BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  2

DATE:  February 27, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: SJM - 72

SPONSOR: Senator Papen

BILL SHORT TITLE: TRD to Study Alternatives to the Paper NTTC System

CONFLICTS, DUPLICATES, COMPANIONS: The memorial references SB-714 as providing a two-year grace period that can be used to allow TRD to study automating the NTTC system.

DESCRIPTION: This memorial directs the Department to undertake a “serious” study of the non-taxable transaction certificate system and recommend improvements, with particular emphasis on using available technology. The Department is directed to report its findings and recommendations to Revenue Stabilization and Tax Policy Committee by December 1, 2001.

EFFECTIVE DATE: not stated – 90 days after adjournment (June 17)

FISCAL IMPACT: none

ADMINISTRATIVE IMPACT: The Department welcomes this memorial. Already the Department has committed to simplifying the paper system, reducing the number of separate NTTCs from 15 to perhaps seven. A number of auditors and revenue processors, as well as information systems personnel, have commented that the NTTC system could be completely automated as a stand-alone website. Issuers could post the NTTC to the account of the vendor. Periodically, the vendor could download electronic copies of NTTCs or upload requests for NTTCs from purchasers who had promised delivery of an NTTC, but failed in this commitment. This technology could be developed for significantly less than the $200 or $300 thousand the last recall and reissue cost in 1991.

TECHNICAL ISSUES: It will undoubtedly take some money thoroughly revamp this system. There are significant security issues with any automated approach and computer server capacity and speed will have to be significantly upgraded 

OTHER IMPACTS AND ISSUES:

Certificate Type	

Nature of Issuer and Transaction	
Statutory
 Reference	
Type 1	By a manufacturer for the purchase of tangible personal property which will become an ingredient or component part of the product being manufactured.	Section 7-9-45 NMSA 1978	
Type 2 	By a wholesaler or retailer for purchase of tangible personal property for resale in the ordinary course of business.	Section 7‑9‑47 NMSA 1978	
Type 3 	By a lessee for the lease of tangible personal property for subsequent lease in the ordinary course of business.	Section 7-9-50 NMSA 1978	
Type 4 	By a lessor for the purchase of tangible personal property for subsequent lease in the ordinary course of business.	Section 7-9-49 NMSA 1978	
Type 5 	By a service contractor for the purchase of a service for resale if (1) the value of the service purchased is stated separately in the charge upon subsequent sale of the service; (2) the subsequent sale by the buyer is in the ordinary course of business; and (3) the subsequent sale of the service is taxable under the Gross Receipts and Compensating Tax Act.	Section 7-9-48 NMSA 1978	
Type 6 	By a construction contractor for the purchase of construction materials which will be incorporated as an ingredient or component part of a construction project which is subject to the gross receipts tax.	Section 7-9-51 NMSA 1978	
Type 7 	By a construction contractor for the purchase of construction services to be performed on a construction project which is subject to the gross receipts tax.	Section 7-9-52 NMSA 1978	
Type 8 	For the purchase of service for export when initial use of the product of the service will be made outside New Mexico.	Section 7-9-57 NMSA 1978	
Type 9 	By government agencies and 501(c)(3) organizations for the purchase of tangible personal property only. These certificates may not be used for the purchase of services or for the lease of property. 501(c)(3) organizations may not use these certificates to purchase construction materials to be used in construction projects. 	7-9-54 NMSA 1978 and
7-9-60 NMSA 1978	
Type 13 	By manufacturers for the purchase of services performed directly upon tangible personal property they are in the business of manufacturing or upon ingredient or component parts thereof.	Section 7-9-75 NMSA 1978	
Type 14 	By state and federal credit unions for purchase of tangible personal property.	Federal law preempts taxation of federal credit unions. State law enabling state credit unions include a provision that they be treated the same as federal credit unions for taxation.	
Type 15 	By qualified federal contractors on a contract by contract basis.		
Type OSB 	By an out-of-state purchaser of tangible personal property if the tangible personal property for resale in the ordinary course of business. This certificate differs from a type 2 certificate in that the purchaser need not be registered with the Department.	Section 7‑9‑47 NMSA 1978	
Filmmakers	By qualified filmmakers for the purchase or lease of tangible personal property or purchase of specified services integral to producing a film.	Section 7-9-86 NMSA 1978	
Spaceport 	The Department will develop a spaceport deduction certificate if required.	Section 7-9-54.2 NMSA 1978