SENATE FINANCE COMMITTEE SUBSTITUTE FOR
SENATE BILL 496
53rd legislature - STATE OF NEW MEXICO - first session, 2017
AN ACT
RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE; ENACTING THE GROSS RECEIPTS TAX ON FOOD ACT; DISTRIBUTING THE REVENUE FROM THE TAX TO MUNICIPALITIES AND COUNTIES; ENDING THE HOLD HARMLESS DISTRIBUTION TO MUNICIPALITIES AND COUNTIES THAT OFFSET THE DEDUCTIONS FROM THE GROSS RECEIPTS FOR THE SALE OF FOOD AND HEALTH CARE PRACTITIONER SERVICES; REQUIRING A LOCAL GOVERNMENT THAT HAS IMPOSED A HOLD HARMLESS GROSS RECEIPTS TAX TO REPEAL ALL INCREMENTS OF THE TAX EFFECTIVE JULY 1, 2018; AMENDING AND REPEALING CERTAIN DEDUCTIONS AND CREDITS THAT CAN BE TAKEN AGAINST TAX LIABILITIES PURSUANT TO THE INCOME TAX ACT, CORPORATE INCOME AND FRANCHISE TAX ACT AND GROSS RECEIPTS AND COMPENSATING TAX ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 5 of this act may be cited as the "Gross Receipts Tax on Food Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Gross Receipts Tax on Food Act:
A. "engaging in business" means carrying on or causing to be carried on the selling of food at a retail food store with the purpose of direct or indirect benefit;
B. "food" means any food or food product for home consumption that meets the definition of food in 7 USCA 2012(k)(1) for purposes of the federal supplemental nutrition assistance program;
C. "food gross receipts" means the total amount of money or the value of other consideration received from selling food at a retail food store in New Mexico, or, if in an exchange in which the money or other consideration received does not represent the value of the food, "food gross receipts" means the reasonable value of the food. "Food gross receipts" excludes:
(1) cash discounts allowed and taken;
(2) gross receipts tax on food payable on transactions for the reporting period;
(3) gross receipts tax payable pursuant to the Gross Receipts and Compensating Tax Act on transactions for the reporting period;
(4) taxes imposed pursuant to the provisions of any local option gross receipts tax, as that term is defined in the Tax Administration Act, that is payable for the reporting period;
(5) a time-price differential; and
(6) any gross receipts or sales taxes imposed by an Indian nation, tribe or pueblo; provided that the tax is approved, if approval is required by federal law or regulation, by the United States secretary of the interior; and provided further that the gross receipts or sales tax imposed by the Indian nation, tribe or pueblo provides a reciprocal exclusion from gross receipts, sales or gross receipts-based excise taxes imposed by the state or its political subdivisions; and
D. "retail food store" means an establishment that sells food for home preparation and consumption and that meets the definition of retail food store in 7 USCA 2012(p)(1) for purposes of the federal supplemental nutrition assistance program, whether or not the establishment participates in the federal supplemental nutrition assistance program.
SECTION 3. [NEW MATERIAL] GROSS RECEIPTS TAX ON FOOD.--For the privilege of engaging in business, an excise tax of four percent of gross receipts on the sale of food at a retail food store is imposed on any person engaging in business in New Mexico. The tax imposed by this section may be cited as the "gross receipts tax on food".
SECTION 4. [NEW MATERIAL] EXEMPTIONS.--Exempted from the gross receipts tax on food are all receipts that are exempt from the gross receipts tax or may be deducted from gross receipts pursuant to the Gross Receipts and Compensating Tax Act except receipts that may be deducted pursuant to Section 7-9-92 NMSA 1978.
SECTION 5. [NEW MATERIAL] DATE PAYMENT DUE.--The tax imposed by the Gross Receipts Tax on Food Act is to be paid on or before the twenty-fifth day of the month following the month in which the taxable event occurs.
SECTION 6. Section 7-1-2 NMSA 1978 (being Laws 1965, Chapter 248, Section 2, as amended) is amended to read:
"7-1-2. APPLICABILITY.--The Tax Administration Act applies to and governs:
A. the administration and enforcement of the following taxes or tax acts as they now exist or may hereafter be amended:
(1) Income Tax Act;
(2) Withholding Tax Act;
(3) Venture Capital Investment Act;
(4) Gross Receipts and Compensating Tax Act and any state gross receipts tax;
(5) Liquor Excise Tax Act;
(6) Local Liquor Excise Tax Act;
(7) any municipal local option gross receipts tax;
(8) any county local option gross receipts tax;
(9) Special Fuels Supplier Tax Act;
(10) Gasoline Tax Act;
(11) petroleum products loading fee, which fee shall be considered a tax for the purpose of the Tax Administration Act;
(12) Alternative Fuel Tax Act;
(13) Cigarette Tax Act;
(14) Estate Tax Act;
(15) Railroad Car Company Tax Act;
(16) Investment Credit Act, rural job tax credit, Laboratory Partnership with Small Business Tax Credit Act, Technology Jobs and Research and Development Tax Credit Act, Film Production Tax Credit Act, Affordable Housing Tax Credit Act and high-wage jobs tax credit;
(17) Corporate Income and Franchise Tax Act;
(18) Uniform Division of Income for Tax Purposes Act;
(19) Multistate Tax Compact;
(20) Tobacco Products Tax Act; [and]
(21) the telecommunications relay service surcharge imposed by Section 63-9F-11 NMSA 1978, which surcharge shall be considered a tax for the purposes of the Tax Administration Act; and
(22) the Gross Receipts Tax on Food Act;
B. the administration and enforcement of the following taxes, surtaxes, advanced payments or tax acts as they now exist or may hereafter be amended:
(1) Resources Excise Tax Act;
(2) Severance Tax Act;
(3) any severance surtax;
(4) Oil and Gas Severance Tax Act;
(5) Oil and Gas Conservation Tax Act;
(6) Oil and Gas Emergency School Tax Act;
(7) Oil and Gas Ad Valorem Production Tax Act;
(8) Natural Gas Processors Tax Act;
(9) Oil and Gas Production Equipment Ad Valorem Tax Act;
(10) Copper Production Ad Valorem Tax Act;
(11) any advance payment required to be made by any act specified in this subsection, which advance payment shall be considered a tax for the purposes of the Tax Administration Act;
(12) Enhanced Oil Recovery Act;
(13) Natural Gas and Crude Oil Production Incentive Act; and
(14) intergovernmental production tax credit and intergovernmental production equipment tax credit;
C. the administration and enforcement of the following taxes, surcharges, fees or acts as they now exist or may hereafter be amended:
(1) Weight Distance Tax Act;
(2) the workers' compensation fee authorized by Section 52-5-19 NMSA 1978, which fee shall be considered a tax for purposes of the Tax Administration Act;
(3) Uniform Unclaimed Property Act (1995);
(4) 911 emergency surcharge and the network and database surcharge, which surcharges shall be considered taxes for purposes of the Tax Administration Act;
(5) the solid waste assessment fee authorized by the Solid Waste Act, which fee shall be considered a tax for purposes of the Tax Administration Act;
(6) the water conservation fee imposed by Section 74-1-13 NMSA 1978, which fee shall be considered a tax for the purposes of the Tax Administration Act; and
(7) the gaming tax imposed pursuant to the Gaming Control Act; and
D. the administration and enforcement of all other laws, with respect to which the department is charged with responsibilities pursuant to the Tax Administration Act, but only to the extent that the other laws do not conflict with the Tax Administration Act."
