0001| AN ACT | 0002| RELATING TO TAXATION; AMENDING THE INCOME TAX ACT AND CORPORATE | 0003| INCOME AND FRANCHISE TAX ACT TO MAKE SPECIFIC THE TAXABILITY OF | 0004| GAMBLING WINNINGS; AMENDING THE WITHHOLDING TAX ACT TO REQUIRE | 0005| WITHHOLDING FROM CERTAIN GAMBLING WINNINGS; DECLARING AN | 0006| EMERGENCY. | 0007| | 0008| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: Section 1. Section 7-2-11 NMSA 1978 (being Laws 1965, Chapter 202, Section 9, as | 0009| amended) is amended to read: | 0010| "7-2-11. TAX CREDIT--INCOME ALLOCATION AND APPORTIONMENT.-- | 0011| A. Net income of any individual having income that is taxable both within and | 0012| without this state shall be | 0013| apportioned and allocated as follows: | 0014| (1) during the first taxable year in which an individual incurs tax liability | 0015| as a resident, only income earned on or after the date the individual became a resident and, in | 0016| addition, income earned in New Mexico while a nonresident of New Mexico shall be allocated | 0017| to New Mexico; | 0018| (2) except as provided otherwise in Paragraph (1) of this subsection, | 0019| income other than compensation or gambling winnings shall be allocated and apportioned as | 0020| provided in the Uniform Division of Income for Tax Purposes Act, but if the income is not | 0021| allocated or apportioned by that act, then it may be allocated or apportioned in accordance with | 0022| instructions, rulings or regulations of the secretary; | 0023| (3) except as provided otherwise in Paragraph (1) of this subsection, | 0024| compensation and gambling winnings of a resident taxpayer shall be allocated to this state; | 0025| (4) compensation of a nonresident taxpayer shall be allocated to this state | 0001| to the extent that such compensation is for activities, labor or personal services within this state; | 0002| provided, if the activities, labor or services are performed in this state for fifteen or fewer days | 0003| during the taxpayer's taxable year, the compensation may be allocated to the taxpayer's state of | 0004| residence; | 0005| (5) gambling winnings of a nonresident shall be allocated to this state if | 0006| the gambling winnings arose from a source within this state; and | 0007| (6) other deductions and exemptions allowable in computing net income | 0008| and not specifically allocated in the Uniform Division of Income for Tax Purposes Act shall be | 0009| equitably allocated or apportioned in accordance with instructions, rulings or regulations of the | 0010| secretary. | 0011| B. For the purposes of this section, "non-New Mexico percentage" means the | 0012| percentage determined by dividing the difference between the taxpayer's net income and the sum | 0013| of the amounts allocated or apportioned to New Mexico by that net income. | 0014| C. A taxpayer may claim a credit in an amount equal to the amount of tax | 0015| determined to be due under Section 7-2-7 or 7-2-7.1 NMSA 1978 multiplied by the non-New | 0016| Mexico percentage." | 0017| Section 2. Section 7-2A-8 NMSA 1978 (being Laws 1981, Chapter 37, Section 41, as | 0018| amended) is amended to read: | 0019| "7-2A-8. CREDIT--INCOME ALLOCATION AND APPORTIONMENT.-- | 0020| A. Net income of any taxpayer having income that is taxable both within and | 0021| without this state shall be apportioned and allocated as follows: | 0022| (1) except as otherwise provided in Paragraphs (2) through (4) of this | 0023| subsection, income shall be allocated and apportioned as provided in the Uniform Division of | 0024| Income for Tax Purposes Act; | 0025| (2) except for gambling winnings, nonbusiness income as defined in the | 0001| Uniform Division of Income for Tax Purposes Act not otherwise allocated or apportioned under | 0002| the Uniform Division of Income for Tax Purposes Act shall be equitably allocated or | 0003| apportioned in accordance with instructions, rulings or regulations of the secretary; | 0004| (3) other deductions and exemptions allowable in computing federal | 0005| taxable income and not specifically allocated in the Uniform Division of Income for Tax | 0006| Purposes Act shall be equitably allocated or apportioned in accordance with instructions, rulings | 0007| or regulations of the secretary; and | 0008| (4) gambling winnings that are nonbusiness income and arise from | 0009| sources within this state shall be allocated to this state. | 0010| B. For the purposes of this section, "non-New Mexico percentage" means the | 0011| percentage determined by dividing the difference between the taxpayer's net income and the sum | 0012| of the amounts allocated or apportioned to New Mexico by that net income. | 0013| C. A taxpayer may claim a credit in an amount equal to the amount of tax | 0014| determined to be due under Section 7-2A-5 NMSA 1978 multiplied by the non-New Mexico | 0015| percentage." | 0016| Section 3. Section 7-3-2 NMSA 1978 (being Laws 1990, Chapter 64, Section 1) is | 0017| amended to read: | 0018| "7-3-2. DEFINITIONS.