0001| SENATE BILL 53 | 0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0003| INTRODUCED BY | 0004| MANNY M. ARAGON | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| AN ACT | 0011| RELATING TO TAXATION; PROVIDING A DEDUCTION FROM GROSS | 0012| RECEIPTS AND GOVERNMENTAL GROSS RECEIPTS FROM CERTAIN SALES OF | 0013| FOOD; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978. | 0014| | 0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0016| Section 1. Section 7-9-3 NMSA 1978 (being Laws 1978, | 0017| Chapter 46, Section 1, as amended) is amended to read: | 0018| "7-9-3. DEFINITIONS.--As used in the Gross Receipts and | 0019| Compensating Tax Act: | 0020| A. "department" means the taxation and revenue | 0021| department, the secretary of taxation and revenue or any | 0022| employee of the department exercising authority lawfully | 0023| delegated to that employee by the secretary; | 0024| B. "buying" or "selling" means any transfer of | 0025| property for consideration or any performance of service for | - 1 - 0001| consideration; | 0002| C. "construction" means building, altering, | 0003| repairing or demolishing in the ordinary course of business | 0004| any: | 0005| (1) road, highway, bridge, parking area or | 0006| related project; | 0007| (2) building, stadium or other structure; | 0008| (3) airport, subway or similar facility; | 0009| (4) park, trail, athletic field, golf course | 0010| or similar facility; | 0011| (5) dam, reservoir, canal, ditch or similar | 0012| facility; | 0013| (6) sewerage or water treatment facility, | 0014| power generating plant, pump station, natural gas compressing | 0015| station, gas processing plant, coal gasification plant, | 0016| refinery, distillery or similar facility; | 0017| (7) sewerage, water, gas or other pipeline; | 0018| (8) transmission line; | 0019| (9) radio, television or other tower; | 0020| (10) water, oil or other storage tank; | 0021| (11) shaft, tunnel or other mining | 0022| appurtenance; | 0023| (12) microwave station or similar facility; | 0024| or | 0025| (13) similar work; | - 2 - 0001| "construction" also means: | 0002| (14) leveling or clearing land; | 0003| (15) excavating earth; | 0004| (16) drilling wells of any type, including | 0005| seismograph shot holes or core drilling; or | 0006| (17) similar work; | 0007| D. "financial corporation" means any savings and | 0008| loan association or any incorporated savings and loan company, | 0009| trust company, mortgage banking company, consumer finance | 0010| company or other financial corporation; | 0011| E. "engaging in business" means carrying on or | 0012| causing to be carried on any activity with the purpose of | 0013| direct or indirect benefit; | 0014| F. "gross receipts" means the total amount of | 0015| money or the value of other consideration received from | 0016| selling property in New Mexico, from leasing property employed | 0017| in New Mexico, from selling services performed outside New | 0018| Mexico the product of which is initially used in New Mexico or | 0019| from performing services in New Mexico. In an exchange in | 0020| which the money or other consideration received does not | 0021| represent the value of the property or service exchanged, | 0022| "gross receipts" means the reasonable value of the property or | 0023| service exchanged. | 0024| (1) "Gross receipts" includes: | 0025| (a) any receipts from sales of tangible | - 3 - 0001| personal property handled on consignment; | 0002| (b) the total commissions or fees | 0003| derived from the business of buying, selling or promoting the | 0004| purchase, sale or leasing, as an agent or broker on a | 0005| commission or fee basis, of any property, service, stock, bond | 0006| or security; | 0007| (c) amounts paid by members of any | 0008| cooperative association or similar organization for sales or | 0009| leases of personal property or performance of services by such | 0010| organization; and | 0011| (d) amounts received from transmitting | 0012| messages or conversations by persons providing telephone or | 0013| telegraph services. | 0014| (2) "Gross receipts" excludes: | 0015| (a) cash discounts allowed and taken; | 0016| (b) New Mexico gross receipts tax, | 0017| governmental gross receipts tax and leased vehicle gross | 0018| receipts tax payable on transactions for the reporting period; | 0019| (c) taxes imposed pursuant to the | 0020| provisions of any local option gross receipts tax that is | 0021| payable on transactions for the reporting period; | 0022| (d) any gross receipts or sales taxes | 0023| imposed by an Indian nation, tribe or pueblo; provided that | 0024| the tax is approved, if approval is required