SECTION 7. Section 7-1-6.15 NMSA 1978 (being Laws 1983, Chapter 211, Section 20, as amended by Laws 2015, Chapter 89, Section 1 and by Laws 2015, Chapter 100, Section 1) is amended to read:
"7-1-6.15. ADJUSTMENTS OF DISTRIBUTIONS OR TRANSFERS TO MUNICIPALITIES OR COUNTIES.--
A. The provisions of this section apply to:
(1) any distribution to a municipality pursuant to Section 7-1-6.4, 7-1-6.36 or 7-1-6.46 NMSA 1978;
(2) any transfer to a municipality with respect to any local option gross receipts tax imposed by that municipality;
(3) any transfer to a county with respect to any local option gross receipts tax imposed by that county;
(4) any distribution to a county pursuant to Section 7-1-6.16 or 7-1-6.47 NMSA 1978;
(5) any distribution to a municipality or a county of gasoline taxes pursuant to Section 7-1-6.9 NMSA 1978;
(6) any transfer to a county with respect to any tax imposed in accordance with the Local Liquor Excise Tax Act;
(7) any distribution to a county from the county government road fund pursuant to Section 7-1-6.26 NMSA 1978;
(8) any distribution to a municipality of gasoline taxes pursuant to Section 7-1-6.27 NMSA 1978; [and]
(9) any distribution to a municipality of compensating taxes pursuant to Section 7-1-6.55 NMSA 1978; and
(10) any distribution to a municipality or county pursuant to Section 11 of this 2017 act.
B. Before making a distribution or transfer specified in Subsection A of this section to a municipality or county for the month, amounts comprising the net receipts shall be segregated into two mutually exclusive categories. One category shall be for amounts relating to the current month, and the other category shall be for amounts relating to prior periods. The total of each category for a municipality or county shall be reported each month to that municipality or county. If the total of the amounts relating to prior periods is less than zero and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that municipality or county, then the following procedures shall be carried out:
(1) all negative amounts relating to any period prior to the three calendar years preceding the year of the current month, net of any positive amounts in that same time period for the same taxpayers to which the negative amounts pertain, shall be excluded from the total relating to prior periods. Except as provided in Paragraph (2) of this subsection, the net receipts to be distributed or transferred to the municipality or county shall be adjusted to equal the amount for the current month plus the revised total for prior periods; and
(2) if the revised total for prior periods determined pursuant to Paragraph (1) of this subsection is negative and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that municipality or county, the revised total for prior periods shall be excluded from the distribution or transfers and the net receipts to be distributed or transferred to the municipality or county shall be equal to the amount for the current month.
C. The department shall recover from a municipality or county the amount excluded by Paragraph (2) of Subsection B of this section. This amount may be referred to as the "recoverable amount".
D. Prior to or concurrently with the distribution or transfer to the municipality or county of the adjusted net receipts, the department shall notify the municipality or county whose distribution or transfer has been adjusted pursuant to Paragraph (2) of Subsection B of this section:
(1) that the department has made such an adjustment, that the department has determined that a specified amount is recoverable from the municipality or county and that the department intends to recover that amount from future distributions or transfers to the municipality or county;
(2) that the municipality or county has ninety days from the date notice is made to enter into a mutually agreeable repayment agreement with the department;
(3) that if the municipality or county takes no action within the ninety-day period, the department will recover the amount from the next six distributions or transfers following the expiration of the ninety days; and
(4) that the municipality or county may inspect, pursuant to Section 7-1-8.9 NMSA 1978, an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application.
E. No earlier than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall begin recovering the recoverable amount from a municipality or county as follows:
(1) the department may collect the recoverable amount by:
(a) decreasing distributions or transfers to the municipality or county in accordance with a repayment agreement entered into with the municipality or county; or
(b) except as provided in Paragraphs (2) and (3) of this subsection, if the municipality or county fails to act within the ninety days, decreasing the amount of the next six distributions or transfers to the municipality or county following expiration of the ninety-day period in increments as nearly equal as practicable and sufficient to recover the amount;
(2) if, pursuant to Subsection B of this section, the secretary determines that the recoverable amount is more than fifty percent of the average distribution or transfer of net receipts for that municipality or county, the secretary:
(a) shall recover only up to fifty percent of the average distribution or transfer of net receipts for that municipality or county; and
(b) may, in the secretary's discretion, waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance; and
(3) if, after application of a refund claim, audit adjustment, correction of a mistake by the department or other adjustment of a prior period, but prior to any recovery of the department pursuant to this section, the total net receipts of a municipality or county for the twelve-month period beginning with the current month are reduced or are projected to be reduced to less than fifty percent of the average distribution or transfer of net receipts, the secretary may waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance.
F. No later than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall provide the municipality or county adequate opportunity to review an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application, pursuant to Section 7-1-8.9 NMSA 1978.
G. On or before September 1 of each year beginning in 2016, the secretary shall report to the state board of finance and the legislative finance committee the total recoverable amount waived pursuant to Subparagraph (b) of Paragraph (2) and Paragraph (3) of Subsection E of this section for each municipality and county in the prior fiscal year.
H. The secretary is authorized to decrease a distribution or transfer to a municipality or county upon being directed to do so by the secretary of finance and administration pursuant to the State Aid Intercept Act or to redirect a distribution or transfer to the New Mexico finance authority pursuant to an ordinance or a resolution passed by the county or municipality and a written agreement of the municipality or county and the New Mexico finance authority. Upon direction to decrease a distribution or transfer or notice to redirect a distribution or transfer to a municipality or county, the secretary shall decrease or redirect the next designated distribution or transfer, and succeeding distributions or transfers as necessary, by the amount of the state distributions intercept authorized by the secretary of finance and administration pursuant to the State Aid Intercept Act or by the amount of the state distribution intercept authorized pursuant to an ordinance or a resolution passed by the county or municipality and a written agreement with the New Mexico finance authority. The secretary shall transfer the state distributions intercept amount to the municipal or county treasurer or other person designated by the secretary of finance and administration or to the New Mexico finance authority pursuant to written agreement to pay the debt service to avoid default on qualified local revenue bonds or meet other local revenue bond, loan or other debt obligations of the municipality or county to the New Mexico finance authority. A decrease to or redirection of a distribution or transfer pursuant to this subsection that arose:
(1) prior to an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department takes precedence over any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, which may be made only from the net amount of the distribution or transfer remaining after application of the decrease or redirection pursuant to this subsection; and
(2) after an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department shall be subordinate to any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section.
I. Upon the direction of the secretary of finance and administration pursuant to Section 9-6-5.2 NMSA 1978, the secretary shall temporarily withhold the balance of a distribution to a municipality or county, net of any decrease or redirected amount pursuant to Subsection H of this section and any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, that has failed to submit an audit report required by the Audit Act or a financial report required by Subsection F of Section 6-6-2 NMSA 1978. The amount to be withheld, the source of the withheld distribution and the number of months that the distribution is to be withheld shall be as directed by the secretary of finance and administration. A distribution withheld pursuant to this subsection shall remain in the tax administration suspense fund until distributed to the municipality or county and shall not be distributed to the general fund. An amount withheld pursuant to this subsection shall be distributed to the municipality or county upon direction of the secretary of finance and administration.
