SENATE BILL 457
53rd legislature - STATE OF NEW MEXICO - first session, 2017
INTRODUCED BY
John Arthur Smith and Stuart Ingle
AN ACT
RELATING TO TAXATION; ADJUSTING CERTAIN HEALTH CARE INDUSTRY DEDUCTIONS AND EXEMPTIONS FROM GROSS RECEIPTS AND GOVERNMENTAL GROSS RECEIPTS; ELIMINATING THE HOLD HARMLESS DISTRIBUTION TO OFFSET THE HEALTH CARE PRACTITIONER DEDUCTION; DEFINING "NET PATIENT CARE REVENUE" IN THE GROSS RECEIPTS AND COMPENSATING TAX ACT; IMPOSING THE STATE GROSS RECEIPTS TAX ON THE NET PATIENT CARE REVENUE OF A NONPROFIT HOSPITAL; IMPOSING THE GOVERNMENTAL GROSS RECEIPTS TAX ON THE NET PATIENT CARE REVENUE OF A GOVERNMENT HOSPITAL; DISTRIBUTING THE NET GOVERNMENTAL GROSS RECEIPTS ATTRIBUTABLE TO NET PATIENT CARE REVENUE TO THE GENERAL FUND; INCREASING A GROSS RECEIPTS TAX DEDUCTION FOR HOSPITALS LICENSED BY THE DEPARTMENT OF HEALTH; ALLOWING A GOVERNMENTAL GROSS RECEIPTS TAX DEDUCTION FOR HOSPITALS LICENSED BY THE DEPARTMENT OF HEALTH; REDUCING THE DEDUCTION FROM GROSS RECEIPTS FOR CERTAIN HEALTH CARE PRACTITIONERS; REQUIRING THE TAXATION AND REVENUE DEPARTMENT TO EVALUATE HEALTH-CARE-INDUSTRY-RELATED REVENUE COLLECTIONS AND TAX EXPENDITURES AND REPORT TO THE LEGISLATURE; REPEALING THE GROSS RECEIPTS TAX DEDUCTION FOR PAYMENTS BY CERTAIN FEDERAL AGENCIES FOR CERTAIN MEDICAL AND HEALTH CARE SERVICES AND A CREDIT AGAINST THE GROSS RECEIPTS TAX FOR CERTAIN HOSPITALS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-1-6.38 NMSA 1978 (being Laws 1994, Chapter 145, Section 1, as amended) is amended to read:
"7-1-6.38. DISTRIBUTION--GOVERNMENTAL GROSS RECEIPTS TAX.--
A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made in amounts equal to the following percentages of the net receipts attributable to the governmental gross receipts tax, less the net receipts attributable to net patient care revenue from a hospital licensed by the department of health:
(1) seventy-five percent to the public project revolving fund administered by the New Mexico finance authority; [in an amount equal to seventy-five percent of the net receipts attributable to the governmental gross receipts tax.
B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made]
(2) twenty-four percent to the energy, minerals and natural resources department [in an amount equal to twenty-four percent of the net receipts attributable to the governmental gross receipts tax]; provided that forty-one and two-thirds percent of the distribution is appropriated to the energy, minerals and natural resources department to implement the provisions of the New Mexico Youth Conservation Corps Act and fifty-eight and one-third percent of the distribution is appropriated to the energy, minerals and natural resources department for state park and recreation area capital improvements, including the costs of planning, engineering, design, construction, renovation, repair, equipment and furnishings; and
[C. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made]
(3) one percent to the [office of] cultural affairs [in an amount equal to one percent of the net receipts attributable to the governmental gross receipts tax] department for capital improvements at state museums and monuments administered by the [office of] cultural affairs department.
[D.] B. The state pledges to and agrees with the holders of any bonds or notes issued by the New Mexico finance authority or by the energy, minerals and natural resources department and payable from the net receipts attributable to the governmental gross receipts tax distributed to the New Mexico finance authority or the energy, minerals and natural resources department pursuant to this section that the state will not limit, reduce or alter the distribution of the net receipts attributable to the governmental gross receipts tax to the New Mexico finance authority or the energy, minerals and natural resources department or limit, reduce or alter the rate of imposition of the governmental gross receipts tax until the bonds or notes together with the interest thereon are fully met and discharged. The New Mexico finance authority and the energy, minerals and natural resources department are authorized to include this pledge and agreement of the state in any agreement with the holders of the bonds or notes."
