0001| | 0002| SENATE BILL 54 | 0003| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0004| INTRODUCED BY | 0005| MANNY M. ARAGON | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO TAXATION; PROVIDING A DEDUCTION FROM GROSS | 0013| RECEIPTS AND GOVERNMENTAL GROSS RECEIPTS FOR RECEIPTS FROM THE | 0014| SALE OF PRESCRIPTION DRUGS; ABOLISHING THE PRESCRIPTION DRUG | 0015| TAX CREDIT; AMENDING, REPEALING AND ENACTING SECTIONS OF THE | 0016| NMSA 1978. | 0017| | 0018| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0019| Section 1. 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 | - 1 - 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; | - 2 - 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; | 0017| F. "gross receipts" means the total amount of | 0018| money or the value of other consideration received from | 0019| selling property in New Mexico, from leasing property employed | 0020| in New Mexico, from selling services performed outside New | 0021| Mexico the product of which is initially used in New Mexico or | 0022| from performing services in New Mexico. In an exchange in | 0023| which the money or other consideration received does not | 0024| represent the value of the property or service exchanged, | 0025| "gross receipts" means the reasonable value of the property or | - 3 - 0001| service exchanged. | 0002| (1) "Gross receipts" includes: | 0003| (a) any receipts from sales of tangible | 0004| personal property handled on consignment; | 0005| (b) the total commissions or fees | 0006| derived from the business of buying, selling or promoting the | 0007| purchase, sale or leasing, as an agent or broker on a | 0008| commission or fee basis, of any property, service, stock, bond | 0009| or security; | 0010| (c) amounts paid by members of any | 0011| cooperative association or similar organization for sales or | 0012| leases of personal property or performance of services by such | 0013| organization; and | 0014| (d) amounts received from transmitting | 0015| messages or conversations by persons providing telephone or | 0016| telegraph services. | 0017| (2) "Gross receipts" excludes: | 0018| (a) cash discounts allowed and taken; | 0019| (b) New Mexico gross receipts tax, | 0020| governmental gross receipts tax and leased vehicle gross | 0021| receipts tax payable on transactions for the reporting period; | 0022| (c) taxes imposed pursuant to the | 0023| provisions of any local option gross receipts tax that is | 0024| payable on transactions for the reporting period; | 0025| (d) any gross receipts or sales taxes | - 4 - 0001| imposed by an Indian nation, tribe or pueblo provided that the | 0002| tax is approved, if approval is required by federal law or | 0003| regulation, by the secretary of the interior of the United | 0004| States and provided further that the gross receipts or sales | 0005| tax imposed by the Indian nation, tribe or pueblo provides a | 0006| reciprocal exclusion for gross receipts, sales or gross | 0007| receipts-based excise taxes imposed by the state or its | 0008| political subdivisions; | 0009| (e) any type of time-price | 0010| differential; and | 0011| (f) amounts received solely on behalf | 0012| of another in a disclosed agency capacity. | 0013| (3) When the sale of property or service is | 0014| made under any type of charge, conditional or time-sales | 0015| contract or the leasing of property is made under a leasing | 0016| contract, the seller or lessor may elect to treat all | 0017| receipts, excluding any type of time-price differential, under | 0018| such contracts as gross receipts as and when the payments are | 0019| actually received. If the seller or lessor transfers his | 0020| interest in any such contract to a third person, the seller or | 0021| lessor shall pay the gross receipts tax upon the full sale or | 0022| leasing contract amount, excluding any type of time-price | 0023| differential; | 0024| G. "manufacturing" means combining or processing | 0025| components or materials to increase their value for sale in | - 5 - 0001| the ordinary course of business, but does not include | 0002| construction; | 0003| H. "person" means: | 0004| (1) any individual, estate, trust, receiver, | 0005| cooperative association, club, corporation, company, firm, | 0006| partnership, limited liability company, limited liability | 0007| partnership, joint venture, syndicate or other entity, | 0008| including any gas, water or electric utility owned or operated | 0009| by a county, municipality or other political subdivision of | 0010| the state; or | 0011| (2) any national, federal, state, Indian or | 0012| other governmental unit or subdivision, or any agency, | 0013| department or instrumentality of any of the foregoing; | 0014| I. "property" means real property, tangible | 0015| personal property, licenses, franchises, patents, trademarks | 0016| and copyrights. Tangible personal property includes | 0017| electricity and manufactured homes; | 0018| J. "leasing" means any arrangement whereby, for a | 0019| consideration, property is employed for or by any person other | 0020| than the owner of the property, except that the granting of a | 0021| license to use property is the sale of a license and not a | 0022| lease; | 0023| K. "service" means all activities engaged in for | 0024| other persons for a consideration, which activities involve | 0025| predominantly the performance of a service as distinguished | - 6 - 0001| from selling or leasing