0001|                            HOUSE BILL 298
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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|                              TED HOBBS
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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; PROVIDING A DEDUCTION FROM GROSS
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0012|     RECEIPTS AND GOVERNMENTAL GROSS RECEIPTS FOR RECEIPTS FROM THE
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0013|     SALE OF PRESCRIPTION DRUGS AND PROSTHETIC DEVICES FOR STATE
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0014|     TAX PURPOSES BUT NOT FOR LOCAL OPTION GROSS RECEIPTS TAX
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0015|     PURPOSES; AMENDING THE DISTRIBUTION OF CERTAIN RECEIPTS TO
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0016|     MUNICIPALITIES; AMENDING THE LOCAL OPTION GROSS RECEIPTS TAX
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0017|     ACTS; REPEALING THE INCOME TAX CREDIT FOR PRESCRIPTION DRUGS;
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0018|     AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA 1978. 
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0019|     
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0020|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0021|          Section 1.  Section 7-1-6.4 NMSA 1978 (being Laws 1983,
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0022|     Chapter 211, Section 9, as amended) is amended to read:
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0023|          "7-1-6.4.  DISTRIBUTION--MUNICIPALITY FROM GROSS RECEIPTS
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0024|     TAX.--
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0025|               A.  Except as provided in Subsection B of this
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<center>- 1 -</center>

0001|     section, a distribution pursuant to Section 7-1-6.1 NMSA 1978
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0002|     shall be made to each municipality in an amount, subject to
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0003|     any increase or decrease made pursuant to Section 7-1-6.15
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0004|     NMSA 1978, equal to the product of the quotient of one and two
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0005|     hundred twenty-five thousandths percent divided by the tax
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0006|     rate imposed by Section 7-9-4 NMSA 1978 <s>[times]</s> <u>multiplied
</u>    |
<u></u>0007| <u>    by</u> the net receipts for the month attributable to the gross
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0008|     receipts tax from business locations:
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0009|                    (1)  within that municipality;
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0010|                    (2)  on land owned by the state, commonly
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0011|     known as the "state fair grounds", within the exterior
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0012|     boundaries of that municipality;
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0013|                    (3) outside the boundaries of any municipality
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0014|     on land owned by that municipality; and
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0015|                    (4)  on an Indian reservation or pueblo grant
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0016|     in an area that is contiguous to that municipality and in
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0017|     which the municipality performs services pursuant to a
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0018|     contract between the municipality and the Indian tribe or
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0019|     Indian pueblo if:
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0020|                         (a)  the contract describes an area in
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0021|     which the municipality is required to perform services and
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0022|     requires the municipality to perform services that are
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0023|     substantially the same as the services the municipality
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0024|     performs for itself; and
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0025|                         (b)  the governing body of the
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<center>- 2 -</center>

0001|     municipality has submitted a copy of the contract to the
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0002|     secretary.
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0003|               B.  If the reduction made by Laws 1991, Chapter 9,
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0004|     Section 9 to the distribution under this section impairs the
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0005|     ability of a municipality to meet its principal or interest
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0006|     payment obligations for revenue bonds outstanding prior to
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0007|     July 1, 1991 that are secured by the pledge of all or part of
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0008|     the municipality's revenue from the distribution made
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0009|     <s>[under]</s> <u>pursuant to</u> this section, then the amount
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0010|     distributed pursuant to this section to that municipality
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0011|     shall be increased by an amount sufficient to meet any
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0012|     required payment, provided that the distribution amount does
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0013|     not exceed the amount that would have been due that
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0014|     municipality <s>[under]</s> <u>pursuant to</u> this section as it was in
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0015|     effect on June 30, 1992.
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0016|               <u>C.  In addition to the distribution required in
</u>    |
<u></u>0017| <u>    Subsection A of this section, a distribution shall be made,
</u>    |
<u></u>0018| <u>    subject to any increase or decrease made pursuant to Section
</u>    |
<u></u>0019| <u>    7-1-6.15 NMSA 1978, in an amount equal to the product of one
</u>    |
<u></u>0020| <u>    and two hundred twenty-five thousandths percent multiplied by
</u>    |
<u></u>0021| <u>    the gross receipts subject to a local option gross receipts
</u>    |
<u></u>0022| <u>    tax but not subject to the tax imposed by Section 7-9-4 NMSA
</u>    |
<u></u>0023| <u>    1978.</u>"
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0024|          Section 2.  Section 7-9-3 NMSA 1978 (being Laws 1978,
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0025|     Chapter 46, Section 1, as amended) is amended to read:
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<center>- 3 -</center>

