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