SENATE BILL 217
54th legislature - STATE OF NEW MEXICO - second session, 2020
RELATING TO TAXATION; REDUCING A DISTRIBUTION OF GROSS RECEIPTS TAX REVENUE TO MUNICIPALITIES; DISTRIBUTING THE GREATER OF A PORTION OF GROSS RECEIPTS TAX REVENUE OR INCOME TAX REVENUE TO MUNICIPALITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-1-6.4 NMSA 1978 (being Laws 1983, Chapter 211, Section 9, as amended) is amended to read:
"7-1-6.4. DISTRIBUTION--MUNICIPALITY FROM GROSS RECEIPTS TAX.--
A. Except as provided in Subsection B of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the product of the quotient of one [and two hundred twenty-five thousandths] percent divided by the tax rate imposed by Section 7-9-4 NMSA 1978 multiplied by the net receipts, except net receipts attributable to a nonprofit hospital licensed by the department of health, for the month attributable to the gross receipts tax from business locations:
(1) within that municipality;
(2) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of that municipality;
(3) outside the boundaries of any municipality on land owned by that municipality; and
(4) on an Indian reservation or pueblo grant in an area that is contiguous to that municipality and in which the municipality performs services pursuant to a contract between the municipality and the Indian tribe or Indian pueblo if:
(a) 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) the governing body of the municipality has submitted a copy of the contract to the secretary.
B. If the reduction made by Laws 1991, Chapter 9, Section 9 to the distribution under this section impairs the ability of a municipality to meet its principal or interest payment obligations for revenue bonds outstanding prior to July 1, 1991 that are secured by the pledge of all or part of the municipality's revenue from the distribution made under this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet any required payment, provided that the distribution amount does not exceed the amount that would have been due that municipality under this section as it was in effect on June 30, 1992.
C. 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.
D. As used in this section, "nonprofit hospital" means a hospital that has been granted exemption from federal income tax by the United States commissioner of internal revenue as an organization described in Section 501(c)(3) of the Internal Revenue Code."
SECTION 2. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION TO MUNICIPALITIES--GREATER OF PORTION OF INC0ME TAX OR GROSS RECEIPTS TAX.--
A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality in an amount equal to the greater of:
(1) the amount that would be distributed pursuant to Section 7-1-6.4 NMSA 1978 to the municipality if the percentage used for purposes of that section for the month were two hundred twenty-five thousandths percent; or
(2) one-twelfth of an amount shown in the schedule prepared in accordance with Subsection B of this section for the municipality for the applicable year.
B. The department shall determine by December 1 of each year the ratio of municipal gross receipts share to municipal income base for the taxable year ending the prior December 31. The ratio shall be calculated in decimal form, to at least three significant places. The department shall report to the municipalities, the legislative finance committee and the department of finance and administration no later than December 10 of each year the ratio determined and a schedule showing for each municipality an amount equal to the sum of the net income reported by the taxpayers whose address reported on the return is within the municipality for the prior taxable year multiplied by the ratio.
C. The distribution made pursuant to this section is subject to and impressed with any pledge in effect on January 1, 2021 of all or part of the municipality's revenue from the distribution made pursuant to Section 7-1-6.4 NMSA 1978 until the obligation secured by the pledge is discharged.
D. As used in this section:
(1) "municipal gross receipts share" means the total taxable gross receipts reported in a calendar year for all municipalities multiplied by two hundred twenty-five ten-thousandths;
(2) "municipal income base" means the sum for an income taxable year of the net income reported by all taxpayers whose addresses reported on the taxpayers' returns are within a New Mexico municipality;
(3) "net income" means "net income" as that term is used in the Income Tax Act; and
(4) "New Mexico percentage" means a percentage equal to one hundred percent minus the non-New Mexico percentage determined pursuant to Section 7-2-11 NMSA 1978, expressed as a decimal to at least three significant places."
SECTION 3. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2021.
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