0001|          "7-9-3.  DEFINITIONS.--As used in the Gross Receipts and
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0002|     Compensating Tax Act:
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0003|               A.  "department" means the taxation and revenue
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0004|     department, the secretary of taxation and revenue or any
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0005|     employee of the department exercising authority lawfully
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0006|     delegated to that employee by the secretary;
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0007|               B.  "buying" or "selling" means any transfer of
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0008|     property for consideration or any performance of service for
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0009|     consideration;
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0010|               C.  "construction" means building, altering,
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0011|     repairing or demolishing in the ordinary course of business
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0012|     any:
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0013|                    (1)  road, highway, bridge, parking area or
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0014|     related project;
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0015|                    (2)  building, stadium or other structure;
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0016|                    (3)  airport, subway or similar facility;
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0017|                    (4)  park, trail, athletic field, golf course
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0018|     or similar facility;
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0019|                    (5)  dam, reservoir, canal, ditch or similar
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0020|     facility;
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0021|                    (6)  sewerage or water treatment facility,
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0022|     power generating plant, pump station, natural gas compressing
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0023|     station, gas processing plant, coal gasification plant,
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0024|     refinery, distillery or similar facility;
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0025|                    (7)  sewerage, water, gas or other pipeline;
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<center>- 4 -</center>

0001|                    (8)  transmission line;
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0002|                    (9)  radio, television or other tower;
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0003|                    (10)  water, oil or other storage tank;
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0004|                    (11)  shaft, tunnel or other mining
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0005|     appurtenance;
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0006|                    (12)  microwave station or similar facility;
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0007|     or
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0008|                    (13)  similar work;
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0009|     "construction" also means:
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0010|                    (14)  leveling or clearing land;
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0011|                    (15)  excavating earth;
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0012|                    (16)  drilling wells of any type, including
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0013|     seismograph shot holes or core drilling; or
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0014|                    (17)  similar work;
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0015|               D.  "financial corporation" means any savings and
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0016|     loan association or any incorporated savings and loan company,
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0017|     trust company, mortgage banking company, consumer finance
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0018|     company or other financial corporation;
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0019|               E.  "engaging in business" means carrying on or
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0020|     causing to be carried on any activity with the purpose of
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0021|     direct or indirect benefit;
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0022|               F.  "gross receipts" means the total amount of
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0023|     money or the value of other consideration received from
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0024|     selling property in New Mexico, from leasing property employed
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0025|     in New Mexico, from selling services performed outside New
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<center>- 5 -</center>

0001|     Mexico the product of which is initially used in New Mexico or
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0002|     from performing services in New Mexico.  In an exchange in
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0003|     which the money or other consideration received does not
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0004|     represent the value of the property or service exchanged,
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0005|     "gross receipts" means the reasonable value of the property or
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0006|     service exchanged.
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0007|                    (1)  "Gross receipts" includes:
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0008|                         (a)  any receipts from sales of tangible
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0009|     personal property handled on consignment;
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0010|                         (b)  the total commissions or fees
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0011|     derived from the business of buying, selling or promoting the
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0012|     purchase, sale or leasing, as an agent or broker on a
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0013|     commission or fee basis, of any property, service, stock, bond
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0014|     or security;
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0015|                         (c)  amounts paid by members of any
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0016|     cooperative association or similar organization for sales or
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0017|     leases of personal property or performance of services by such
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0018|     organization; and
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0019|                         (d)  amounts received from transmitting
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0020|     messages or conversations by persons providing telephone or
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0021|     telegraph services.
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0022|                    (2)  "Gross receipts" excludes:
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0023|                         (a)  cash discounts allowed and taken;
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0024|                         (b)  New Mexico gross receipts tax,
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0025|     governmental gross receipts tax and leased vehicle gross
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<center>- 6 -</center>

