0001| HOUSE BILL 345 | 0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0003| INTRODUCED BY | 0004| J. "ANDY" KISSNER | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| AN ACT | 0011| RELATING TO TAXATION; ALLOWING GROSS RECEIPTS AND INTERSTATE | 0012| TELECOMMUNICATIONS GROSS RECEIPTS DEDUCTIONS FOR RECEIPTS FROM | 0013| PROVIDING CERTAIN INTERNET SERVICES AND ALLOWING GROSS | 0014| RECEIPTS DEDUCTIONS FOR RECEIPTS FROM CERTAIN WORLD WIDE WEB | 0015| ACTIVITIES; AMENDING AND ENACTING SECTIONS OF THE NMSA. | 0016| | 0017| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0018| Section 1. A new section of the Gross Receipts and | 0019| Compensating Tax Act is enacted to read: | 0020| "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--INTERNET | 0021| SERVICES.--During the period July 1, 1998 through June 30, | 0022| 2000, receipts from providing leased telephone lines, | 0023| telecommunications services, internet services, internet | 0024| access services or computer programming that will be used by | 0025| other persons in providing internet access and related | - 1 - 0001| services to the final user may be deducted from gross receipts | 0002| if the sale is made to a person who is subject to the gross | 0003| receipts tax or the interstate telecommunications gross | 0004| receipts tax." | 0005| Section 2. A new section of the Gross Receipts and | 0006| Compensating Tax Act is enacted to read: | 0007| "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--HOSTING | 0008| WORLD WIDE WEB SITES.--Receipts from hosting world wide web | 0009| sites may be deducted from gross receipts. For purposes of | 0010| this section, "hosting" means storing information on computers | 0011| attached to the internet." | 0012| Section 3. A new section of the Gross Receipts and | 0013| Compensating Tax Act is enacted to read: | 0014| "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--SALES | 0015| THROUGH WORLD WIDE WEB SITES.--Receipts of any person derived | 0016| from the sale of a service or property made through a world | 0017| wide web site to a person with a billing address outside New | 0018| Mexico may be deducted from gross receipts." | 0019| Section 4. Section 7-9-3 NMSA 1978 (being Laws 1978, | 0020| Chapter 46, Section 1, as amended) is amended to read: | 0021| "7-9-3. DEFINITIONS.--As used in the Gross Receipts and | 0022| Compensating Tax Act: | 0023| A. "department" means the taxation and revenue | 0024| department, the secretary of taxation and revenue or any | 0025| employee of the department exercising authority lawfully | - 2 - 0001| delegated to that employee by the secretary; | 0002| B. "buying" or "selling" means any transfer of | 0003| property for consideration or any performance of service for | 0004| consideration; | 0005| C. "construction" means building, altering, | 0006| repairing or demolishing in the ordinary course of business | 0007| any: | 0008| (1) road, highway, bridge, parking area or | 0009| related project; | 0010| (2) building, stadium or other structure; | 0011| (3) airport, subway or similar facility; | 0012| (4) park, trail, athletic field, golf course | 0013| or similar facility; | 0014| (5) dam, reservoir, canal, ditch or similar | 0015| facility; | 0016| (6) sewerage or water treatment facility, | 0017| power generating plant, pump station, natural gas compressing | 0018| station, gas processing plant, coal gasification plant, | 0019| refinery, distillery or similar facility; | 0020| (7) sewerage, water, gas or other pipeline; | 0021| (8) transmission line; | 0022| (9) radio, television or other tower; | 0023| (10) water, oil or other storage tank; | 0024| (11) shaft, tunnel or other mining | 0025| appurtenance; | - 3 - 0001| (12) microwave station or similar facility; | 0002| or | 0003| (13) similar work; | 0004| "construction" also means: | 0005| (14) leveling or clearing land; | 0006| (15) excavating earth; | 0007| (16) drilling wells of any type, including | 0008| seismograph shot holes or core drilling; or | 0009| (17) similar work; | 0010| D. "financial corporation" means any savings and | 0011| loan association or any incorporated savings and loan company, | 0012| trust company, mortgage banking company, consumer finance | 0013| company or other financial corporation; | 0014| E. "engaging in business" means carrying on or | 0015| causing to be carried on any activity with the purpose of | 0016| direct or indirect benefit, except that "engaging in | 0017| business" does not include having a world wide web site as a | 0018| third-party content provider on a computer physically located | 0019| in New Mexico but owned by another person; | 0020| F. "gross receipts" means the total amount of | 0021| money or the value of other consideration received from | 0022| selling property in New Mexico, from leasing property employed | 0023| in New Mexico, from selling services performed outside New | 0024| Mexico the product of which is initially used in New Mexico or | 0025| from performing services in New Mexico. In an exchange in | - 4 - 0001| which the money or other consideration received does not | 0002| represent the value of the property or service exchanged, | 0003| "gross receipts" means the reasonable value of the property or | 0004| service exchanged. | 0005| (1) "Gross receipts" includes: | 0006| (a) any receipts from sales of tangible | 0007| personal property handled on consignment; | 0008| (b) the total commissions or fees | 0009| derived from the business of buying, selling or promoting the | 0010| purchase, sale or leasing, as an agent or broker on a | 0011| commission or fee basis, of any property, service, stock, bond | 0012| or security; | 0013| (c) amounts