HOUSE BILL 223

50th legislature - STATE OF NEW MEXICO - second session, 2012

INTRODUCED BY

Thomas A. Garcia

AN ACT

RELATING TO TAXATION; PROVIDING A DEDUCTION FROM GROSS RECEIPTS FOR SALES OF MANUFACTURING EQUIPMENT.

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

     SECTION 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--SALE OF MANUFACTURING EQUIPMENT.--

          A. Receipts from selling manufacturing equipment to a person engaged in the business of manufacturing may be deducted from gross receipts if the sale is made to a person who delivers a nontaxable transaction certificate to the seller. The buyer delivering the nontaxable transaction certificate must use the manufacturing equipment in the ordinary course of its business.

          B. The purpose of this deduction is to encourage the growth of manufacturing in New Mexico, improve the competitive position of New Mexico with other states and encourage a manufacturing operation to update and improve the manufacturing operation's equipment to enable greater and more efficient production of manufactured goods.

          C. As used in this section, "manufacturing equipment" means an essential machine, mechanism or tool or a component of an essential machine, mechanism or tool used directly and exclusively in a taxpayer's manufacturing operation and subject to depreciation for purposes of the Internal Revenue Code of 1986, as amended, by the taxpayer carrying on the manufacturing operation. "Manufacturing equipment" does not include any vehicle that leaves the site of the manufacturing operation for purposes of transporting persons or property."

     SECTION 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2012.

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