0001|     receipts tax payable on transactions for the reporting period;
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0002|                         (c)  taxes imposed pursuant to the
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0003|     provisions of any local option gross receipts tax that is
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0004|     payable on transactions for the reporting period;
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0005|                         (d)  any gross receipts or sales taxes
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0006|     imposed by an Indian nation, tribe or pueblo provided that the
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0007|     tax is approved, if approval is required by federal law or
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0008|     regulation, by the secretary of the interior of the United
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0009|     States and provided further that the gross receipts or sales
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0010|     tax imposed by the Indian nation, tribe or pueblo provides a
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0011|     reciprocal exclusion for gross receipts, sales or gross
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0012|     receipts-based excise taxes imposed by the state or its
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0013|     political subdivisions;
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0014|                         (e)  any type of time-price
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0015|     differential; and
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0016|                         (f)  amounts received solely on behalf
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0017|     of another in a disclosed agency capacity.
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0018|                    (3)  When the sale of property or service is
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0019|     made under any type of charge, conditional or time-sales
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0020|     contract or the leasing of property is made under a leasing
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0021|     contract, the seller or lessor may elect to treat all
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0022|     receipts, excluding any type of time-price differential, under
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0023|     such contracts as gross receipts as and when the payments are
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0024|     actually received.  If the seller or lessor transfers his
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0025|     interest in any such contract to a third person, the seller or
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<center>- 7 -</center>

0001|     lessor shall pay the gross receipts tax upon the full sale or
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0002|     leasing contract amount, excluding any type of time-price
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0003|     differential;
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0004|               G.  "manufacturing" means combining or processing
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0005|     components or materials to increase their value for sale in
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0006|     the ordinary course of business, but does not include
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0007|     construction;
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0008|               H.  "person" means:
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0009|                    (1)  any individual, estate, trust, receiver,
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0010|     cooperative association, club, corporation, company, firm,
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0011|     partnership, limited liability company, limited liability
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0012|     partnership, joint venture, syndicate or other entity,
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0013|     including any gas, water or electric utility owned or operated
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0014|     by a county, municipality or other political subdivision of
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0015|     the state; or
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0016|                    (2)  any national, federal, state, Indian or
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0017|     other governmental unit or subdivision, or any agency,
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0018|     department or instrumentality of any of the foregoing;
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0019|               I.  "property" means real property, tangible
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0020|     personal property, licenses, franchises, patents, trademarks
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0021|     and copyrights.  Tangible personal property includes
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0022|     electricity and manufactured homes;
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0023|               J.  "leasing" means any arrangement whereby, for a
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0024|     consideration, property is employed for or by any person other
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0025|     than the owner of the property, except that the granting of a
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<center>- 8 -</center>

0001|     license to use property is the sale of a license and not a
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0002|     lease;
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0003|               K.  "service" means all activities engaged in for
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0004|     other persons for a consideration, which activities involve
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0005|     predominantly the performance of a service as distinguished
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0006|     from selling or leasing property.  "Service" includes
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0007|     activities performed by a person for its members or
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0008|     shareholders.  In determining what is a service, the intended
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0009|     use, principal objective or ultimate objective of the
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0010|     contracting parties shall not be controlling.  "Service"
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0011|     includes construction activities and all tangible personal
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0012|     property that will become an ingredient or component part of a
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0013|     construction project.  Such tangible personal property retains
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0014|     its character as tangible personal property until it is
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0015|     installed as an ingredient or component part of a construction
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0016|     project in New Mexico.  However, sales of tangible personal
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0017|     property that will become an ingredient or component part of a
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0018|     construction project to persons engaged in the construction
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0019|     business are sales of tangible personal property;
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0020|               L.  "use" or "using" includes use, consumption or
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0021|     storage other than storage for subsequent sale in the ordinary
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0022|     course of business or for use solely outside this state;
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0023|               M.  "secretary" means the secretary of taxation and
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0024|     revenue or the secretary's delegate;
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0025|               N.  "manufactured home" means a moveable or
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<center>- 9 -</center>