J. As used in this section:
(1) "amounts relating to the current month" means any amounts included in the net receipts of the current month that represent payment of tax due for the current month, correction of amounts processed in the current month that relate to the current month or that otherwise relate to obligations due for the current month;
(2) "amounts relating to prior periods" means any amounts processed during the current month that adjust amounts processed in a period or periods prior to the current month regardless of whether the adjustment is a correction of a department error or due to the filing of amended returns, payment of department-issued assessments, filing or approval of claims for refund, audit adjustments or other cause;
(3) "average distribution or transfer amount" means the following amounts; provided that a distribution or transfer that is negative shall not be used in calculating the amounts:
(a) the annual average of the total amount distributed or transferred to a municipality or county in each of the three twelve-month periods preceding the current month;
(b) if a distribution or transfer to a municipality or county has been made for less than three years, the total amount distributed or transferred in the year preceding the current month; or
(c) if a municipality or county has not received distributions or transfers of net receipts for twelve or more months, the monthly average of net receipts distributed or transferred to the municipality or county preceding the current month multiplied by twelve;
(4) "current month" means the month for which the distribution or transfer is being prepared; and
(5) "repayment agreement" means an agreement between the department and a municipality or county under which the municipality or county agrees to allow the department to recover an amount determined pursuant to Paragraph (2) of Subsection B of this section by decreasing distributions or transfers to the municipality or county for one or more months beginning with the distribution or transfer to be made with respect to a designated month. No interest shall be charged."
SECTION 8. Section 7-1-6.16 NMSA 1978 (being Laws 1983, Chapter 213, Section 27, as amended) is amended to read:
"7-1-6.16. COUNTY EQUALIZATION DISTRIBUTION.--
A. Beginning on September 15, 1989 and on September 15 of each year thereafter, the department shall distribute to any county that has imposed or continued in effect during the state's preceding fiscal year a county gross receipts tax pursuant to Section 7-20E-9 NMSA 1978 an amount equal to:
(1) the product of a fraction, the numerator of which is the county's population and the denominator of which is the state's population, multiplied by the annual sum for the county; less
(2) the net receipts received by the department during the report year, including any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, attributable to the county gross receipts tax at a rate of one-eighth percent; provided that for any month in the report year, if no county gross receipts tax was in effect in the county in the previous month, the net receipts, for the purposes of this section, for that county for that month shall be zero.
B. If the amount determined by the calculation in Subsection A of this section is zero or a negative number for a county, no distribution shall be made to that county.
C. As used in this section:
(1) "annual sum" means for each county the sum of the monthly amounts for those months in the report year that follow a month in which the county had in effect a county gross receipts tax;
(2) "monthly amount" means an amount equal to the product of:
(a) the net receipts received by the department in the month attributable to the state gross receipts tax [plus five percent of the total amount of deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month plus five percent of the total amount of deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month]; and
(b) a fraction, the numerator of which is one-eighth percent and the denominator of which is the tax rate imposed by Section 7-9-4 NMSA 1978 in effect on the last day of the previous month;
(3) "population" means the most recent official census or estimate determined by the United States census bureau for the unit or, if neither is available, the most current estimated population for the unit provided in writing by the bureau of business and economic research at the university of New Mexico; and
(4) "report year" means the twelve-month period ending on the July 31 immediately preceding the date upon which a distribution pursuant to this section is required to be made."
SECTION 9. Section 7-1-6.46 NMSA 1978 (being Laws 2004, Chapter 116, Section 1, as amended) is amended to read:
"7-1-6.46. DISTRIBUTION TO MUNICIPALITIES--OFFSET FOR FOOD DEDUCTION AND HEALTH CARE PRACTITIONER SERVICES DEDUCTION.--
A. Prior to July 1, 2017, for a municipality that [has not elected to impose] does not have in effect a municipal hold harmless gross receipts tax through an ordinance and that has a population of less than ten thousand according to the most recent federal decennial census, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to [the sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month plus one and two hundred twenty-five thousandths percent; and
(2)] the total deductions claimed pursuant to [Section] Sections 7-9-92 and 7-9-93 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month plus one and two hundred twenty-five thousandths percent.
B. For a municipality not described in Subsection A of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to [the sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2007 plus one and two hundred twenty-five thousandths percent in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and
(2)] the total deductions claimed pursuant to [Section] Sections 7-9-92 and 7-9-93 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2007 plus one and two hundred twenty-five thousandths percent in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017, [and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven] zero percent.
C. The distribution pursuant to [Subsections A and B of] this section is in lieu of revenue that would have been received by the municipality but for the deductions provided by Sections 7-9-92 and 7-9-93 NMSA 1978. The distribution shall be considered gross receipts tax revenue and shall be used by the municipality in the same manner as gross receipts tax revenue, including payment of gross receipts tax revenue bonds. [A distribution pursuant to this section to a municipality not described in Subsection A of this section or to a municipality that has imposed a gross receipts tax through an ordinance that does not provide a deduction contained in the Gross Receipts and Compensating Tax Act shall not be made on or after July 1, 2029.]
D. If the reductions made by this [2013] 2017 act to the distributions made pursuant to [Subsections A and B of] this section impair the ability of a municipality to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, [2013] 2017 and that are secured by the pledge of all or part of the municipality's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that municipality pursuant to this section does not exceed the amount that would have been due that municipality pursuant to this section as it was in effect on June 30, [2013] 2017.
E. For the purposes of this section, "business locations attributable to the municipality" means business locations:
(1) within the municipality;
(2) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of the municipality;
(3) outside the boundaries of the municipality on land owned by the municipality; and
(4) on an Indian reservation or pueblo grant in an area that is contiguous to the municipality and in which the municipality performs services pursuant to a contract between the municipality and the Indian tribe or Indian pueblo if:
(a) the contract describes an area in which the municipality is required to perform services and requires the municipality to perform services that are substantially the same as the services the municipality performs for itself; and
(b) the governing body of the municipality has submitted a copy of the contract to the secretary.
F. A distribution pursuant to this section may be adjusted for a distribution made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a municipality pursuant to the Tax Increment for Development Act."
SECTION 10. Section 7-1-6.47 NMSA 1978 (being Laws 2004, Chapter 116, Section 2, as amended) is amended to read:
"7-1-6.47. DISTRIBUTION TO COUNTIES--OFFSET FOR FOOD DEDUCTION AND HEALTH CARE PRACTITIONER SERVICES DEDUCTION.--
A. Prior to July 1, 2017, for a county that has not elected to impose a county hold harmless gross receipts tax through an ordinance and that has a population of less than forty-eight thousand according to the most recent federal decennial census, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to: [the sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county;
(2) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality;
(3)] (1) the total deductions claimed pursuant to [Section] Sections 7-9-92 and 7-9-93 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county; and
[(4)] (2) the total deductions claimed pursuant to [Section] Sections 7-9-92 and 7-9-93 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality.
