0001| HOUSE BILL 35
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0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003| INTRODUCED BY
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0004| JUDY VANDERSTAR RUSSELL
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0005|
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0006|
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0007|
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0008|
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0009|
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0010| AN ACT
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0011| RELATING TO TAXATION; AMENDING THE GROSS RECEIPTS AND
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0012| COMPENSATING TAX ACT AND LOCAL OPTION GROSS RECEIPTS TAX ACTS;
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0013| PROVIDING AN EXEMPTION FOR FOREIGN GOVERNMENTS AND A DEDUCTION
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0014| FOR FOREIGN DIPLOMATS; PERMITTING ACCEPTANCE OF NONTAXABLE
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0015| TRANSACTION DOCUMENTS FROM OTHER JURISDICTIONS; CLARIFYING THE
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0016| DEDUCTIONS FOR AGRICULTURAL IMPLEMENTS AND EXP0RTED SERVICES;
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0017| ELIMINATING THE EXEMPTION FOR TRANSPORTATION ACROSS CERTAIN
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0018| JURISDICTIONAL BOUNDARIES; AMENDING, REPEALING AND ENACTING
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0019| CERTAIN SECTIONS OF THE NMSA 1978.
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0020|
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0021| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0022| Section 1. Section 7-9-13 NMSA 1978 (being Laws 1969,
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0023| Chapter 144, Section 6, as amended) is amended to read:
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0024| "7-9-13. EXEMPTION--GROSS RECEIPTS TAX--GOVERNMENTAL
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0025| AGENCIES.--
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0001| A. Except as otherwise provided in this section,
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0002| exempted from the gross receipts tax are receipts of:
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0003| (1) the United States or any agency,
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0004| department or instrumentality thereof;
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0005| (2) the state of New Mexico or any political
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0006| subdivision thereof; [or]
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0007| (3) any Indian nation, tribe or pueblo from
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0008| activities or transactions occurring on its sovereign
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0009| territory; or
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0010| (4) any foreign nation or agency,
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0011| instrumentality or political subdivision thereof, but only
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0012| when required by a treaty in force to which the United States
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0013| is a party.
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0014| B. Receipts from the sale of gas or electricity by
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0015| a utility owned or operated by a county, municipality or other
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0016| political subdivision of a state are not exempted from the
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0017| gross receipts tax.
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0018| C. Receipts from the operation of a cable
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0019| television system owned or operated by a municipality are not
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0020| exempted from the gross receipts tax."
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0021| Section 2. A new section of the Gross Receipts and
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0022| Compensating Tax Act is enacted to read:
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0023| "[NEW MATERIAL] DEDUCTION--SALES TO CERTAIN ACCREDITED
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0024| DIPLOMATS AND MISSIONS.--Receipts from selling or leasing
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0025| property to, or from performing services for, an accredited
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0001| foreign mission or an accredited member of a foreign mission
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0002| may be deducted from gross receipts when a treaty in force to
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0003| which the United States is a party requires forbearance of tax
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0004| when the legal incidence is upon the buyer or when the tax is
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0005| customarily passed on to the buyer."
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0006| Section 3. Section 7-9-43 NMSA 1978 (being Laws 1966,
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0007| Chapter 47, Section 13, as amended) is amended to read:
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0008| "7-9-43. NONTAXABLE TRANSACTION CERTIFICATES AND OTHER
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0009| EVIDENCE REQUIRED TO ENTITLE PERSONS TO DEDUCTIONS--RENEWAL.--
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0010| A. All nontaxable transaction certificates of the
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0011| appropriate series executed by buyers or lessees should be in
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0012| the possession of the seller or lessor for nontaxable
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0013| transactions at the time the return is due for receipts from
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0014| the transactions. If the seller or lessor is not in
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0015| possession of the required nontaxable transaction certificates
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0016| within sixty days from the date that the notice requiring
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0017| possession of these nontaxable transaction certificates is
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0018| given the seller or lessor by the department, deductions
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0019| claimed by the seller or lessor that require delivery of these
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0020| nontaxable transaction certificates shall be disallowed. The
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0021| nontaxable transaction certificates shall contain the
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0022| information and be in a form prescribed by the department.
