1978 (being Laws 1966, Chapter 47, Section 7, as amended) is amended to read:

"7-9-7. IMPOSITION AND RATE OF TAX--DENOMINATION AS "COMPENSATING TAX".--

A. For the privilege of using tangible property in New Mexico, there is imposed on the person using the property an excise tax equal to [five and one-eighth] four and seven-eighths percent of the value of tangible property that was:

(1) manufactured by the person using the property in the state;

(2) acquired as the result of a transaction with a person located outside this state that would have been subject to the gross receipts tax had the tangible personal property been acquired from a person with nexus with New Mexico; or

(3) acquired as the result of a transaction that was not initially subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax but which transaction, because of the buyer's subsequent use of the property, should have been subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax.

B. For the purpose of Subsection A of this section, value of tangible property shall be the adjusted basis of the property for federal income tax purposes determined as of the time of acquisition or introduction into this state or of conversion to use, whichever is later. If no adjusted basis for federal income tax purposes is established for the property, a reasonable value of the property shall be used.

C. For the privilege of using services rendered in New Mexico, there is imposed on the person using such services an excise tax equal to [five] four and seven-eighths percent of the value of the services at the time they were rendered. The services, to be taxable under this subsection, must have been rendered as the result of a transaction that was not initially subject to the gross receipts tax but which transaction, because of the buyer's subsequent use of the services, should have been subject to the gross receipts tax.

D. The tax imposed by this section shall be referred to as the "compensating tax"."

SECTION 3. Section 7-14-4 NMSA 1978 (being Laws 1988, Chapter 73, Section 14) is amended to read:

"7-14-4. DETERMINATION OF AMOUNT OF MOTOR VEHICLE EXCISE TAX.--The rate of the motor vehicle excise tax is [three] four and seven-eighths percent and is applied to the price paid for the vehicle. If the price paid does not represent the value of the vehicle in the condition that existed at the time it was acquired, the tax rate shall be applied to the reasonable value of the vehicle in such condition at such time. However, allowances granted for vehicle trade-ins may be deducted from the price paid or the reasonable value of the vehicle purchased."

SECTION 4. Section 7-25-4 NMSA 1978 (being Laws 1999, Chapter 177, Section 2) is amended to read:

"7-25-4. RATE AND MEASURE OF TAX--DENOMINATION AS "RESOURCES TAX".--

A. For the privilege of severing natural resources, there is imposed on [any] a severer of natural resources in New Mexico an excise tax [at the following rates] on the taxable value of the natural resources

[(1) all natural resources except potash and molybdenum, three fourths of one percent;

(2) potash, one half of one percent; and

(3) molybdenum, one eighth of one percent] of three-fourths percent.

B. The tax imposed by this section shall be referred to as the "resources tax"."

SECTION 5. Section 7-25-5 NMSA 1978 (being Laws 1999, Chapter 177, Section 4) is amended to read:

"7-25-5. RATE AND MEASURE OF TAX--DENOMINATION AS "PROCESSORS TAX".--

A. For the privilege of processing natural resources, there is imposed on [any] a processor of natural resources in New Mexico an excise tax at the following rates on the taxable value of the natural resources:

(1) all natural resources except timber, [potash and molybdenum] three-fourths [of one] percent; and

(2) timber, three-eighths [of one] percent.

[(3) potash, one eighth of one percent; and

(4) molybdenum, one eighth of one percent.]

B. The tax imposed by this section shall be referred to as the "processors tax"."

SECTION 6. Section 7-29-4.2 NMSA 1978 (being Laws 1980, Chapter 62, Section 7, as amended) is amended to read:

"7-29-4.2. VALUE MAY BE DETERMINED BY DEPARTMENT--STANDARD.--

A. The department may determine the value of products severed from a production unit when the:

[A. the] (1) operator and purchaser are affiliated persons;

[B. the] (2) sale and purchase of products is not an arm's length transaction; or [when

C.] (3) products are severed and removed from a production unit and a value as defined in the Oil and Gas Severance Tax Act is not established for such products.

B. The value determined by the department shall be commensurate with the actual price received for products of like quality, character and use [which] that are severed in the same field or area. If there are no sales of products of like quality, character and use severed in the same field or area, then the department shall establish a reasonable value.

C. In determining the value of products pursuant to this section, the department may deduct an amount equal to no more than twenty-five percent of the value of transportation or processing of products severed from the production unit."