B. For a county not described in Subsection A of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to: [the sum of:
(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed throughout the county in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven percent;
(2) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed in the county area not within a municipality in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;
(d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven percent;
(3)] (1) the total deductions claimed pursuant to [Section] Sections 7-9-92 and 7-9-93 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed throughout the county in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent; and
(d) on or after July 1, 2017, [and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven] zero percent; and
[(4)] (2) the total deductions claimed pursuant to [Section] Sections 7-9-92 and 7-9-93 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed in the county area not within a municipality in the following percentages:
(a) prior to July 1, 2015, one hundred percent;
(b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;
(c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent; and
(d) on or after July 1, 2017, [and prior to July 1, 2018, eighty-two percent;
(e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;
(f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;
(g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;
(h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;
(i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and
(o) on or after July 1, 2028 and prior to July 1, 2029, seven] zero percent.
C. The distribution pursuant to [Subsections A and B of] this section is in lieu of revenue that would have been received by the county but for the deductions provided by Sections 7-9-92 and 7-9-93 NMSA 1978. The distribution shall be considered gross receipts tax revenue and shall be used by the county in the same manner as gross receipts tax revenue, including payment of gross receipts tax revenue bonds. [A distribution pursuant to this section to a county not described in Subsection A of this section or to a county that has imposed a gross receipts tax through an ordinance that does not provide a deduction contained in the Gross Receipts and Compensating Tax Act shall not be made on or after July 1, 2029.]
D. If the reductions made by this [2013] 2017 act to the distributions made pursuant to [Subsections A and B of] this section impair the ability of a county to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, [2013] 2017 and that are secured by the pledge of all or part of the county's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that county shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that county pursuant to this section does not exceed the amount that would have been due that county pursuant to this section as it was in effect on June 30, [2013] 2017.
E. A distribution pursuant to this section may be adjusted for a distribution made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a county pursuant to the Tax Increment for Development Act."
SECTION 11. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION--GROSS RECEIPTS TAX ON FOOD--MUNICIPALITIES AND COUNTIES.--
A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality in an amount equal to eighty-four and thirty-seven hundredths percent of the net receipts attributable to the gross receipts tax on food sold in the municipality.
B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county in an amount equal to fifteen and sixty-three hundredths percent of the net receipts attributable to the gross receipts tax on food sold in that portion of a county that is located inside the boundaries of a municipality.
C. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county in an amount equal to the net receipts attributable to the gross receipts tax on food sold in that portion of a county located outside the boundaries of a municipality.
D. The distribution amounts made pursuant to this section shall be subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978."
SECTION 12. Section 7-2F-12 NMSA 1978 (being Laws 2015, Chapter 143, Section 11) is amended to read:
"7-2F-12. CREDIT CLAIMS--AGGREGATE AMOUNT OF CLAIMS ALLOWED.--
A. A claim for a film and television tax credit shall be filed as part of a return filed pursuant to the Income Tax Act or the Corporate Income and Franchise Tax Act or an information return filed by a pass-through entity. The date a credit claim is received by the department shall determine the order that a credit claim is authorized for payment by the department. The aggregate amount of claims for a credit provided by the Film Production Tax Credit Act that may be authorized for payment in any fiscal year is [fifty million dollars ($50,000,000)] forty-five million dollars ($45,000,000) with respect to the direct production expenditures or postproduction expenditures made on film or commercial audiovisual products. A film production company that submits a claim for a film and television tax credit that is unable to receive the tax credit because the claims for the fiscal year exceed the limitation in this subsection shall be placed for the subsequent fiscal year at the front of a queue of credit claimants submitting claims in the subsequent fiscal year in the order of the date on which the credit was authorized for payment.
B. Except as otherwise provided in this section, credit claims authorized for payment pursuant to the Film Production Tax Credit Act shall be paid pursuant to provisions of the Tax Administration Act to the taxpayer as follows:
(1) a credit claim amount of less than two million dollars ($2,000,000) per taxable year shall be paid immediately upon authorization for payment of the credit claim;
(2) a credit claim amount of two million dollars ($2,000,000) or more but less than five million dollars ($5,000,000) per taxable year shall be divided into two equal payments, with the first payment to be made immediately upon authorization of the payment of the credit claim and the second payment to be made twelve months following the date of the first payment; and
(3) a credit claim amount of five million dollars ($5,000,000) or more per taxable year shall be divided into three equal payments, with the first payment to be made immediately upon authorization of payment of the credit claim, the second payment to be made twelve months following the date of the first payment and the third payment to be made twenty-four months following the date of the first payment.
C. For a fiscal year in which the amount of total credit claims authorized for payment is less than the aggregate amount of credit claims that may be authorized for payment pursuant to this section, the next scheduled payments for credit claims authorized for payment pursuant to Subsection B of this section shall be accelerated for payment for that fiscal year and shall be paid to a taxpayer pursuant to the Tax Administration Act and in the order in which outstanding payments are scheduled in the queue established pursuant to Subsections A and B of this section; provided that the total credit claims authorized for payment shall not exceed the aggregate amount of credit claims that may be authorized for payment pursuant to this section. If a partial payment is made pursuant to this subsection, the difference owed shall retain its original position in the queue.
D. Any amount of a credit claim that is carried forward pursuant to Subsection B of this section shall be subject to the limit on the aggregate amount of credit claims that may be authorized for payment pursuant to Subsection A of this section in the fiscal year in which that amount is paid.
E. A credit claim shall only be considered received by the department if the credit claim is made on a complete return filed after the close of the taxable year. All direct production expenditures and postproduction expenditures incurred during the taxable year by a film production company shall be submitted as part of the same income tax return and paid pursuant to this section. A credit claim shall not be divided and submitted with multiple returns or in multiple years.
F. For purposes of determining the payment of credit claims pursuant to this section, the secretary of taxation and revenue may require that credit claims of affiliated persons be combined into one claim if necessary to accurately reflect closely integrated activities of affiliated persons."