0001|     portable housing structure for human occupancy that exceeds
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0002|     either a width of eight feet or a length of forty feet
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0003|     constructed to be towed on its own chassis and designed to be
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0004|     installed with or without a permanent foundation;
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0005|               O.  "initial use" or "initially used" means the
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0006|     first employment for the intended purpose and does not include
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0007|     the following activities:
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0008|                    (1)  observation of tests conducted by the
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0009|     performer of services;
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0010|                    (2)  participation in progress reviews,
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0011|     briefings, consultations and conferences conducted by the
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0012|     performer of services;
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0013|                    (3)  review of preliminary drafts, drawings
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0014|     and other materials prepared by the performer of the services;
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0015|                    (4)  inspection of preliminary prototypes
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0016|     developed by the performer of services; or
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0017|                    (5)  similar activities; 
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0018|               P.  "research and development services" means any
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0019|     activity engaged in for other persons for consideration, for
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0020|     one or more of the following purposes:
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0021|                    (1)  advancing basic knowledge in a recognized
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0022|     field of natural science;
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0023|                    (2)  advancing technology in a field of
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0024|     technical endeavor;
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0025|                    (3)  the development of a new or improved
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<center>- 10 -</center>

0001|     product, process or system with new or improved function,
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0002|     performance, reliability or quality, whether or not the new or
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0003|     improved product, process or system is offered for sale, lease
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0004|     or other transfer;
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0005|                    (4)  the development of new uses or
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0006|     applications for an existing product, process or system,
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0007|     whether or not the new use or application is offered as the
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0008|     rationale for purchase, lease or other transfer of the
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0009|     product, process or system;
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0010|                    (5)  analytical or survey activities
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0011|     incorporating technology review, application, trade-off study,
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0012|     modeling, simulation, conceptual design or similar activities,
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0013|     whether or not offered for sale, lease or other transfer; or
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0014|                    (6)  the design and development of prototypes
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0015|     or the integration of systems incorporating advances,
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0016|     developments or improvements included in Paragraphs (1)
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0017|     through (5) of this subsection; <s>[and]</s>
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0018|               Q.  "local option gross receipts tax" means a tax
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0019|     authorized to be imposed by a county or municipality upon the
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0020|     taxpayer's gross receipts and required to be collected by the
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0021|     department at the same time and in the same manner as the
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0022|     gross receipts tax; "local option gross receipts tax" includes
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0023|     the taxes imposed pursuant to the Municipal Local Option Gross
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0024|     Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax
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0025|     Act, Special Municipal Gross Receipts Tax Act, County Local
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<center>- 11 -</center>

0001|     Option Gross Receipts Taxes Act, Local Hospital Gross Receipts
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0002|     Tax Act, County Correctional Facility Gross Receipts Tax Act
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0003|     and such other acts as may be enacted authorizing counties or
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0004|     municipalities to impose taxes on gross receipts, which taxes
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0005|     are to be collected by the department;
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0006|               <u>R.  "prescription drug" means insulin and
</u>    |
<u></u>0007| <u>    substances that are:
</u>    |
<u></u>0008| <u>                   (1)  dispensed by or under the supervision of
</u>    |
<u></u>0009| <u>    a licensed pharmacist or by a physician or other person
</u>    |
<u></u>0010| <u>    authorized under state law to dispense the substance;
</u>    |
<u></u>0011| <u>                   (2)  prescribed for a specific human being by
</u>    |
<u></u>0012| <u>    a person authorized under state law to prescribe the
</u>    |
<u></u>0013| <u>    substance; and
</u>    |
<u></u>0014| <u>                   (3)  subject to the restrictions on sale
</u>    |
<u></u>0015| <u>    contained in 21 USCA 353(b)(1); and
</u>    |
<u></u>0016| <u>              S.  "prosthetic device" means:
</u>    |
<u></u>0017| <u>                   (1)  orthopedic prosthesis, orthopedic braces
</u>    |
<u></u>0018| <u>    and supports and orthopedic shoes;
</u>    |
<u></u>0019| <u>                   (2)  ocular prosthesis;
</u>    |
<u></u>0020| <u>                   (3)  a prosthesis or prosthetic device ordered
</u>    |
<u></u>0021| <u>    as a result of surgery;
</u>    |
<u></u>0022| <u>                   (4)  crutches and wheelchairs; and
</u>    |
<u></u>0023| <u>                   (5)  replacement parts or related supplies
</u>    |
<u></u>0024| <u>    designed specifically for any of the items specified in
</u>    |
<u></u>0025| <u>    Paragraphs (1) through (4) of this subsection.</u>"
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<center>- 12 -</center>