SECTION 7. Section 7-31-4 NMSA 1978 (being Laws 1959, Chapter 54, Section 4, as amended) is amended to read:

"7-31-4. PRIVILEGE TAX LEVIED--COLLECTED BY

DEPARTMENT--RATE--INTEREST OWNER'S LIABILITY TO STATE--INDIAN

LIABILITY.--

A. There is levied and shall be collected by the department a privilege tax on the business of every person severing products in this state. The measure of the tax shall be:

(1) on oil and on oil and other liquid hydrocarbons removed from natural gas at or near the wellhead, [except as provided in Paragraphs (4) and (5) of this subsection, three and fifteen hundredths] four percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;

(2) on carbon dioxide, helium and non-hydrocarbon gases, [three and fifteen hundredths] four percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978; and

(3) on natural gas, [except as provided in Paragraphs (6) and (7) of this subsection] four percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978.

[(4) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, one and fifty-eight hundredths percent of the taxable value determined pursuant to Section

7-31-5 NMSA 1978, provided that the average annual taxable value of oil was equal to or less than fifteen dollars ($15.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;

(5) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, two and thirty-six hundredths percent of the taxable value determined pursuant to Section

7-31-5 NMSA 1978, provided that the average annual taxable value of oil was greater than fifteen dollars ($15.00) per barrel but not more than eighteen dollars ($18.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;

(6) on the natural gas removed from a stripper well property, two percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of natural gas was equal to or less than one dollar fifteen cents ($1.15) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed; and

(7) on the natural gas removed from a stripper well property, three percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of natural gas was greater than one dollar fifteen cents ($1.15) per thousand cubic feet but not more than one dollar thirty-five cents ($1.35) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed.]

B. Every interest owner, for the purpose of levying this tax, is deemed to be in the business of severing products and is liable for this tax to the extent of [his] the owner's interest in the value of the products or to the extent of [his] the owner's interest as may be measured by the value of the products.

C. Any Indian tribe, Indian pueblo or Indian is liable for this tax to the extent authorized or permitted by law."

SECTION 8. Section 7-31-6 NMSA 1978 (being Laws 1959, Chapter 54, Section 6) is amended to read:

"7-31-6. VALUE MAY BE DETERMINED BY [COMMISSION] DEPARTMENT--STANDARD.--

A. The [commission] department may determine the value of products severed from a production unit when the:

[A. the] (1) operator and purchaser are affiliated persons; [or when

B. the] (2) sale and purchase of products is not an arm's length transaction; or [when

C.] (3) products are severed and removed from a production unit and a value as defined in [this] the Oil and Gas Emergency School Tax Act is not established for such products.

B. The value determined by the [commission] department shall be commensurate with the actual price received for products of like quality, character and use [which] that are severed in the same field or area.

SECTION 9. Section 7-32-5 NMSA 1978 (being Laws 1959, Chapter 55, Section 5, as amended) is amended to read:

"7-32-5. ASSESSED VALUE--METHOD OF DETERMINING.--

A. The taxable value of products is an amount equal to one hundred fifty percent of the value of products after deducting:

(1) royalties paid or due the United States or the state of New Mexico;

(2) royalties paid or due any [Indian tribe, Indian pueblo or Indian that is a ward of the United States] federally recognized Indian nation, tribe or pueblo; and

(3) the reasonable expense of trucking any product from the production unit to the first place of market.

B. The assessed value of products shall be determined by applying the uniform assessment ratio to the taxable value of products. The method prescribed by this section shall be the exclusive method for determining the assessed value of products. The tax imposed by Section [72-22-4 NMSA 1953] 7-32-4 NMSA 1978 of the Oil and Gas Ad Valorem Production Tax Act, together with the tax imposed by Section [72-24-4 NMSA 1953] 7-34-4 NMSA 1978 of the Oil and Gas Production Equipment Ad Valorem Tax Act, shall be the full and exclusive measure of ad valorem tax liability on the interests of all persons, including the operator and interest owners, in the production unit. Any other ad valorem tax on the production unit or on products severed therefrom is void.

C. In determining the taxable value of products pursuant to this section, the department may deduct an amount equal to no more than twenty-five percent of the value of transportation or processing of the products."

SECTION 10. REPEAL.--Section 7-26-6.2 NMSA 1978 (being Laws 1990, Chapter 83, Section 1 and Laws 1990, Chapter 84, Section 1, as amended) is repealed.

SECTION 11. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.

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