SECTION 2. Section 7-1-6.46 NMSA 1978 (being Laws 2004, Chapter 116, Section 1, as amended) is amended to read:
"7-1-6.46. DISTRIBUTION TO MUNICIPALITIES--OFFSET FOR FOOD DEDUCTION [AND HEALTH CARE PRACTITIONER SERVICES DEDUCTION].--
A. For a municipality that [has not elected to impose] does not have in effect a municipal hold harmless gross receipts tax through an ordinance and that has a population of less than ten thousand according to the most recent federal decennial census, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to [a] the municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the [sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month plus one and two hundred twenty-five thousandths percent; and
(2) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month plus one and two hundred twenty-five thousandths percent] applicable maximum distribution for the municipality.
B. For a municipality not described in Subsection A of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the [sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2007 plus one and two hundred twenty-five thousandths percent in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and
(2) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2007 plus one and two hundred twenty-five thousandths percent in] applicable maximum distribution for the municipality multiplied by the following percentages:
[(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d)] (1) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
[(e)] (2) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
[(f)] (3) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
[(g)] (4) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
[(h)] (5) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
[(i)] (6) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
[(j)] (7) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
[(k)] (8) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
[(l)] (9) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
[(m)] (10) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
[(n)] (11) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; [and
(o)] (12) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and
(13) on and after July 1, 2029, zero percent.
C. [The] A distribution pursuant to [Subsections A and B of] this section is in lieu of revenue that would have been received by the municipality but for the deductions provided by [Sections] Section 7-9-92 [and 7-9-93] NMSA 1978. The distribution shall be considered gross receipts tax revenue and shall be used by the municipality in the same manner as gross receipts tax revenue, including payment of gross receipts tax revenue bonds. [A distribution pursuant to this section to a municipality not described in Subsection A of this section or to a municipality that has imposed a gross receipts tax through an ordinance that does not provide a deduction contained in the Gross Receipts and Compensating Tax Act shall not be made on or after July 1, 2029.]
D. If the [reductions] changes made by this [2013] 2017 act to the distributions made pursuant to [Subsections A and B of] this section impair the ability of a municipality to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, [2013] 2017 and that are secured by the pledge of all or part of the municipality's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that municipality pursuant to this section does not exceed the amount that would have been due that municipality pursuant to this section as it was in effect on June 30, [2013] 2017.
E. For the purposes of this section:
(1) "business locations attributable to the municipality" means business locations:
[(1)] (a) within the municipality;
[(2)] (b) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of the municipality;
[(3)] (c) outside the boundaries of the municipality on land owned by the municipality; and
[(4)] (d) on an Indian reservation or pueblo grant in an area that is contiguous to the municipality and in which the municipality performs services pursuant to a contract between the municipality and the Indian tribe or Indian pueblo if: [(a)] 1) the contract describes an area in which the municipality is required to perform services and requires the municipality to perform services that are substantially the same as the services the municipality performs for itself; and [(b)] 2) the governing body of the municipality has submitted a copy of the contract to the secretary; and
(2) "maximum distribution" means:
(a) for a municipality that has a population of less than ten thousand according to the most recent federal decennial census, the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month plus one and two hundred twenty-five thousandths percent; and
(b) for a municipality that has a population of ten thousand or more according to the most recent federal decennial census, the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2007 plus one and two hundred twenty-five thousandths percent.
F. A distribution pursuant to this section may be adjusted for a distribution made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a municipality pursuant to the Tax Increment for Development Act."