0001|          <u></u>Section 3.  A new section of the Gross Receipts and
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0002|     Compensating Tax Act is enacted to read:
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0003|          "[<u>NEW MATERIAL</u>] DEDUCTION--GROSS RECEIPTS TAX AND
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0004|     GOVERNMENTAL GROSS RECEIPTS TAX--PRESCRIPTION DRUGS--
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0005|     PROSTHETIC DEVICES.--Receipts from the following may be
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0006|     deducted from gross receipts or governmental gross receipts:
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0007|               A.  sale other than sale for resale of prescription
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0008|     drugs; and
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0009|               B.  sale or lease of prosthetic devices when made
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0010|     by a licensed practitioner to the user or consumer of the
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0011|     device and sale or lease of prosthetic devices made by a
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0012|     person on the basis of written order written by a licensed
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0013|     practitioner ordering the device for a specific human being."  
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0014|          Section 4.  Section 7-19-13 NMSA 1978 (being Laws 1979,
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0015|     Chapter 397, Section 4) is amended to read:
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0016|          "7-19-13.  ORDINANCE <s>[MUST]</s> <u>SHALL</u> CONFORM TO CERTAIN
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0017|     PROVISIONS OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT AND
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0018|     REQUIREMENTS OF THE <s>[DIVISION]</s> <u>DEPARTMENT</u>.--
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0019|               A.  Any ordinance imposing a supplemental municipal
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0020|     gross receipts tax shall adopt by reference the same
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0021|     definitions and the same provisions relating to exemptions and
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0022|     deductions as are contained in the Gross Receipts and
    |
0023|     Compensating Tax Act then in effect and as it may be amended
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0024|     from time to time, <u>except as otherwise provided in the
</u>    |
<u></u>0025| <u>    Supplemental Municipal Gross Receipts Tax Act.</u>
    |
<center>- 13 -</center>

0001|               B.  The governing body of any municipality imposing
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0002|     or increasing the supplemental municipal gross receipts tax
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0003|     <s>[must]</s> <u>shall</u> adopt the language of the model ordinance
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0004|     furnished to the municipality by the <s>[division]</s> <u>department</u>
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0005|     for the portion of the ordinance relating to the tax."
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0006|          Section 5.  A new section of the Supplemental Municipal
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0007|     Gross Receipts Tax Act, Section 7-19-14.1 NMSA 1978, is
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0008|     enacted to read:
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0009|          "7-19-14.1.  [<u>NEW MATERIAL</u>] SPECIFIC ADDITIONS.--A tax
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0010|     authorized by the provisions of the Supplemental Municipal
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0011|     Gross Receipts Tax Act and imposed shall be imposed on the
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0012|     gross receipts arising from:
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0013|               A.  sale other than sale for resale of prescription
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0014|     drugs; and
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0015|               B.  sale or lease of prosthetic devices when made
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0016|     by a licensed practitioner to the user or consumer of the
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0017|     device and sale or lease of prosthetic devices made by a
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0018|     person on the basis of written order written by a licensed
    |
0019|     practitioner ordering the device for a specific human being."
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0020|          Section 6.  Section 7-19D-4 NMSA 1978 (being Laws 1993,
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0021|     Chapter 346, Section 4) is amended to read:
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0022|          "7-19D-4.  ORDINANCE SHALL CONFORM TO CERTAIN PROVISIONS
    |
0023|     OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT AND
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0024|     REQUIREMENTS OF THE DEPARTMENT.--
    |
0025|               A.  An ordinance imposing a tax <s>[under]</s> <u>pursuant
</u>    |
<center>- 14 -</center>

<u></u>0001| <u>    to</u> the provisions of the Municipal Local Option Gross
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0002|     Receipts Taxes Act shall adopt by reference the same
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0003|     definitions and the same provisions relating to exemptions and
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0004|     deductions as are contained in the Gross Receipts and
    |
0005|     Compensating Tax Act then in effect and as it may be amended
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0006|     from time to time, <u>except as otherwise provided in the
</u>    |
<u></u>0007| <u>    Municipal Local Option Gross Receipts Taxes Act</u>.
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0008|               B.  The governing body of any municipality imposing
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0009|     a tax <s>[under]</s> <u>pursuant to provisions of</u> the Municipal
    |
0010|     Local Option Gross Receipts Taxes Act shall impose the tax by
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0011|     adopting the model ordinance with respect to the tax furnished
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0012|     to the municipality by the department.  An ordinance that does
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0013|     not conform substantially to the model ordinance of the
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0014|     department is not valid."
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0015|          Section 7.  A new section of the Municipal Local Option
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0016|     Gross Receipts Taxes Act, Section 7-19D-5.1 NMSA 1978, is
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0017|     enacted to read:
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0018|          "7-19D-5.1.  [<u>NEW MATERIAL</u>] SPECIFIC ADDITIONS.--A tax
    |
0019|     authorized by the provisions of the Municipal Local Option
    |
0020|     Gross Receipts Taxes Act and imposed shall be imposed on the
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0021|     gross receipts arising from:
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0022|               A.  sale other than sale for resale of prescription
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0023|     drugs; and
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0024|               B.  sale or lease of prosthetic devices when made
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0025|     by a licensed practitioner to the user or consumer of the
    |
<center>- 15 -</center>