--As used in the Withholding Tax Act: | 0019| A. "department" means the taxation and revenue department, the secretary of | 0020| taxation and revenue or any employee of the department exercising authority lawfully delegated | 0021| to that employee by the secretary; | 0022| B. "employee" means either an individual domiciled within the state who | 0023| performs services either within or without the state for an employer or, to the extent permitted | 0024| by law, an individual domiciled outside of the state who performs services within the state for an | 0025| employer; | 0001| C. "employer" means a person, or an officer, agent or employee of that person, | 0002| having control of the payment of wages, doing business in or deriving income from sources | 0003| within the state for whom an individual performs or performed any service as the employee of | 0004| that person, except that if the person for whom the individual performs or performed the services | 0005| does not have control over the payment of the wages for such services, "employer" means the | 0006| person having control of the payment of wages; | 0007| D. "Internal Revenue Code" means the Internal Revenue Code of 1986, as | 0008| amended; | 0009| E. "payor" means any person making payment of a pension or annuity to an | 0010| individual domiciled in New Mexico; | 0011| F. "payroll period" means a period for which a payment of wages is made to the | 0012| employee by his employer; | 0013| G. "person" means any individual, club, company, cooperative association, | 0014| corporation, estate, firm, joint venture, partnership, receiver, syndicate, trust or other association | 0015| and, to the extent permitted by law, any federal, state or other governmental unit or subdivision | 0016| or an agency, department or instrumentality thereof; | 0017| H. "wagerer" means any person who receives winnings that are subject to | 0018| withholding; | 0019| I. "wages" means remuneration in cash or other form for services performed by | 0020| an employee for an employer; | 0021| J. "winnings that are subject to withholding" means "winnings which are subject | 0022| to withholding" as that term is defined in Section 3402 of the Internal Revenue Code; | 0023| K. "withholdee" means: | 0024| (1) an individual domiciled in New Mexico receiving a pension or | 0025| annuity from which an amount of tax is deducted and withheld pursuant to the Withholding Tax | 0001| Act; | 0002| (2) an employee; and | 0003| (3) a wagerer; and | 0004| L. "withholder" means a payor, an employer or any person required to deduct | 0005| and withhold from winnings that are subject to withholding." | 0006| Section 4. Section 7-3-3 NMSA 1978 (being Laws 1961, Chapter 243, Section 3, as | 0007| amended) is amended to read: | 0008| "7-3-3. TAX WITHHELD AT SOURCE.-- | 0009| A. Every employer who deducts and withholds a portion of an employee's wages | 0010| for payment of income tax under the provisions of the Internal Revenue Code shall deduct and | 0011| withhold an amount for each payroll period computed from a state withholding tax table fur- | 0012| nished by the department; provided: | 0013| (1) if the employee instructs the employer to withhold a greater amount, | 0014| the employer shall deduct and withhold the greater amount; | 0015| (2) if the employee is not a resident of New Mexico and is to perform | 0016| services in New Mexico for fifteen or fewer days cumulatively during the calendar year, the | 0017| employer is not required to deduct and withhold an amount from that employee's wages; and | 0018| (3) if the aggregate monthly amount withheld under this section would be | 0019| less than one dollar ($1.00) for an employee, the employer shall not be required to deduct and | 0020| withhold wages in regard to that employee. | 0021| B. The department shall devise and furnish a state withholding tax table based on | 0022| statutes made and provided to employers required to withhold amounts under this section. This | 0023| table shall be devised to provide for a yearly aggregate withholding that will approximate the | 0024| state income tax liability of