SECTION 3. Section 7-1-6.47 NMSA 1978 (being Laws 2004, Chapter 116, Section 2, as amended) is amended to read:
"7-1-6.47. DISTRIBUTION TO COUNTIES--OFFSET FOR FOOD DEDUCTION [AND HEALTH CARE PRACTITIONER SERVICES DEDUCTION].--
A. For a county that [has not elected to impose] does not have in effect a county hold harmless gross receipts tax through an ordinance and that has a population of less than forty-eight thousand according to the most recent federal decennial census, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to [a] the county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the [sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county;
(2) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality;
(3) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county; and
(4) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality] applicable maximum distribution for the county.
B. For a county not described in Subsection A of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the [sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed throughout the county in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven percent;
(2) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed in the county area not within a municipality in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven percent;
(3) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed throughout the county in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and
(4) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed in the county area not within a municipality in] applicable maximum distribution multiplied by the following percentages:
[(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d)] (1) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
[(e)] (2) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
[(f)] (3) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
[(g)] (4) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
[(h)] (5) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
[(i)] (6) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
[(j)] (7) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
[(k)] (8) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
[(l)] (9) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
[(m)] (10) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
[(n)] (11) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; [and
(o)] (12) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and
(13) on and after July 1, 2029, zero percent.
C. [The] A distribution pursuant to [Subsections A and B of] this section is in lieu of revenue that would have been received by the county but for the deductions provided by [Sections] Section 7-9-92 [and 7-9-93] NMSA 1978. The distribution shall be considered gross receipts tax revenue and shall be used by the county in the same manner as gross receipts tax revenue, including payment of gross receipts tax revenue bonds. [A distribution pursuant to this section to a county not described in Subsection A of this section or to a county that has imposed a gross receipts tax through an ordinance that does not provide a deduction contained in the Gross Receipts and Compensating Tax Act shall not be made on or after July 1, 2029.]
D. If the [reductions] changes made by this [2013] 2017 act to the distributions made pursuant to [Subsections A and B of] this section impair the ability of a county to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, [2013] 2017 and that are secured by the pledge of all or part of the county's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that county shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that county pursuant to this section does not exceed the amount that would have been due that county pursuant to this section as it was in effect on June 30, [2013] 2017.
E. A distribution pursuant to this section may be adjusted for a distribution made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a county pursuant to the Tax Increment for Development Act.
F. For purposes of this section, "maximum distribution" means:
(1) for counties that have a population of less than forty-eight thousand according to the most recent federal decennial census, the sum of:
(a) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county; and
(b) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality; and
(2) for counties that have a population of forty-eight thousand or more according to the most recent federal decennial census, the sum of:
(a) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed throughout the county; and
(b) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed in the county area not within a municipality."
SECTION 4. Section 7-9-3 NMSA 1978 (being Laws 1978, Chapter 46, Section 1, as amended) is amended to read:
"7-9-3. DEFINITIONS.--As used in the Gross Receipts and Compensating Tax Act:
A. "buying" or "selling" means a transfer of property for consideration or the performance of service for consideration;
B. "department" means the taxation and revenue department, the secretary of taxation and revenue or an employee of the department exercising authority lawfully delegated to that employee by the secretary;
C. "financial corporation" means a savings and loan association or an incorporated savings and loan company, trust company, mortgage banking company, consumer finance company or other financial corporation;
D. "initial use" or "initially used" means the first employment for the intended purpose and does not include the following activities:
(1) observation of tests conducted by the performer of services;
(2) participation in progress reviews, briefings, consultations and conferences conducted by the performer of services;
(3) review of preliminary drafts, drawings and other materials prepared by the performer of the services;
(4) inspection of preliminary prototypes developed by the performer of services; or
(5) similar activities;