0001|     device and sale or lease of prosthetic devices made by a
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0002|     person on the basis of written order written by a licensed
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0003|     practitioner ordering the device for a specific human being."
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0004|          Section 8.  Section 7-20C-4 NMSA 1978 (being Laws 1991,
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0005|     Chapter 176, Section 4) is amended to read:
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0006|          "7-20C-4.  ORDINANCE SHALL CONFORM TO CERTAIN PROVISIONS
    |
0007|     OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT AND
    |
0008|     REQUIREMENTS OF THE DEPARTMENT.--
    |
0009|               A.  Any ordinance imposing the local hospital gross
    |
0010|     receipts tax shall adopt by reference the same definitions and
    |
0011|     the same provisions relating to exemptions and deductions as
    |
0012|     are contained in the Gross Receipts and Compensating Tax Act
    |
0013|     then in effect and as it may be amended from time to time,
    |
0014|     <u>except as otherwise provided in the Local Hospital Gross
</u>    |
<u></u>0015| <u>    Receipts Tax Act</u>.
    |
0016|               B.  The governing body of any county imposing the
    |
0017|     tax shall adopt the model ordinances furnished to the county
    |
0018|     by the department."
    |
0019|          Section 9.  A new section of the Local Hospital Gross
    |
0020|     Receipts Tax Act, Section 7-20C-5.1 NMSA 1978, is enacted to
    |
0021|     read:
    |
0022|          "7-20C-5.1.  [<u>NEW MATERIAL</u>] SPECIFIC ADDITIONS.--A tax
    |
0023|     authorized by the provisions of the Local Hospital Gross
    |
0024|     Receipts Tax Act and imposed shall be imposed on the gross
    |
0025|     receipts arising from:
    |
<center>- 16 -</center>

0001|               A.  sale other than sale for resale of prescription
    |
0002|     drugs; and
    |
0003|               B.  sale or lease of prosthetic devices when made
    |
0004|     by a licensed practitioner to the user or consumer of the
    |
0005|     device and sale or lease of prosthetic devices made by a
    |
0006|     person on the basis of written order written by a licensed
    |
0007|     practitioner ordering the device for a specific human being."
    |
0008|          Section 10.  Section 7-20E-4 NMSA 1978 (being Laws 1993,
    |
0009|     Chapter 354, Section 4) is amended to read:
    |
0010|          "7-20E-4.  ORDINANCE SHALL CONFORM TO CERTAIN PROVISIONS
    |
0011|     OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT AND
    |
0012|     REQUIREMENTS OF THE DEPARTMENT.--
    |
0013|               A.  An ordinance imposing a tax <s>[under]</s> <u>pursuant
</u>    |
<u></u>0014| <u>    to</u> the provisions of the County Local Option Gross Receipts
    |
0015|     Taxes Act shall adopt by reference the same definitions and
    |
0016|     the same provisions relating to exemptions and deductions as
    |
0017|     are contained in the Gross Receipts and Compensating Tax Act
    |
0018|     then in effect and as it may be amended from time to time,
    |
0019|     <u>except as otherwise provided in the County Local Option Gross
</u>    |
<u></u>0020| <u>    Receipts Taxes Act</u>.
    |
0021|               B.  The governing body of any county imposing a tax
    |
0022|     <s>[under]</s> <u>authorized by</u> the County Local Option Gross
    |
0023|     Receipts Taxes Act shall impose the tax by adopting the model
    |
0024|     ordinance with respect to the tax furnished to the county by
    |
0025|     the department.  An ordinance that does not conform
    |
<center>- 17 -</center>