average taxpayers in each exemption category. | 0025| C. If an individual requests in writing that the payor deduct and withhold an | 0001| amount from the amount of the pension or annuity due the individual, the payor making payment | 0002| of a pension or annuity to an individual domiciled in New Mexico shall deduct and withhold the | 0003| amount requested to be deducted and withheld, provided that the payor is not required to deduct | 0004| and withhold any amount less than ten dollars ($10.00) per payment. The written request shall | 0005| include the payee's name, current address, taxpayer identification number and, if applicable, the | 0006| contract, policy or account number to which the request applies. | 0007| D. Every person in New Mexico who is required by the provisions of the Internal | 0008| Revenue Code to deduct and withhold federal tax from payment of winnings that are subject to | 0009| withholding shall deduct and withhold from such payment a tax in an amount equal to six | 0010| percent of the winnings, except that an Indian nation, tribe or pueblo or an agency, department, | 0011| subdivision or instrumentality thereof is not required to deduct or withhold from payments made | 0012| to members or spouses of members of that Indian nation, tribe or pueblo." | 0013| Section 5. Section 7-3-4 NMSA 1978 (being Laws 1961, Chapter 243, Section 4, as | 0014| amended) is amended to read: | 0015| "7-3-4. DEDUCTIONS CONSIDERED TAXES.--Amounts deducted under the | 0016| provisions of the Withholding Tax Act shall be a collected tax. No employee shall have a right | 0017| of action against the employer for any amount deducted and withheld from the employee's | 0018| wages. No individual who has instructed a payor to deduct and withhold an amount from the | 0019| pension or annuity due that individual shall have a right of action against a payor for any amount | 0020| deducted and withheld pursuant to the instruction. No wagerer who receives winnings that are | 0021| subject to withholding shall have a right of action against the person who deducted and withheld | 0022| an amount from the wagerer's winnings for the amount deducted and withheld." | 0023| Section 6. Section 7-3-7 NMSA 1978 (being Laws 1961, Chapter 243, Section 8, as | 0024| amended) is amended to read: | 0025| "7-3-7. STATEMENTS OF WITHHOLDING.-- | 0001| A. Every employer shall file an annual statement of withholding for each | 0002| employee. This statement shall be in a form prescribed by the department and shall be filed with | 0003| the department on or before the last day of February of the year following that for which the | 0004| statement is made. It shall include the total compensation paid the employee and the total | 0005| amount of tax withheld for the calendar year or portion of a calendar year if the employee has | 0006| worked less than a full calendar year. | 0007| B. Every payor shall file an annual statement of withholding for each individual | 0008| from whom some portion of a pension or an annuity has been deducted and withheld by that | 0009| payor. This statement shall be in a form prescribed by the department and shall be filed with the | 0010| department on or before the last day of February of the year following that for which the | 0011| statement is made. It shall include the total amount of pension or annuity paid to the individual | 0012| and the amount of tax withheld for the calendar year. | 0013| C. Every person required to deduct and withhold tax from a payment of winnings | 0014| that are subject to withholding shall file an annual statement of withholding for each wagerer | 0015| from whom some portion of a payment of winnings has been deducted and withheld by that | 0016| person. This statement shall be in a form prescribed by the department and shall be filed with | 0017| the department on or before the last day of February of the year following that for which the | 0018| statement is made. It shall include the total amount of winnings paid to the individual and the | 0019| amount of tax withheld for the calendar year. The department may also require any person who | 0020| is required to submit an information return to the internal revenue service regarding the winnings | 0021| of another person to submit copies of the return to the department." | 0022| Section 7. EFFECTIVE DATE.--The effective date of the provisions of this act is April | 0023| 1, 1996. | 0024| Section 8. EMERGENCY.--It is necessary for the public peace, health and safety | 0025| that this act take effect immediately. | 0001| |