E. "leasing" means an arrangement whereby, for a consideration, property is employed for or by any person other than the owner of the property, except that the granting of a license to use property is licensing and is not a lease;
F. "local option gross receipts tax" means a tax authorized to be imposed by a county or municipality upon the taxpayer's gross receipts and required to be collected by the department at the same time and in the same manner as the gross receipts tax; "local option gross receipts tax" includes the taxes imposed pursuant to the Municipal Local Option Gross Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax Act, County Local Option Gross Receipts Taxes Act, Local Hospital Gross Receipts Tax Act and County Correctional Facility Gross Receipts Tax Act and such other acts as may be enacted authorizing counties or municipalities to impose taxes on gross receipts, which taxes are to be collected by the department;
G. "manufactured home" means a movable or portable housing structure for human occupancy that exceeds either a width of eight feet or a length of forty feet constructed to be towed on its own chassis and designed to be installed with or without a permanent foundation;
H. "manufacturing" means combining or processing components or materials to increase their value for sale in the ordinary course of business, but does not include construction;
I. "net patient care revenue" means the revenue that a nonprofit or governmental hospital generates from treating patients, less any amounts from contractual adjustments, bad debts and charitable treatment of patients;
[I.] J. "person" means:
(1) an individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, limited liability partnership, joint venture, syndicate or other entity, including any gas, water or electric utility owned or operated by a county, municipality or other political subdivision of the state; or
(2) a national, federal, state, Indian or other governmental unit or subdivision, or an agency, department or instrumentality of any of the foregoing;
[J.] K. "property" means real property, tangible personal property, licenses other than the licenses of copyrights, trademarks or patents and franchises. Tangible personal property includes electricity and manufactured homes;
[K.] L. "research and development services" means an activity engaged in for other persons for consideration, for one or more of the following purposes:
(1) advancing basic knowledge in a recognized field of natural science;
(2) advancing technology in a field of technical endeavor;
(3) developing a new or improved product, process or system with new or improved function, performance, reliability or quality, whether or not the new or improved product, process or system is offered for sale, lease or other transfer;
(4) developing new uses or applications for an existing product, process or system, whether or not the new use or application is offered as the rationale for purchase, lease or other transfer of the product, process or system;
(5) developing analytical or survey activities incorporating technology review, application, trade-off study, modeling, simulation, conceptual design or similar activities, whether or not offered for sale, lease or other transfer; or
(6) designing and developing prototypes or integrating systems incorporating the advances, developments or improvements included in Paragraphs (1) through (5) of this subsection;
[L.] M. "secretary" means the secretary of taxation and revenue or the secretary's delegate;
[M.] N. "service" means all activities engaged in for other persons for a consideration, which activities involve predominantly the performance of a service as distinguished from selling or leasing property. "Service" includes activities performed by a person for its members or shareholders. In determining what is a service, the intended use, principal objective or ultimate objective of the contracting parties shall not be controlling. "Service" includes construction activities and all tangible personal property that will become an ingredient or component part of a construction project. That tangible personal property retains its character as tangible personal property until it is installed as an ingredient or component part of a construction project in New Mexico. Sales of tangible personal property that will become an ingredient or component part of a construction project to persons engaged in the construction business are sales of tangible personal property; and
[N.] O. "use" or "using" includes use, consumption or storage other than storage for subsequent sale in the ordinary course of business or for use solely outside this state."
SECTION 5. Section 7-9-3.2 NMSA 1978 (being Laws 1991, Chapter 8, Section 1, as amended) is amended to read:
"7-9-3.2. ADDITIONAL DEFINITION.--
A. As used in the Gross Receipts and Compensating Tax Act, "governmental gross receipts" means:
(1) receipts of the state or an agency, institution, instrumentality or political subdivision from:
[(1)] (a) the sale of tangible personal property other than water from facilities open to the general public;
[(2)] (b) the performance of or admissions to recreational, athletic or entertainment services or events in facilities open to the general public;
[(3)] (c) refuse collection or refuse disposal or both;
[(4)] (d) sewage services;
[(5)] (e) the sale of water by a utility owned or operated by a county, municipality or other political subdivision of the state; [and
(6)] (f) the renting of parking, docking or tie-down spaces or the granting of permission to park vehicles, tie down aircraft or dock boats; and
(g) net patient care revenue from a hospital licensed by the department of health and subject to the governmental gross receipts tax; and
["Governmental gross receipts"] (2) includes receipts from the sale of tangible personal property handled on consignment when sold from facilities open to the general public but excludes cash discounts taken and allowed, governmental gross receipts tax payable on transactions reportable for the period and any type of time-price differential.