property. "Service" includes | 0002| activities performed by a person for its members or | 0003| shareholders. In determining what is a service, the intended | 0004| use, principal objective or ultimate objective of the | 0005| contracting parties shall not be controlling. "Service" | 0006| includes construction activities and all tangible personal | 0007| property that will become an ingredient or component part of a | 0008| construction project. Such tangible personal property retains | 0009| its character as tangible personal property until it is | 0010| installed as an ingredient or component part of a construction | 0011| project in New Mexico. However, sales of tangible personal | 0012| property that will become an ingredient or component part of a | 0013| construction project to persons engaged in the construction | 0014| business are sales of tangible personal property; | 0015| L. "use" or "using" includes use, consumption or | 0016| storage other than storage for subsequent sale in the ordinary | 0017| course of business or for use solely outside this state; | 0018| M. "secretary" means the secretary of taxation and | 0019| revenue or the secretary's delegate; | 0020| N. "manufactured home" means a moveable or | 0021| portable housing structure for human occupancy that exceeds | 0022| either a width of eight feet or a length of forty feet | 0023| constructed to be towed on its own chassis and designed to be | 0024| installed with or without a permanent foundation; | 0025| O. "initial use" or "initially used" means the | - 7 - 0001| first employment for the intended purpose and does not include | 0002| the following activities: | 0003| (1) observation of tests conducted by the | 0004| performer of services; | 0005| (2) participation in progress reviews, | 0006| briefings, consultations and conferences conducted by the | 0007| performer of services; | 0008| (3) review of preliminary drafts, drawings | 0009| and other materials prepared by the performer of the services; | 0010| (4) inspection of preliminary prototypes | 0011| developed by the performer of services; or | 0012| (5) similar activities; | 0013| P. "research and development services" means any | 0014| activity engaged in for other persons for consideration, for | 0015| one or more of the following purposes: | 0016| (1) advancing basic knowledge in a recognized | 0017| field of natural science; | 0018| (2) advancing technology in a field of | 0019| technical endeavor; | 0020| (3) the development of a new or improved | 0021| product, process or system with new or improved function, | 0022| performance, reliability or quality, whether or not the new or | 0023| improved product, process or system is offered for sale, lease | 0024| or other transfer; | 0025| (4) the development of new uses or | - 8 - 0001| applications for an existing product, process or system, | 0002| whether or not the new use or application is offered as the | 0003| rationale for purchase, lease or other transfer of the | 0004| product, process or system; | 0005| (5) analytical or survey activities | 0006| incorporating technology review, application, trade-off study, | 0007| modeling, simulation, conceptual design or similar activities, | 0008| whether or not offered for sale, lease or other transfer; or | 0009| (6) the design and development of prototypes | 0010| or the integration of systems incorporating advances, | 0011| developments or improvements included in Paragraphs (1) | 0012| through (5) of this subsection; ~~[and]~~ | 0013| Q. "local option gross receipts tax" means a tax | 0014| authorized to be imposed by a county or municipality upon the | 0015| taxpayer's gross receipts and required to be collected by the | 0016| department at the same time and in the same manner as the | 0017| gross receipts tax; "local option gross receipts tax" includes | 0018| the taxes imposed pursuant to the Municipal Local Option Gross | 0019| Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax | 0020| Act, Special Municipal Gross Receipts Tax Act, County Local | 0021| Option Gross Receipts Taxes Act, Local Hospital Gross Receipts | 0022| Tax Act, County Correctional Facility Gross Receipts Tax Act | 0023| and such other acts as may be enacted authorizing counties or | 0024| municipalities to impose taxes on gross receipts, which taxes | 0025| are to be collected by the department; and | - 9 - 0001| R. "prescription drugs" means insulin and | 0002| substances that are: | 0003| (1) dispensed by or under the supervision of | 0004| a licensed pharmacist or by a physician or other person | 0005| authorized under state law to do so; | 0006| (2) prescribed for a specified person by a | 0007| person authorized under state law to prescribe the substance; | 0008| and | 0009| (3) subject to the restrictions on sale | 0010| contained in Subparagraph 1 of Subsection (b) of 21 USCA | 0011| 353." | 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--PRESCRIPTION DRUGS.--Receipts | 0016| from the sale of prescription drugs may be deducted from gross | 0017| receipts and governmental gross receipts." | 0018| Section 3. REPEAL.--Section 7-2-18.3 NMSA 1978 (being | 0019| Laws 1994, Chapter 5, Section 17) is repealed. | 0020| Section 4. APPLICABILITY.--The provisions of Section 3 | 0021| of this act apply to taxable years beginning on or after | 0022| January 1, 1999. | 0023| Section 5. EFFECTIVE DATE.--The effective date of the | 0024| provisions of this act is January 1, 1999. | 0025| | - 10 -