SECTION 13. Section 7-9-3.5 NMSA 1978 (being Laws 2003, Chapter 272, Section 3, as amended) is amended to read:
"7-9-3.5. DEFINITION--GROSS RECEIPTS.--
A. As used in the Gross Receipts and Compensating Tax Act:
(1) "gross receipts" means the total amount of money or the value of other consideration received from selling property in New Mexico, from leasing or licensing property employed in New Mexico, from granting a right to use a franchise employed in New Mexico, from selling services performed outside New Mexico, the product of which is initially used in New Mexico, or from performing services in New Mexico. In an exchange in which the money or other consideration received does not represent the value of the property or service exchanged, "gross receipts" means the reasonable value of the property or service exchanged;
(2) "gross receipts" includes:
(a) any receipts from sales of tangible personal property handled on consignment;
(b) the total commissions or fees derived from the business of buying, selling or promoting the purchase, sale or lease, as an agent or broker on a commission or fee basis, of any property, service, stock, bond or security;
(c) amounts paid by members of any cooperative association or similar organization for sales or leases of personal property or performance of services by such organization;
(d) amounts received from transmitting messages or conversations by persons providing telephone or telegraph services;
(e) amounts received by a New Mexico florist from the sale of flowers, plants or other products that are customarily sold by florists where the sale is made pursuant to orders placed with the New Mexico florist that are filled and delivered outside New Mexico by an out-of-state florist; and
(f) the receipts of a home service provider from providing mobile telecommunications services to customers whose place of primary use is in New Mexico if: 1) the mobile telecommunications services originate and terminate in the same state, regardless of where the services originate, terminate or pass through; and 2) the charges for mobile telecommunications services are billed by or for a customer's home service provider and are deemed provided by the home service provider. For the purposes of this section, "home service provider", "mobile telecommunications services", "customer" and "place of primary use" have the meanings given in the federal Mobile Telecommunications Sourcing Act; and
(3) "gross receipts" excludes:
(a) cash discounts allowed and taken;
(b) New Mexico gross receipts tax, governmental gross receipts tax, [and] leased vehicle gross receipts tax and the gross receipts tax on food payable on transactions for the reporting period;
(c) taxes imposed pursuant to the provisions of any local option gross receipts tax that is payable on transactions for the reporting period;
(d) any gross receipts or sales taxes imposed by an Indian nation, tribe or pueblo; provided that the tax is approved, if approval is required by federal law or regulation, by the secretary of the interior of the United States; and provided further that the gross receipts or sales tax imposed by the Indian nation, tribe or pueblo provides a reciprocal exclusion for gross receipts, sales or gross receipts-based excise taxes imposed by the state or its political subdivisions;
(e) any type of time-price differential;
(f) amounts received solely on behalf of another in a disclosed agency capacity; and
(g) amounts received by a New Mexico florist from the sale of flowers, plants or other products that are customarily sold by florists where the sale is made pursuant to orders placed with an out-of-state florist for filling and delivery in New Mexico by a New Mexico florist.
B. When the sale of property or service is made under any type of charge, conditional or time-sales contract or the leasing of property is made under a leasing contract, the seller or lessor may elect to treat all receipts, excluding any type of time-price differential, under such contracts as gross receipts as and when the payments are actually received. If the seller or lessor transfers the seller's or lessor's interest in any such contract to a third person, the seller or lessor shall pay the gross receipts tax upon the full sale or leasing contract amount, excluding any type of time-price differential."
SECTION 14. Section 7-9-62 NMSA 1978 (being Laws 1969, Chapter 144, Section 52, as amended) is amended to read:
"7-9-62. DEDUCTION--GROSS RECEIPTS TAX--AGRICULTURAL IMPLEMENTS--[AIRCRAFT MANUFACTURERS--VEHICLES THAT ARE NOT REQUIRED TO BE REGISTERED--AIRCRAFT PARTS AND MAINTENANCE SERVICES] FARM TRACTORS--REPORTING REQUIREMENTS.--
A. [Except for receipts deductible under Subsection B of this section] Fifty percent of the receipts from selling agricultural implements or farm tractors [aircraft or vehicles that are not required to be registered under the Motor Vehicle Code] may be deducted from gross receipts; provided that, with respect to agricultural implements, the sale is made to a person who states in writing that the person is regularly engaged in the business of farming or ranching. Any deduction allowed under Section 7-9-71 NMSA 1978 must be taken before the deduction allowed by this subsection is computed.
[B. Receipts of an aircraft manufacturer or affiliate from selling aircraft or from selling aircraft flight support, pilot training or maintenance training services may be deducted from gross receipts. Any deduction allowed under Section 7-9-71 NMSA 1978 must be taken before the deduction allowed by this subsection is computed.
C. Receipts from selling aircraft parts or maintenance services for aircraft or aircraft parts may be deducted from gross receipts. Any deduction allowed under Section 7-9-71 NMSA 1978 must be taken before the deduction allowed by this subsection is computed.
D.] B. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.
[E.] C. The department shall compile an annual report on the deductions provided by this section that shall include the number of taxpayers approved by the department to receive the deductions, the aggregate amount of deductions approved and any other information necessary to evaluate the effectiveness of the deductions. Beginning in 2019 and every five years thereafter that the deductions are in effect, the department shall compile and present the annual reports to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the deductions.
[F.] D. As used in this section,
[(1) "affiliate" means a business entity that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the aircraft manufacturer;
(2)] "agricultural implement" means a tool, utensil or instrument that is depreciable for federal income tax purposes and that is:
[(a)] (1) designed to irrigate agricultural crops above ground or below ground at the place where the crop is grown; or
[(b)] (2) designed primarily for use with a source of motive power, such as a tractor, in planting, growing, cultivating, harvesting or processing agricultural crops at the place where the crop is grown; in raising poultry or livestock; or in obtaining or processing food or fiber, such as eggs, milk, wool or mohair, from living poultry or livestock at the place where the poultry or livestock are kept for this purpose.
[(3) "aircraft manufacturer" means a business entity that in the ordinary course of business designs and builds private or commercial aircraft certified by the federal aviation administration;
(4) "business entity" means a corporation, limited liability company, partnership, limited partnership, limited liability partnership or real estate investment trust, but does not mean an individual or a joint venture;
(5) "control" means equity ownership in a business entity that:
(a) represents at least fifty percent of the total voting power of that business entity; and
(b) has a value equal to at least fifty percent of the total equity of that business entity; and
(6) "flight support" means providing navigation data, charts, weather information, online maintenance records and other aircraft or flight-related information and the software needed to access the information.]"
SECTION 15. Section 7-9-77 NMSA 1978 (being Laws 1966, Chapter 47, Section 15, as amended) is amended to read:
"7-9-77. DEDUCTIONS--COMPENSATING TAX--AGRICULTURAL IMPLEMENTS AND FARM TRACTORS.--
A. Fifty percent of the value of agricultural implements or farm tractors [aircraft not exempted under Section 7-9-30 NMSA 1978 or vehicles that are not required to be registered under the Motor Vehicle Code] may be deducted from the value in computing the compensating tax due; provided that, with respect to use of agricultural implements, the person using the property is regularly engaged in the business of farming or ranching. Any deduction allowed under Subsection B of this section is to be taken before the deduction allowed by this subsection is computed. As used in this subsection, "agricultural implement" means a tool, utensil or instrument that is:
(1) designed primarily for use with a source of motive power, such as a tractor, in planting, growing, cultivating, harvesting or processing agricultural produce at the place where the produce is grown; in raising poultry or livestock; or in obtaining or processing food or fiber, such as eggs, milk, wool or mohair, from living poultry or livestock at the place where the poultry or livestock are kept for this purpose; and
(2) depreciable for federal income tax purposes.
B. That portion of the value of tangible personal property on which an allowance was granted to the buyer for a trade-in of tangible personal property of the same type that was bought may be deducted from the value in computing the compensating tax due."
SECTION 16. Section 7-9-83 NMSA 1978 (being Laws 1993, Chapter 364, Section 1, as amended) is amended to read:
"7-9-83. DEDUCTION--GROSS RECEIPTS TAX--JET FUEL.--
[A. From July 1, 2003 through June 30, 2017,
fifty-five percent of the receipts from the sale of fuel specially prepared and sold for use in turboprop or jet-type engines as determined by the department may be deducted from gross receipts.
B. After June 30, 2017, forty] Thirty percent of the receipts from the sale of fuel specially prepared and sold for use in turboprop or jet-type engines as determined by the department may be deducted from gross receipts."