B. As used in this section, "facilities open to the general public" does not include point of sale registers or electronic devices at a bookstore owned or operated by a public post-secondary educational institution when the registers or devices are utilized in the sale of textbooks or other materials required for courses at the institution to a student enrolled at the institution who displays a valid student identification card."
SECTION 6. Section 7-9-4.3 NMSA 1978 (being Laws 1991, Chapter 8, Section 2, as amended by Laws 1993, Chapter 332, Section 1 and by Laws 1993, Chapter 352, Section 1) is amended to read:
"7-9-4.3. IMPOSITION AND RATE OF TAX--DENOMINATION AS "GOVERNMENTAL GROSS RECEIPTS TAX".--For the privilege of engaging in certain activities by governments, there is imposed on every agency, institution, instrumentality or political subdivision of the state, except any school district [and any entity licensed by the department of health that is principally engaged in providing health care services], an excise tax of five percent of governmental gross receipts. The tax imposed by this section shall be referred to as the "governmental gross receipts tax"."
SECTION 7. A new Section 7-9-4.4 NMSA 1978 is enacted to read:
"7-9-4.4. [NEW MATERIAL] EXEMPTION--GOVERNMENTAL GROSS RECEIPTS TAX--CERTAIN SERVICES PROVIDED BY A HOSPITAL LICENSED BY THE DEPARTMENT OF HEALTH.--Exempted from the governmental gross receipts tax are the receipts of an entity licensed by the department of health that is principally engaged in providing health care services; provided that the receipts are not receipts of net patient care revenue."
SECTION 8. Section 7-9-29 NMSA 1978 (being Laws 1970, Chapter 12, Section 3, as amended) is amended to read:
"7-9-29. EXEMPTION--GROSS RECEIPTS TAX--CERTAIN ORGANIZATIONS.--
A. Exempted from the gross receipts tax are the receipts of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of [1954] 1986, as that section may be amended or renumbered, except receipts of net patient care revenue.
B. Exempted from the gross receipts tax are the receipts from carrying on chamber of commerce, visitor bureau and convention bureau functions of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(6) of the United States Internal Revenue Code of [1954] 1986, as that section may be amended or renumbered.
C. This section does not apply to receipts derived from an unrelated trade or business as defined in Section 513 of the United States Internal Revenue Code of [1954] 1986, as that section may be amended or renumbered."
SECTION 9. Section 7-9-73.1 NMSA 1978 (being Laws 1991, Chapter 8, Section 3, as amended) is amended to read:
"7-9-73.1. DEDUCTION--GROSS RECEIPTS--[HOSPITALS] GOVERNMENTAL GROSS RECEIPTS--ENTITIES LICENSED BY THE DEPARTMENT OF HEALTH.--[Fifty]
A. Sixty percent of the receipts of [hospitals] an entity licensed by the department of health that is principally engaged in providing health care services may be deducted from gross receipts; provided that this deduction may be applied only to the taxable gross receipts remaining after all other appropriate deductions have been taken.
B. Sixty percent of the receipts from net patient care revenue received by a hospital licensed by the department of health may be deducted from governmental gross receipts; provided that this deduction may be applied only to the taxable governmental gross receipts remaining after all other appropriate deductions have been taken."
SECTION 10. Section 7-9-93 NMSA 1978 (being Laws 2004, Chapter 116, Section 6, as amended) is amended to read:
"7-9-93. DEDUCTION--GROSS RECEIPTS--CERTAIN RECEIPTS FOR SERVICES PROVIDED BY HEALTH CARE PRACTITIONER.--
A. Sixty percent of receipts of a health care practitioner [for commercial contract services or medicare part C services paid by a managed health care provider or health care insurer] may be deducted from gross receipts [if the] for services that are within the scope of practice of the health care practitioner [providing the service. Receipts from fee-for-service payments by a health care insurer may not be deducted from gross receipts].
B. The deduction provided by this section shall be applied only to gross receipts remaining after all other allowable deductions available under the Gross Receipts and Compensating Tax Act have been taken and shall be separately stated by the taxpayer.