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0023| The department by regulation may deem to be nontaxable
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0024| transaction certificates documents issued by other states or
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0025| the multistate tax commission to taxpayers not required to be
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0001| registered in New Mexico. Only buyers or lessees who have a
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0002| registration number or have applied for a registration number
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0003| and have not been refused one under Subsection C of Section
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0004| 7-1-12 NMSA 1978 shall execute nontaxable transaction
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0005| certificates issued by the department. If the seller or
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0006| lessor has been given an identification number for tax
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0007| purposes by the department, the seller or lessor shall
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0008| disclose that identification number to the buyer or lessee
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0009| prior to or upon acceptance of a nontaxable transaction
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0010| certificate. When the seller or lessor accepts a nontaxable
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0011| transaction certificate within the required time and in good
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0012| faith that the buyer or lessee will employ the property or
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0013| service transferred in a nontaxable manner, the properly
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0014| executed nontaxable transaction certificate shall be
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0015| conclusive evidence, and the only material evidence, that the
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0016| proceeds from the transaction are deductible from the seller's
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0017| or lessor's gross receipts.
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0018| B. Properly executed documents required to support
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0019| the deductions provided in Sections 7-9-57, 7-9-58 and 7-9-74
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0020| NMSA 1978 should be in the possession of the seller at the
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0021| time the return is due for receipts from the transactions. If
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0022| the seller is not in possession of these documents within
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0023| sixty days from the date that the notice requiring possession
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0024| of these documents is given to the seller by the department,
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0025| deductions claimed by the seller or lessor that require
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0001| delivery of these documents shall be disallowed. These
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0002| documents shall contain the information and be in a form
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0003| prescribed by the department. When the seller accepts these
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0004| documents within the required time and in good faith that the
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0005| buyer will employ the property or service transferred in a
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0006| nontaxable manner, the properly executed documents shall be
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0007| conclusive evidence, and the only material evidence, that the
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0008| proceeds from the transaction are deductible from the seller's
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0009| gross receipts.
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0010| C. Notice, as used in this section, is sufficient
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0011| if the notice is mailed or served as provided in Subsection A
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0012| of Section 7-1-9 NMSA 1978. Notice by the department under
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0013| this section shall not be given prior to the commencement of
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0014| an audit of the seller required to be in possession of the
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0015| documents.
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0016| D. On January 1, 1992, every nontaxable
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0017| transaction certificate, except for nontaxable transaction
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0018| certificates of the series applicable to the ten-year period
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0019| beginning January 1, 1992 and issued by the department prior
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0020| to that date, is void with respect to transactions after
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0021| December 31, 1991. The department shall issue separate series
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0022| of nontaxable transaction certificates for the ten-year period
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0023| beginning January 1, 1992 and for each ten-year period
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0024| beginning on January 1 of every tenth year succeeding calendar
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0025| year 1992. A series of nontaxable transaction certificates
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0001| issued by the department for any ten-year period may be
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0002| executed by buyers or lessees for transactions occurring
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0003| within or prior to that ten-year period but are not valid
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0004| for transactions occurring after that ten-year period. For
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0005| administrative convenience, the department may accept and
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0006| approve qualifying applications for the privilege of executing
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0007| nontaxable transaction certificates and pre-issue certificates
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0008| of any series within the six-month period immediately
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0009| preceding the beginning of the ten-year period to which the
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0010| series of nontaxable transaction certificates applies.