by federal law or | 0025| regulation, by the secretary of the interior of the United | - 4 - 0001| States, and; provided further that the gross receipts or sales | 0002| tax imposed by the Indian nation, tribe or pueblo provides a | 0003| reciprocal exclusion for gross receipts, sales or gross | 0004| receipts-based excise taxes imposed by the state or its | 0005| political subdivisions; | 0006| (e) any type of time-price | 0007| differential; and | 0008| (f) amounts received solely on behalf | 0009| of another in a disclosed agency capacity. | 0010| (3) When the sale of property or service is | 0011| made under any type of charge, conditional or time-sales | 0012| contract or the leasing of property is made under a leasing | 0013| contract, the seller or lessor may elect to treat all | 0014| receipts, excluding any type of time-price differential, under | 0015| such contracts as gross receipts as and when the payments are | 0016| actually received. If the seller or lessor transfers his | 0017| interest in any such contract to a third person, the seller or | 0018| lessor shall pay the gross receipts tax upon the full sale or | 0019| leasing contract amount, excluding any type of time-price | 0020| differential; | 0021| G. "manufacturing" means combining or processing | 0022| components or materials to increase their value for sale in | 0023| the ordinary course of business, but does not include | 0024| construction; | 0025| H. "person" means: | - 5 - 0001| (1) any individual, estate, trust, receiver, | 0002| cooperative association, club, corporation, company, firm, | 0003| partnership, limited liability company, limited liability | 0004| partnership, joint venture, syndicate or other entity, | 0005| including any gas, water or electric utility owned or operated | 0006| by a county, municipality or other political subdivision of | 0007| the state; or | 0008| (2) any national, federal, state, Indian or | 0009| other governmental unit or subdivision, or any agency, | 0010| department or instrumentality of any of the foregoing; | 0011| I. "property" means real property, tangible | 0012| personal property, licenses, franchises, patents, trademarks | 0013| and copyrights. Tangible personal property includes | 0014| electricity and manufactured homes; | 0015| J. "leasing" means any arrangement whereby, for a | 0016| consideration, property is employed for or by any person other | 0017| than the owner of the property, except that the granting of a | 0018| license to use property is the sale of a license and not a | 0019| lease; | 0020| K. "service" means all activities engaged in for | 0021| other persons for a consideration, which activities involve | 0022| predominantly the performance of a service as distinguished | 0023| from selling or leasing property. "Service" includes | 0024| activities performed by a person for its members or | 0025| shareholders. In determining what is a service, the intended | - 6 - 0001| use, principal objective or ultimate objective of the | 0002| contracting parties shall not be controlling. "Service" | 0003| includes construction activities and all tangible personal | 0004| property that will become an ingredient or component part of a | 0005| construction project. Such tangible personal property retains | 0006| its character as tangible personal property until it is | 0007| installed as an ingredient or component part of a construction | 0008| project in New Mexico. However, sales of tangible personal | 0009| property that will become an ingredient or component part of a | 0010| construction project to persons engaged in the construction | 0011| business are sales of tangible personal property; | 0012| L. "use" or "using" includes use, consumption or | 0013| storage other than storage for subsequent sale in the ordinary | 0014| course of business or for use solely outside this state; | 0015| M. "secretary" means the secretary of taxation and | 0016| revenue or the secretary's delegate; | 0017| N. "manufactured home" means a moveable or | 0018| portable housing structure for human occupancy that exceeds | 0019| either a width of eight feet or a length of forty feet | 0020| constructed to be towed on its own chassis and designed to be | 0021| installed with or without a permanent foundation; | 0022| O. "initial use" or "initially used" means the | 0023| first employment for the intended purpose and does not include | 0024| the following activities: | 0025| (1) observation of tests conducted by the | - 7 - 0001| performer of services; | 0002| (2) participation in progress reviews, | 0003| briefings, consultations and conferences conducted by the | 0004| performer of services; | 0005| (3) review