SECTION 17. Section 7-9-84 NMSA 1978 (being Laws 1993, Chapter 364, Section 2, as amended) is amended to read:
"7-9-84. DEDUCTION--COMPENSATING TAX--JET FUEL.--
[A. From July 1, 2003 through June 30, 2017, fifty-
five percent of the value of the fuel specially prepared and sold for use in turboprop or jet-type engines as determined by the department may be deducted in computing the compensating tax due.
B. After June 30, 2017, forty] Thirty percent of the value of the fuel specially prepared and sold for use in turboprop or jet-type engines as determined by the department may be deducted in computing the compensating tax due."
SECTION 18. Section 7-9G-1 NMSA 1978 (being Laws 2004, Chapter 15, Section 1, as amended) is amended to read:
"7-9G-1. HIGH-WAGE JOBS TAX CREDIT--QUALIFYING
HIGH-WAGE JOBS.--
A. A taxpayer who is an eligible employer may apply for, and the department may allow, a tax credit for each new high-wage economic-based job. The credit provided in this section may be referred to as the "high-wage jobs tax credit".
B. The purpose of the high-wage jobs tax credit is to provide an incentive for urban and rural businesses to create and fill new high-wage economic-based jobs in New Mexico.
C. The high-wage jobs tax credit may be claimed and allowed in an amount equal to [ten] eight percent of the wages distributed to an eligible employee in a new high-wage economic-based job, but shall not exceed [twelve thousand dollars ($12,000)] nine thousand six hundred dollars ($9,600) per job per qualifying period. The high-wage jobs tax credit may be claimed by an eligible employer for each new high-wage economic-based job performed for the year in which the new high-wage economic-based job is created and for the three consecutive qualifying periods as provided in this section.
D. To receive a high-wage jobs tax credit, a taxpayer shall file an application for approval of the credit with the department once per calendar year on forms and in the manner prescribed by the department. The annual application shall contain the certification required by Subsection K of this section and shall contain all qualifying periods that closed during the calendar year for which the application is made. Any qualifying period that did not close in the calendar year for which the application is made shall be denied by the department. The application for a calendar year shall be filed no later than December 31 of the following calendar year. If a taxpayer fails to file the annual application within the time limits provided in this section, the application shall be denied by the department. The department shall make a determination on the application within one hundred eighty days of the date on which the application was filed; provided that the one-hundred-eighty-day period shall not begin until the application is complete, as determined by the department.
E. A new high-wage economic-based job shall not be eligible for a credit pursuant to this section for the initial qualifying period unless the eligible employer's total number of employees with threshold jobs on the last day of the initial qualifying period at the location at which the job is performed or based is at least one more than the number of threshold jobs on the day prior to the date the new high-wage economic-based job was created. A new high-wage economic-based job shall not be eligible for a credit pursuant to this section for a consecutive qualifying period unless the total number of threshold jobs at a location at which the job is performed or based on the last day of that qualifying period is greater than or equal to the number of threshold jobs at that same location on the last day of the initial qualifying period for the new high-wage economic-based job.
F. Any consecutive qualifying period for a new high-wage economic-based job shall not be eligible for a credit pursuant to this section unless the wage, the forty-eight-week occupancy and the residency requirements for a new high-wage economic-based job are met for each consecutive qualifying period. If any consecutive qualifying period for a new high-wage economic-based job does not meet the wage, the forty-eight-week occupancy and the residency requirements, all subsequent qualifying periods are ineligible.
G. Except as provided in Subsection H of this section, a new high-wage economic-based job shall not be eligible for a credit pursuant to this section if:
(1) the new high-wage economic-based job is created due to a business merger or acquisition or other change in business organization;
(2) the eligible employee was terminated from employment in New Mexico by another employer involved in the business merger or acquisition or other change in business organization with the taxpayer; and
(3) the new high-wage economic-based job is performed by:
(a) the person who performed the job or its functional equivalent prior to the business merger or acquisition or other change in business organization; or
(b) a person replacing the person who performed the job or its functional equivalent prior to a business merger or acquisition or other change in business organization.
H. A new high-wage economic-based job that was created by another employer and for which an application for the high-wage jobs tax credit was received and is under review by the department prior to the time of the business merger or acquisition or other change in business organization shall remain eligible for the high-wage jobs tax credit for the balance of the consecutive qualifying periods. The new employer that results from a business merger or acquisition or other change in business organization may only claim the high-wage jobs tax credit for the balance of the consecutive qualifying periods for which the new high-wage economic-based job is otherwise eligible.
I. A new high-wage economic-based job shall not be eligible for a credit pursuant to this section if the job is created due to an eligible employer entering into a contract or becoming a subcontractor to a contract with a governmental entity that replaces one or more entities performing functionally equivalent services for the governmental entity unless the job is a new high-wage economic-based job that was not being performed by an employee of the replaced entity.
J. A new high-wage economic-based job shall not be eligible for a credit pursuant to this section if the eligible employer has more than one business location in New Mexico from which it conducts business and the requirements of Subsection E of this section are satisfied solely by moving the job from one business location of the eligible employer in New Mexico to another business location of the eligible employer in New Mexico.
K. With respect to each annual application for a high-wage jobs tax credit, the employer shall certify and include:
(1) the amount of wages paid to each eligible employee in a new high-wage economic-based job during the qualifying period;
(2) the number of weeks each position was occupied during the qualifying period;
(3) whether the new high-wage economic-based job was in a municipality with a population of sixty thousand or more or with a population of less than sixty thousand according to the most recent federal decennial census and whether the job was in the unincorporated area of a county;
(4) whether the application pertains to the first, second, third or fourth qualifying period for each eligible employee;
(5) the total number of employees employed by the employer at the job location on the day prior to the qualifying period and on the last day of the qualifying period;
(6) the total number of threshold jobs performed or based at the eligible employer's location on the day prior to the qualifying period and on the last day of the qualifying period;
(7) for an eligible employer that has more than one business location in New Mexico from which it conducts business, the total number of threshold jobs performed or based at each business location of the eligible employer in New Mexico on the day prior to the qualifying period and on the last day of the qualifying period;
(8) whether the eligible employer is receiving or is eligible to receive development training program assistance pursuant to Section 21-19-7 NMSA 1978;
(9) whether the eligible employer has ceased business operations at any of its business locations in New Mexico; and
(10) whether the application is precluded by Subsection O of this section.
L. Any person who willfully submits a false, incorrect or fraudulent certification required pursuant to Subsection K of this section shall be subject to all applicable penalties under the Tax Administration Act, except that the amount on which the penalty is based shall be the total amount of credit requested on the application for approval.
M. Except as provided in Subsection N of this section, an approved high-wage jobs tax credit shall be claimed against the taxpayer's modified combined tax liability and shall be filed with the return due immediately following the date of the credit approval. If the credit exceeds the taxpayer's modified combined tax liability, the excess shall be refunded to the taxpayer.
N. If the taxpayer ceases business operations in New Mexico while an application for credit approval is pending or after an application for credit has been approved for any qualifying period for a new high-wage economic-based job, the department shall not grant an additional high-wage jobs tax credit to that taxpayer, except as provided in Subsection O of this section, and shall extinguish any amount of credit approved for that taxpayer that has not already been claimed against the taxpayer's modified combined tax liability.