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0011| E. To exercise the privilege of executing
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0012| appropriate nontaxable transaction certificates, a buyer or
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0013| lessee shall apply to the department for permission to execute
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0014| nontaxable transaction certificates, except with respect to
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0015| documents issued by other states or the multistate tax
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0016| commission that the department has deemed to be nontaxable
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0017| transaction certificates. If a person is shown on the
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0018| department's records to be a delinquent taxpayer, the
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0019| department may refuse to approve the application of the person
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0020| until the person is no longer shown to be a delinquent
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0021| taxpayer, and the taxpayer may protest that refusal pursuant
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0022| to Section 7-1-24 NMSA 1978. Upon the department's approval
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0023| of the application, the buyer or lessee may request
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0024| appropriate nontaxable transaction certificates for execution
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0025| by the buyer or lessee; provided that if a person is shown on
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0001| the department's records to be a delinquent taxpayer, the
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0002| department may refuse to issue nontaxable transaction
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0003| certificates to the person until the person is no longer shown
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0004| to be a delinquent taxpayer, and the taxpayer may protest that
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0005| refusal pursuant to Section 7-1-24 NMSA 1978. The department
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0006| may require any buyer or lessee requesting and receiving
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0007| nontaxable transaction certificates for execution by that
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0008| buyer or lessee to report to the department annually the
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0009| names, addresses and identification numbers assigned by the
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0010| department of the sellers and lessors to whom they have
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0011| delivered nontaxable transaction certificates. The department
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0012| may require any seller or lessor engaged in business in New
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0013| Mexico to report to the department annually the names,
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0014| addresses and federal employer identification numbers or state
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0015| identification numbers for tax purposes issued by the
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0016| department of the buyers or lessees from whom the seller or
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0017| lessor has accepted nontaxable transaction certificates."
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0018| Section 4. Section 7-9-57 NMSA 1978 (being Laws 1969,
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0019| Chapter 144, Section 47, as amended) is amended to read:
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0020| "7-9-57. DEDUCTION--GROSS RECEIPTS TAX--SALE OF CERTAIN
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0021| SERVICES [TO AN OUT-OF-STATE BUYER] FOR EXPORT.--
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0022| A. Receipts from performing a service may be
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0023| deducted from gross receipts if [the sale of the service is
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made to a buyer who delivers to the seller either a nontaxable
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transaction certificate or other evidence acceptable to the
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secretary that the transaction does not contravene the
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conditions set out in Subsection C of this section.
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B. The buyer delivering the nontaxable transaction
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certificate or other evidence acceptable to the secretary
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shall not contravene the conditions set out in Subsection C of
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this section.
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C. Receipts from performance of a service shall
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not be subject to the deduction provided in this section if
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the buyer of the service or any of the buyer's employees or
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agents:
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(1) makes initial use of the product of the
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service in New Mexico; or
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(2) takes delivery of the product of the
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service in New Mexico] there is a product of the service,
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0015| that product is delivered out of state and initially used out
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0016| of state and the buyer delivers to the seller either a
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0017| nontaxable transaction certificate or other evidence
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0018| acceptable to the secretary.
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0019| [D.] B. Receipts from performing a service
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0020| which initially qualified for the deduction provided in this
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0021| section but which no longer meets the criteria set forth in
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0022| Subsection [C] A of this section shall be deductible for
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0023| the period prior to the disqualification.
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0024| C. As used in this section, "product of the
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0025| service" means tangible personal property that incorporates or
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0001| embodies the service performed."
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0002| Section 5. Section 7-9-62 NMSA 1978 (being Laws 1969,
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0003| Chapter 144, Section 52, as amended) is amended to read:
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0004| "7-9-62. DEDUCTION--GROSS RECEIPTS TAX--AGRICULTURAL
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0005| IMPLEMENTS--AIRCRAFT--VEHICLES THAT ARE NOT REQUIRED TO BE
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0006| REGISTERED.--
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0007| A. Fifty percent of the receipts from selling
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0008| agricultural implements, farm tractors, aircraft or vehicles
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0009| that are not required to be registered under the Motor Vehicle
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0010| Code may be deducted from gross receipts; provided that, with
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0011| respect to agricultural implements, the sale is made to a
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0012| person who states in writing that the person is regularly
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0013| engaged in the business of farming or ranching. Any
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0014| deduction allowed under Section [72-16A-14.28 NMSA 1953] 7-
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0015| 9-71 NMSA 1978 must be taken before the deduction allowed by
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0016| this section is computed.