0001|     substantially to the model ordinance of the department is not
    |
0002|     valid."
    |
0003|          Section 11.  A new section of the County Local Option
    |
0004|     Gross Receipts Taxes Act, Section 7-20E-5.1 NMSA 1978, is
    |
0005|     enacted to read:
    |
0006|          "7-20E-5.1.  [<u>NEW MATERIAL</u>] SPECIFIC ADDITIONS.--A tax
    |
0007|     authorized by the provisions of the County Local Option Gross
    |
0008|     Receipts Taxes Act and imposed shall be imposed on the gross
    |
0009|     receipts arising from: 
    |
0010|               A.  sale other than sale for resale of prescription
    |
0011|     drugs; and
    |
0012|               B.  sale or lease of prosthetic devices when made
    |
0013|     by a licensed practitioner to the user or consumer of the
    |
0014|     device and sale or lease of prosthetic devices made by a
    |
0015|     person on the basis of written order written by a licensed
    |
0016|     practitioner ordering the device for a specific human being."
    |
0017|          Section 12.  Section 7-20F-4 NMSA 1978 (being Laws 1993,
    |
0018|     Chapter 303, Section 4) is amended to read:
    |
0019|          "7-20F-4.  ORDINANCE SHALL CONFORM TO CERTAIN PROVISIONS
    |
0020|     OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT AND
    |
0021|     REQUIREMENTS OF THE DEPARTMENT.--
    |
0022|               A.  Any ordinance imposing the county correctional
    |
0023|     facility gross receipts tax shall adopt by reference the same
    |
0024|     definitions and the same provisions relating to exemptions and
    |
0025|     deductions as are contained in the Gross Receipts and
    |
<center>- 18 -</center>

0001|     Compensating Tax Act then in effect and as it may be amended
    |
0002|     from time to time, <u>except as otherwise provided in the County
</u>    |
<u></u>0003| <u>    Correctional Facility Gross Receipts Tax Act</u>.
    |
0004|               B.  The governing body of any county imposing the
    |
0005|     county correctional facility gross receipts tax shall adopt
    |
0006|     the model ordinances furnished to the county by the
    |
0007|     department."
    |
0008|          Section 13.  A new section of the County Correctional
    |
0009|     Facility Gross Receipts Tax Act, Section 7-20F-6.1 NMSA 1978,
    |
0010|     is enacted to read:
    |
0011|          "7-20F-6.1.  [<u>NEW MATERIAL</u>] SPECIFIC ADDITIONS.--A tax
    |
0012|     authorized by the provisions of the County Correctional
    |
0013|     Facility Gross Receipts Tax Act and imposed shall be imposed
    |
0014|     on the gross receipts arising from:
    |
0015|               A.  sale other than sale for resale of prescription
    |
0016|     drugs; and
    |
0017|               B.  sale or lease of prosthetic devices when made
    |
0018|     by a licensed practitioner to the user or consumer of the
    |
0019|     device and sale or lease of prosthetic devices made by a
    |
0020|     person on the basis of written order written by a licensed
    |
0021|     practitioner ordering the device for a specific human being."
    |
0022|          Section 14.  REPEAL.--Section 7-2-18.3 NMSA 1978 (being
    |
0023|     Laws 1994, Chapter 5, Section 17) is repealed.
    |
0024|          Section 15.  APPLICABILITY.--The provisions of Section 14
    |
0025|     of this act are applicable to taxable years beginning on or
    |
<center>- 19 -</center>

0001|     after January 1, 1999.
    |
0002|          Section 16.  EXISTING ORDINANCES OR RESOLUTIONS.--Every
    |
0003|     municipal ordinance or county resolution in effect on July 1,
    |
0004|     1998, imposing a local option gross receipts tax is deemed
    |
0005|     hereby to include imposition of the tax on gross receipts from
    |
0006|     selling or leasing prescription drugs or prosthetic devices on
    |
0007|     or after July 1, 1998.
    |
0008|          Section 17.  EFFECTIVE DATE.--
    |
0009|               A.  The effective date of the provisions of Section
    |
0010|     1 of this act is February 1, 1999.
    |
0011|               B.  The effective date of the provisions of
    |
0012|     Sections 2 through 13 of this act is January 1, 1999.
    |
0013|                              
    |