paid by members of any | 0014| cooperative association or similar organization for sales or | 0015| leases of personal property or performance of services by such | 0016| organization; and | 0017| (d) amounts received from transmitting | 0018| messages or conversations by persons providing telephone or | 0019| telegraph services. | 0020| (2) "Gross receipts" excludes: | 0021| (a) cash discounts allowed and taken; | 0022| (b) New Mexico gross receipts tax, | 0023| governmental gross receipts tax and leased vehicle gross | 0024| receipts tax payable on transactions for the reporting period; | 0025| (c) taxes imposed pursuant to the | - 5 - 0001| provisions of any local option gross receipts tax that is | 0002| payable on transactions for the reporting period; | 0003| (d) any gross receipts or sales taxes | 0004| imposed by an Indian nation, tribe or pueblo; provided that | 0005| the tax is approved, if approval is required by federal law or | 0006| regulation, by the secretary of the interior of the United | 0007| States; and provided further that the gross receipts or sales | 0008| tax imposed by the Indian nation, tribe or pueblo provides a | 0009| reciprocal exclusion for gross receipts, sales or gross | 0010| receipts-based excise taxes imposed by the state or its | 0011| political subdivisions; | 0012| (e) any type of time-price | 0013| differential; and | 0014| (f) amounts received solely on behalf | 0015| of another in a disclosed agency capacity. | 0016| (3) When the sale of property or service is | 0017| made under any type of charge, conditional or time-sales | 0018| contract or the leasing of property is made under a leasing | 0019| contract, the seller or lessor may elect to treat all | 0020| receipts, excluding any type of time-price differential, under | 0021| such contracts as gross receipts as and when the payments are | 0022| actually received. If the seller or lessor transfers his | 0023| interest in any such contract to a third person, the seller or | 0024| lessor shall pay the gross receipts tax upon the full sale or | 0025| leasing contract amount, excluding any type of time-price | - 6 - 0001| differential; | 0002| G. "manufacturing" means combining or processing | 0003| components or materials to increase their value for sale in | 0004| the ordinary course of business, but does not include | 0005| construction; | 0006| H. "person" means: | 0007| (1) any individual, estate, trust, receiver, | 0008| cooperative association, club, corporation, company, firm, | 0009| partnership, limited liability company, limited liability | 0010| partnership, joint venture, syndicate or other entity, | 0011| including any gas, water or electric utility owned or operated | 0012| by a county, municipality or other political subdivision of | 0013| the state; or | 0014| (2) any national, federal, state, Indian or | 0015| other governmental unit or subdivision, or any agency, | 0016| department or instrumentality of any of the foregoing; | 0017| I. "property" means real property, tangible | 0018| personal property, licenses, franchises, patents, trademarks | 0019| and copyrights. Tangible personal property includes | 0020| electricity and manufactured homes; | 0021| J. "leasing" means any arrangement whereby, for a | 0022| consideration, property is employed for or by ~~[any]~~ a | 0023| person other than the owner of the property, except that the | 0024| granting of a license to use property is the sale of a license | 0025| and not a lease; | - 7 - 0001| K. "service" means all activities engaged in for | 0002| other persons for a consideration, which activities involve | 0003| predominantly the performance of a service as distinguished | 0004| from selling or leasing property. "Service" includes | 0005| activities performed by a person for its members or | 0006| shareholders. In determining what is a service, the intended | 0007| use, principal objective or ultimate objective of the | 0008| contracting parties shall not be controlling. "Service" | 0009| includes construction activities and all tangible personal | 0010| property that will become an ingredient or component part of a | 0011| construction project. Such tangible personal property retains | 0012| its character as tangible personal property until it is | 0013| installed as an ingredient or component part of a construction | 0014| project in New Mexico. However, sales of tangible personal | 0015| property that will become an ingredient or component part of a | 0016| construction project to persons engaged in the construction | 0017| business are sales of tangible personal property; | 0018| L. "use" or "using" includes use, consumption or | 0019| storage other than storage for subsequent sale in the ordinary | 0020| course of business or for use solely outside this state; | 0021| M. "secretary" means the secretary of taxation and | 0022| revenue or the secretary's delegate; | 0023| N. "manufactured home" means a moveable or | 0024| portable housing structure for human occupancy that exceeds | 0025| either a width of eight feet or a length of forty feet | - 8 - 0001| constructed to be towed on its own chassis and designed to be | 0002| installed with or without a permanent foundation; | 0003| O. "initial use" or "initially used" means the | 0004| first employment for the intended purpose and does not include | 0005| the following activities: | 0006| (1) observation of tests conducted by the | 0007| performer of services; | 0008| (2) participation in progress reviews, | 0009| briefings, consultations and conferences conducted by the | 0010| performer of services; | 0011| (3) review of preliminary drafts, drawings | 0012| and other materials prepared by the