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0017| B. As used in this section, "agricultural
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0018| implement" means a tool, utensil or instrument that is:
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0019| (1) designed primarily for use with a source
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0020| of motive power, such as a tractor, in planting, growing,
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0021| cultivating, harvesting or processing agricultural produce at
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0022| the place where the produce is grown; in raising poultry or
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0023| livestock; or in obtaining or processing food or fiber, such
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0024| as eggs, milk, wool or mohair, from living poultry or
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0025| livestock at the place where the poultry or livestock are kept
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0001| for this purpose; and
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0002| (2) depreciable for federal income tax
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0003| purposes."
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0004| Section 6. Section 7-9-77 NMSA 1978 (being Laws 1966,
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0005| Chapter 47, Section 15, as amended) is amended to read:
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0006| "7-9-77. DEDUCTIONS--COMPENSATING TAX.--
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0007| A. Fifty percent of the value of agricultural
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0008| implements, farm tractors, aircraft not exempted under Section
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0009| 7-9-30 NMSA 1978 or vehicles that are not required to be
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0010| registered under the Motor Vehicle Code may be deducted from
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0011| the value in computing the compensating tax due; provided
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0012| that, with respect to use of agricultural implements, the
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0013| person using the property is regularly engaged in the business
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0014| of farming or ranching. Any deduction allowed under
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0015| Subsection B of this section is to be taken before the
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0016| deduction allowed by this subsection is computed. As used in
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0017| this subsection, "agricultural implement" means a tool,
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0018| utensil or instrument that is:
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0019| (1) designed primarily for use with a source
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0020| of motive power, such as a tractor, in planting, growing,
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0021| cultivating, harvesting or processing agricultural produce at
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0022| the place where the produce is grown; in raising poultry or
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0023| livestock; or in obtaining or processing food or fiber, such
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0024| as eggs, milk, wool or mohair, from living poultry or
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0025| livestock at the place where the poultry or livestock are kept
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0001| for this purpose; and
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0002| (2) depreciable for federal income tax
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0003| purposes.
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0004| B. That portion of the value of tangible personal
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0005| property on which an allowance was granted to the buyer for a
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0006| trade-in of tangible personal property of the same type that
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0007| was bought may be deducted from the value in computing the
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0008| compensating tax due."
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0009| Section 7. Section 7-19-14 NMSA 1978 (being Laws 1979,
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0010| Chapter 397, Section 5, as amended) is amended to read:
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0011| "7-19-14. SPECIFIC EXEMPTIONS.--No supplemental
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0012| municipal gross receipts tax shall be imposed on the gross
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0013| receipts arising from
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0014| [A. transporting persons or property for hire by
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railroad, motor vehicle, air transportation or any other means
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from one point within the municipality to another point
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outside the municipality; or
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B.] a business located outside the boundaries of
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0019| a municipality on land owned by that municipality for which a
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0020| gross receipts tax distribution is made pursuant to Section
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0021| 7-1-6.4 NMSA 1978."
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0022| Section 8. Section 7-19D-5 NMSA 1978 (being Laws 1993,
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0023| Chapter 346, Section 5, as amended) is amended to read:
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0024| "7-19D-5. SPECIFIC EXEMPTIONS.--No tax authorized by the
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0025| provisions of the Municipal Local Option Gross Receipts Taxes
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0001| Act shall be imposed on the gross receipts arising from
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0002| [A. transporting persons or property for hire by
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railroad, motor vehicle, air transportation or any other means
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from one point within the municipality to another point
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outside the municipality; or
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B.] a business located outside the boundaries of
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0007| a municipality on land owned by that municipality for which a
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0008| state gross receipts tax distribution is made pursuant to
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0009| Section 7-1-6.4 NMSA 1978."
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0010| Section 9. REPEAL.--Sections 7-20C-5, 7-20E-5 and
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0011| 7-20F-6 NMSA 1978 (being Laws 1991, Chapter 176, Section 5,
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0012| Laws 1993, Chapter 354, Section 5 and Laws 1993, Chapter 303,
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0013| Section 6, as amended) are repealed.
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0014| Section 10. EFFECTIVE DATE.--The effective date of the
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0015| provisions of this act is July 1, 1998.
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