O. A taxpayer that has received a high-wage jobs tax credit shall not submit a new application for a credit for a minimum of five calendar years from the closing date of the last qualifying period for which the taxpayer received the credit if the taxpayer:
(1) lost eligibility to claim a tax credit from a previous application pursuant to Subsection E or N of this section; or
(2) reduces its total full-time employees in New Mexico by more than five percent after the date on which the last qualifying period on the taxpayer's previous application ends.
P. The economic development department and the taxation and revenue department shall report to the appropriate interim legislative committee each year the cost of this tax credit to the state and its impact on company recruitment and job creation.
Q. As used in this section:
(1) "benefits" means all remuneration for work performed that is provided to an employee in whole or in part by the employer, other than wages, including the employer's contributions to insurance programs, health care, medical, dental and vision plans, life insurance, employer contributions to pensions, such as a 401(k), and employer-provided services, such as child care, offered by an employer to the employee;
(2) "consecutive qualifying periods" means the three qualifying periods successively following the qualifying period in which the new high-wage economic-based job was created;
(3) "department" means the taxation and revenue department;
(4) "domicile" means the sole place where an individual has a true, fixed, permanent home. It is the place where the individual has a voluntary, fixed habitation of self and family with the intention of making a permanent home;
(5) "eligible employee" means an individual who is employed in New Mexico by an eligible employer and who is a resident of New Mexico; "eligible employee" does not include an individual who:
(a) bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to the employer or, if the employer is a corporation, to an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, to an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interest in the entity;
(b) if the employer is an estate or trust, is a grantor, beneficiary or fiduciary of the estate or trust or is an individual who bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to a grantor, beneficiary or fiduciary of the estate or trust;
(c) is a dependent, as that term is described in 26 U.S.C. Section 152(a)(9), of the employer or, if the taxpayer is a corporation, of an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, of an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interest in the entity or, if the employer is an estate or trust, of a grantor, beneficiary or fiduciary of the estate or trust; or
(d) is working or has worked as an employee or as an independent contractor for an entity that, directly or indirectly, owns stock in a corporation of the eligible employer or other interest of the eligible employer that represents fifty percent or more of the total voting power of that entity or has a value equal to fifty percent or more of the capital and profits interest in the entity;
(6) "eligible employer" means an employer that:
(a) sold and delivered more than fifty percent of its goods produced in New Mexico or non-retail services performed in New Mexico to persons outside New Mexico for use or resale outside New Mexico during the applicable qualifying period; provided that the fifty percent of those goods or services is measured by the eligible employer's gross receipts;
(b) is receiving or is eligible to receive development training program assistance pursuant to Section 21-19-7 NMSA 1978 during the applicable qualifying period; and
(c) whose principal business activities at the location in New Mexico for which the high-wage jobs tax credit is being claimed consist of manufacturing or performing non-retail services during the applicable qualifying period;
(7) "for use or resale outside New Mexico" means that the person who purchases the eligible employer's goods or services uses or resells the goods or services outside New Mexico or makes initial use of the goods or services outside New Mexico. If the purchaser conducts business in multiple states, goods and services are deemed for use or resale outside New Mexico, unless New Mexico is the primary market for the purchaser's goods or services;
(8) "full-time employee" means an employee who works for the same employer an average of at least thirty-two hours per week for at least forty-eight weeks per year;
(9) "manufacturing" means "manufacturing" as that term is used in Section 7-9A-3 NMSA 1978;
(10) "modified combined tax liability" means the total liability for the reporting period for the gross receipts tax imposed by Section 7-9-4 NMSA 1978 together with any tax collected at the same time and in the same manner as the gross receipts tax, such as the compensating tax, the withholding tax, the interstate telecommunications gross receipts tax, the surcharges imposed by Section 63-9D-5 NMSA 1978 and the surcharge imposed by Section 63-9F-11 NMSA 1978, minus the amount of any credit other than the high-wage jobs tax credit applied against any or all of these taxes or surcharges; but "modified combined tax liability" excludes all amounts collected with respect to local option gross receipts taxes;
(11) "new high-wage economic-based job" means a new job created in New Mexico by an eligible employer on or after July 1, 2004 and prior to July 1, 2020 that is occupied for at least forty-eight weeks of a qualifying period by an eligible employee who is paid wages calculated for the qualifying period to be at least:
(a) for a new high-wage economic-based job created prior to July 1, 2015: 1) forty thousand dollars ($40,000) if the job is performed or based in or within ten miles of the external boundaries of a municipality with a population of sixty thousand or more according to the most recent federal decennial census or in a class H county; and 2) twenty-eight thousand dollars ($28,000) if the job is performed or based in a municipality with a population of less than sixty thousand according to the most recent federal decennial census or in the unincorporated area, that is not within ten miles of the external boundaries of a municipality with a population of sixty thousand or more, of a county other than a class H county; and
(b) for a new high-wage economic-based
job created on or after July 1, 2015: 1) sixty thousand dollars ($60,000) if the job is performed or based in or within ten miles of the external boundaries of a municipality with a population of sixty thousand or more according to the most recent federal decennial census or in a class H county; and 2) forty thousand dollars ($40,000) if the job is performed or based in a municipality with a population of less than sixty thousand according to the most recent federal decennial census or in the unincorporated area, that is not within ten miles of the external boundaries of a municipality with a population of sixty thousand or more, of a county other than a class H county;
(12) "non-retail service" means a specialized service, excluding a construction service of any type, that is sold to another business or business entity and is used by the business or business entity to develop products for or deliver services to its customers. "Non-retail service" is not provided by direct individual-to-individual interaction and is not offered to the general public by the business or business entity. "Non-retail service" includes:
(a) research, development, engineering and testing services performed for a manufacturer that uses the product of the service to develop new or improve existing products;
(b) software and software application development services performed for a business;
(c) data processing and hosting services performed for a business that uses the service to deliver products or service to its own customers;
(d) digital film production services and post-film production services performed for a business that will market the digital product or film;
(e) customer or call center services performed for a business, if those services do not support retail activities of the eligible employer; and
(f) professional services, such as accounting, engineering, legal and information technology services, if the eligible employer does not offer those services for sale to the general public;
(13) "performed in New Mexico" means that the labor, activities, property and equipment necessary to complete, but not to deliver, a service all occur or are utilized within New Mexico;
(14) "produced in New Mexico" means the creation, bringing into existence or making available a good or product for commercial sale through the expense of labor or capital, or both, within New Mexico;
(15) "qualifying period" means the period of twelve months beginning on the day an eligible employee begins working in a new high-wage economic-based job or the period of twelve months beginning on the anniversary of the day an eligible employee began working in a new high-wage economic-based job;
(16) "resident" means a natural person whose domicile is in New Mexico at the time of hire or within one hundred eighty days of the date of hire;
(17) "threshold job" means a job that is occupied for at least forty-eight weeks of a calendar year by an eligible employee and that meets the wage requirements for a "new high-wage economic-based job"; and
(18) "wages" means all compensation paid by an eligible employer to an eligible employee through the employer's payroll system, including those wages that the employee elects to defer or redirect or the employee's contribution to a 401(k) or cafeteria plan program, but "wages" does not include benefits or the employer's share of payroll taxes, social security or medicare contributions, federal or state unemployment insurance contributions or workers' compensation."