performer of the services; | 0013| (4) inspection of preliminary prototypes | 0014| developed by the performer of services; or | 0015| (5) similar activities; | 0016| P. "research and development services" means any | 0017| activity engaged in for other persons for consideration, for | 0018| one or more of the following purposes: | 0019| (1) advancing basic knowledge in a recognized | 0020| field of natural science; | 0021| (2) advancing technology in a field of | 0022| technical endeavor; | 0023| (3) the development of a new or improved | 0024| product, process or system with new or improved function, | 0025| performance, reliability or quality, whether or not the new or | - 9 - 0001| improved product, process or system is offered for sale, lease | 0002| or other transfer; | 0003| (4) the development of new uses or | 0004| applications for an existing product, process or system, | 0005| whether or not the new use or application is offered as the | 0006| rationale for purchase, lease or other transfer of the | 0007| product, process or system; | 0008| (5) analytical or survey activities | 0009| incorporating technology review, application, trade-off study, | 0010| modeling, simulation, conceptual design or similar activities, | 0011| whether or not offered for sale, lease or other transfer; or | 0012| (6) the design and development of prototypes | 0013| or the integration of systems incorporating advances, | 0014| developments or improvements included in Paragraphs (1) | 0015| through (5) of this subsection; and | 0016| Q. "local option gross receipts tax" means a tax | 0017| authorized to be imposed by a county or municipality upon the | 0018| taxpayer's gross receipts and required to be collected by the | 0019| department at the same time and in the same manner as the | 0020| gross receipts tax; "local option gross receipts tax" includes | 0021| the taxes imposed pursuant to the Municipal Local Option Gross | 0022| Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax | 0023| Act, Special Municipal Gross Receipts Tax Act, County Local | 0024| Option Gross Receipts Taxes Act, Local Hospital Gross Receipts | 0025| Tax Act, County Correctional Facility Gross Receipts Tax Act | - 10 - 0001| and such other acts as may be enacted authorizing counties or | 0002| municipalities to impose taxes on gross receipts, which taxes | 0003| are to be collected by the department." | 0004| Section 5. Section 7-9-10 NMSA 1978 (being Laws 1966, | 0005| Chapter 47, Section 10, as amended) is amended to read: | 0006| "7-9-10. AGENTS FOR COLLECTION OF COMPENSATING TAX-- | 0007| DUTIES.-- | 0008| A. Every person carrying on or causing to be | 0009| carried on any activity within this state attempting to | 0010| exploit New Mexico's markets who sells property or sells | 0011| property and service for use in this state and who is not | 0012| subject to the gross receipts tax on receipts from these sales | 0013| shall collect the compensating tax from the buyer and pay the | 0014| tax collected to the department. "Activity", for the purposes | 0015| of this section, includes, but is not limited to, engaging in | 0016| any of the following in New Mexico: maintaining an office or | 0017| other place of business, soliciting orders through employees | 0018| or independent contractors, soliciting orders through | 0019| advertisements placed in newspapers or magazines published in | 0020| New Mexico or advertisements broadcast by New Mexico radio or | 0021| television stations, soliciting orders through programs | 0022| broadcast by New Mexico radio or television stations or | 0023| transmitted by cable systems in New Mexico, canvassing, | 0024| demonstrating, collecting money, warehousing or storing | 0025| merchandise or delivering or distributing products as a | - 11 - 0001| consequence of an advertising or other sales program directed | 0002| at potential customers, but "activity" does not include | 0003| having a world wide web site as a third-party provider on a | 0004| computer physically located in New Mexico but owned by another | 0005| person. | 0006| B. To insure orderly and efficient collection of | 0007| the public revenue, if any application of this section is held | 0008| invalid, the section's application to other situations or | 0009| persons shall not be affected." | 0010| Section 6. Section 7-9C-7 NMSA 1978 (being Laws 1992, | 0011| Chapter 50, Section 7 and also Laws 1992, Chapter 67, Section | 0012| 7) is amended to read: | 0013| "7-9C-7. DEDUCTION--SALE OF A SERVICE FOR RESALE.-- | 0014| A. Receipts from providing an interstate | 0015| telecommunications service in this state that will be used by | 0016| other persons in providing telephone or telegraph services to | 0017| the final user may be deducted from interstate | 0018| telecommunications gross receipts if the sale is made to a | 0019| person who is subject to the interstate telecommunications | 0020| gross receipts tax or to the gross receipts tax or the | 0021| compensating tax. | 0022| B. Receipts during the period July 1, 1998 | 0023| through June 30, 2000 from providing leased telephone lines, | 0024| telecommunications services, internet access services or | 0025| computer programming that will be used by other persons in | - 12 - 0001| providing internet access and related services to the final | 0002| user may be deducted from interstate telecommunications gross | 0003| receipts if the sale is made to a person who is subject to the | 0004| interstate telecommunications gross receipts tax, the gross | 0005| receipts tax or the compensating tax." | 0006| Section 7. EFFECTIVE DATE.--The effective date of the | 0007| provisions of this act is July 1, 1998. | 0008| |