of preliminary drafts, drawings | 0006| and other materials prepared by the performer of the services; | 0007| (4) inspection of preliminary prototypes | 0008| developed by the performer of services; or | 0009| (5) similar activities; | 0010| P. "research and development services" means any | 0011| activity engaged in for other persons for consideration, for | 0012| one or more of the following purposes: | 0013| (1) advancing basic knowledge in a recognized | 0014| field of natural science; | 0015| (2) advancing technology in a field of | 0016| technical endeavor; | 0017| (3) the development of a new or improved | 0018| product, process or system with new or improved function, | 0019| performance, reliability or quality, whether or not the new or | 0020| improved product, process or system is offered for sale, lease | 0021| or other transfer; | 0022| (4) the development of new uses or | 0023| applications for an existing product, process or system, | 0024| whether or not the new use or application is offered as the | 0025| rationale for purchase, lease or other transfer of the | - 8 - 0001| product, process or system; | 0002| (5) analytical or survey activities | 0003| incorporating technology review, application, trade-off study, | 0004| modeling, simulation, conceptual design or similar activities, | 0005| whether or not offered for sale, lease or other transfer; or | 0006| (6) the design and development of prototypes | 0007| or the integration of systems incorporating advances, | 0008| developments or improvements included in Paragraphs (1) | 0009| through (5) of this subsection; ~~[and]~~ | 0010| Q. "local option gross receipts tax" means a tax | 0011| authorized to be imposed by a county or municipality upon the | 0012| taxpayer's gross receipts and required to be collected by the | 0013| department at the same time and in the same manner as the | 0014| gross receipts tax; "local option gross receipts tax" includes | 0015| the taxes imposed pursuant to the Municipal Local Option Gross | 0016| Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax | 0017| Act, Special Municipal Gross Receipts Tax Act, County Local | 0018| Option Gross Receipts Taxes Act, Local Hospital Gross Receipts | 0019| Tax Act, County Correctional Facility Gross Receipts Tax Act | 0020| and such other acts as may be enacted authorizing counties or | 0021| municipalities to impose taxes on gross receipts, which taxes | 0022| are to be collected by the department; | 0023| R. "food" means any food or food product for home | 0024| consumption except alcoholic beverages and tobacco and its | 0025| products; "food" also includes those hot foods or hot food | - 9 - 0001| products ready for immediate consumption that are included | 0002| under the definition of "food" for the federal food stamp | 0003| program pursuant to 7 U.S.C.A. Section 2012 (g); and | 0004| S. "food service establishment" means a | 0005| restaurant, cafe, snack bar, coffee shop, lunch counter, | 0006| cafeteria, delicatessen, dining room, dining car, drive-in, | 0007| concession stand, fast-food operation, street vendor, catering | 0008| service, room service, hotel, motel, rooming house, guest | 0009| ranch, club, bar, tavern or similar business at which food | 0010| suitable for immediate consumption is delivered in the | 0011| ordinary course of business." | 0012| Section 2. A new section of the Gross Receipts and | 0013| Compensating Tax Act is enacted to read: | 0014| "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX AND | 0015| GOVERNMENTAL GROSS RECEIPTS TAX--SALE OF FOOD.-- | 0016| A. Receipts from selling food other than at food | 0017| service establishments may be deducted from gross receipts and | 0018| governmental gross receipts under this section except for food | 0019| sold: | 0020| (1) for resale; | 0021| (2) to a manufacturer; | 0022| (3) to a governmental agency described in | 0023| Section 7-9-54 NMSA 1978; | 0024| (4) to an organization described in Section | 0025| 7-9-60 NMSA 1978; and | - 10 - 0001| (5) to a person engaged in the food service | 0002| business. | 0003| B. The deduction provided in this section is | 0004| available only to persons who: | 0005| (1) separately account for food receipts by | 0006| special departmental codes on cash register tapes, separate | 0007| cash registers or other methods that accurately separate this | 0008| deduction from other deductible and nondeductible receipts; | 0009| and | 0010| (2) properly complete and file a deduction | 0011| schedule for food receipts as required by the secretary." | 0012| Section 3. EFFECTIVE DATE.--The effective date of the | 0013| provisions of this act is July 1, 1998. | 0014| |