SECTION 19. Section 7-19D-18 NMSA 1978 (being Laws 2013, Chapter 160, Section 11) is amended to read:
"7-19D-18. MUNICIPAL HOLD HARMLESS GROSS RECEIPTS TAX.--
A. Except as provided in Subsection B of this section, the majority of the members of the governing body of any municipality may impose by ordinance an excise tax not to exceed a rate of three-eighths percent of the gross receipts of any person engaging in business in the municipality for the privilege of engaging in business in the municipality. A tax imposed pursuant to this section shall be imposed by the enactment of one or more ordinances each imposing any number of gross receipts tax rate increments [but the total gross receipts tax rate imposed by all ordinances pursuant to this section shall not exceed an aggregate rate of three-eighths percent of the gross receipts of a person engaging in business. Municipalities may impose increments] of one-eighth [of one] percent.
[B.] The tax imposed pursuant to [Subsection A of] this section may be referred to as the "municipal hold harmless gross receipts tax". The imposition of a municipal hold harmless gross receipts tax is not subject to referendum.
B. Except as provided in Subsections D and E of this section, if a municipality has or will have in effect a municipal hold harmless gross receipts tax on January 1, 2018, the municipality shall repeal all increments of the tax by ordinance to be effective January 1, 2018.
C. The governing body of a municipality may, at the time of enacting an ordinance imposing the tax authorized in Subsection A of this section, dedicate the revenue for a specific purpose or area of municipal government services, including but not limited to police protection, fire protection, public transportation or street repair and maintenance. If the governing body proposes to dedicate such revenue, the ordinance and any revenue so dedicated shall be used by the municipality for that purpose unless a subsequent ordinance is adopted to change the purpose to which the revenue is dedicated or to place the revenue in the general fund of the municipality.
D. Any law that imposes or authorizes the imposition of a municipal hold harmless gross receipts tax or that affects the municipal hold harmless gross receipts tax, or any law supplemental thereto or otherwise appertaining thereto, shall not be repealed or amended or otherwise directly or indirectly modified in such a manner as to impair adversely any outstanding revenue bonds that may be secured by a pledge of such municipal hold harmless gross receipts tax unless such outstanding revenue bonds have been discharged in full or provision has been fully made therefor.
E. If the reduction to the rate of tax made by this 2017 act impairs the ability of a municipality to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, 2017 and that are secured by the pledge of all or part of the municipality's revenue from a municipal hold harmless gross receipts tax, the ordinance imposing the municipal hold harmless gross receipts tax shall not be deemed repealed until the outstanding revenue bonds have been discharged in full or provision has been fully made therefor."
SECTION 20. Section 7-20E-28 NMSA 1978 (being Laws 2013, Chapter 160, Section 12) is amended to read:
"7-20E-28. COUNTY HOLD HARMLESS GROSS RECEIPTS TAX.--
A. Except as provided in Subsection B of this section, the majority of the members of the governing body of any county may impose by ordinance an excise tax not to exceed a rate of three-eighths percent of the gross receipts of any person engaging in business in the county for the privilege of engaging in business in the county. A tax imposed pursuant to this section shall be imposed by the enactment of one or more ordinances, each imposing any number of gross receipts tax rate increments [but the total gross receipts tax rate imposed by all ordinances pursuant to this section shall not exceed an aggregate rate of three-eighths percent of the gross receipts of a person engaging in business. Counties may impose increments] of one-eighth [of one] percent.
[B.] The tax imposed [pursuant to Subsection A of] by this section may be referred to as the "county hold harmless gross receipts tax". The imposition of a county hold harmless gross receipts tax is not subject to referendum.
B. Except as provided in Subsections D and E of this section, if a county has or will have in effect a county hold harmless gross receipts tax on January 1, 2018, the county shall repeal all increments of the tax by ordinance to be effective January 1, 2018.
C. The governing body of a county may, at the time of enacting an ordinance imposing the tax authorized in Subsection A of this section, dedicate the revenue for a specific purpose or area of county government services, including but not limited to police protection, fire protection, public transportation or street repair and maintenance. If the governing body proposes to dedicate such revenue, the ordinance and any revenue so dedicated shall be used by the county for that purpose unless a subsequent ordinance is adopted to change the purpose to which the revenue is dedicated or to place the revenue in the general fund of the county.
D. Any law that imposes or authorizes the imposition of a county hold harmless gross receipts tax or that affects the county hold harmless gross receipts tax, or any law supplemental thereto or otherwise appertaining thereto, shall not be repealed or amended or otherwise directly or indirectly modified in such a manner as to impair adversely any outstanding revenue bonds that may be secured by a pledge of such county hold harmless gross receipts tax unless such outstanding revenue bonds have been discharged in full or provision has been fully made therefor.
E. If the reduction to the rate of tax made by this 2017 act impairs the ability of a county to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, 2017 and that are secured by the pledge of all or part of the county's revenue from a county hold harmless gross receipts tax, the ordinance imposing the county hold harmless gross receipts tax shall not be deemed repealed until the outstanding revenue bonds have been discharged in full or provision has been fully made therefor."
SECTION 21. REPEAL.--Sections 7-2-18.18, 7-2-18.19, 7-2-18.21, 7-2-18.25, 7-2-18.29, 7-2A-19, 7-2A-21, 7-2A-23, 7-2A-25 and 7-2A-28 NMSA 1978 (being Laws 2007, Chapter 204, Sections 2, 3 and 7, Laws 2009, Chapter 279, Section 1, Laws 2015, Chapter 130, Section 1, Laws 2002, Chapter 59, Section 1, Laws 2007, Chapter 204, Sections 4 and 8, Laws 2009, Chapter 279, Section 2 and Laws 2015, Chapter 130, Section 2, as amended) are repealed.
SECTION 22. ADDITIONAL REPEAL.--Sections 7-9-57.2, 7-9-63, 7-9-64, 7-9-95, 7-9-112, 7-9A-1 through 7-9A-9, 7-9A-11 and 7-9G-2 NMSA 1978 (being Laws 2002, Chapter 10, Section 1; Laws 1969, Chapter 144, Sections 53 and 54; Laws 2005, Chapter 104, Section 25; Laws 2007, Chapter 204, Section 10; Laws 1979, Chapter 347, Sections 1 and 2; Laws 2001, Chapter 57, Section 2 and Laws 2001, Chapter 337, Section 2; Laws 1979, Chapter 347, Sections 3 through 7; Laws 1983, Chapter 206, Section 6; Laws 1979, Chapter 347, Sections 8 and 9; Laws 1997, Chapter 62, Section 2; and Laws 2007, Chapter 229, Section 1, as amended) are repealed.
SECTION 23. APPLICABILITY.--
A. The provisions of Section 18 of this act apply to credit claims received on or after July 1, 2017.
B. The provisions of Section 21 of this act apply to taxable years beginning on or after January 1, 2018.
SECTION 24. EFFECTIVE DATE.--
A. The effective date of the provisions of Section 21 of this act is January 1, 2018.
B. The effective date of the provisions of Sections 1 through 20 and 22 of this act is July 1, 2017.
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