C. For the purposes of this section,
[(1) "commercial contract services" means health care services performed by a health care practitioner pursuant to a contract with a managed health care provider or health care insurer other than those health care services provided for medicare patients pursuant to Title 18 of the federal Social Security Act or for medicaid patients pursuant to Title 19 or Title 21 of the federal Social Security Act;
(2) "health care insurer" means a person that:
(a) has a valid certificate of authority in good standing pursuant to the New Mexico Insurance Code to act as an insurer, health maintenance organization or nonprofit health care plan or prepaid dental plan; and
(b) contracts to reimburse licensed health care practitioners for providing basic health services to enrollees at negotiated fee rates;
(3)] "health care practitioner" means:
[(a)] (1) a chiropractic physician licensed pursuant to the provisions of the Chiropractic Physician Practice Act;
[(b)] (2) a dentist or dental hygienist licensed pursuant to the Dental Health Care Act;
[(c)] (3) a doctor of oriental medicine licensed pursuant to the provisions of the Acupuncture and Oriental Medicine Practice Act;
[(d)] (4) an optometrist licensed pursuant to the provisions of the Optometry Act;
[(e)] (5) an osteopathic physician or an osteopathic physician's assistant licensed pursuant to the provisions of the Osteopathic Medicine Act;
[(f)] (6) a physical therapist licensed pursuant to the provisions of the Physical Therapy Act;
[(g)] (7) a physician or physician assistant licensed pursuant to the provisions of the Medical Practice Act;
[(h)] (8) a podiatrist licensed pursuant to the provisions of the Podiatry Act;
[(i)] (9) a psychologist licensed pursuant to the provisions of the Professional Psychologist Act;
[(j)] (10) a registered lay midwife registered by the department of health;
[(k)] (11) a registered nurse or licensed practical nurse licensed pursuant to the provisions of the Nursing Practice Act;
[(l)] (12) a registered occupational therapist licensed pursuant to the provisions of the Occupational Therapy Act;
[(m)] (13) a respiratory care practitioner licensed pursuant to the provisions of the Respiratory Care Act;
[(n)] (14) a speech-language pathologist or audiologist licensed pursuant to the Speech-Language Pathology, Audiology and Hearing Aid Dispensing Practices Act;
[(o)] (15) a professional clinical mental health counselor, marriage and family therapist or professional art therapist licensed pursuant to the provisions of the Counseling and Therapy Practice Act who has obtained a master's degree or a doctorate;
[(p)] (16) an independent social worker licensed pursuant to the provisions of the Social Work Practice Act; and
[(q)] (17) a clinical laboratory that is accredited pursuant to 42 U.S.C. Section 263a but that is not a laboratory in a physician's office or in a hospital defined pursuant to 42 U.S.C. Section 1395x.
[(4) "managed health care provider" means a person that provides for the delivery of comprehensive basic health care services and medically necessary services to individuals enrolled in a plan through its own employed health care providers or by contracting with selected or participating health care providers. "Managed health care provider" includes only those persons that provide comprehensive basic health care services to enrollees on a contract basis, including the following:
(a) health maintenance organizations;
(b) preferred provider organizations;
(c) individual practice associations;
(d) competitive medical plans;
(e) exclusive provider organizations;
(f) integrated delivery systems;
(g) independent physician-provider organizations;
(h) physician hospital-provider organizations; and
(i) managed care services organizations; and
(5) "medicare part C services" means services performed pursuant to a contract with a managed health care provider for medicare patients pursuant to Title 18 of the federal Social Security Act.]"
SECTION 11. TEMPORARY PROVISION--DEPARTMENT REPORT TO LEGISLATURE--HEALTH CARE INDUSTRY REVENUE AND TAX EXPENDITURES.--The taxation and revenue department shall evaluate health-care-industry-related revenue collections and tax expenditures and shall, by December 1, 2017, report to the legislative finance committee and the revenue stabilization and tax policy committee the result of that evaluation with a recommendation as to whether existing tax expenditures for that industry should be adjusted.
SECTION 12. REPEAL.--Sections 7-9-77.1 and 7-9-96.1 NMSA 1978 (being Laws 1998, Chapter 96, Section 1 and Laws 2007, Chapter 361, Section 7, as amended) are repealed.
SECTION 13. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2017.
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