SENATE BILL 74

50th legislature - STATE OF NEW MEXICO - second session, 2012

INTRODUCED BY

Stephen H. Fischmann

AN ACT

RELATING TO TAXATION; PROVIDING INCOME TAX CREDITS FOR CERTAIN SERVICES INCURRED BETWEEN BUSINESSES; REDUCING THE DEDUCTION FOR CAPITAL GAIN INCOME; REQUIRING COMBINED REPORTING FOR CERTAIN UNITARY CORPORATIONS; INCREASING THE MOTOR VEHICLE EXCISE TAX.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 7-2-34 NMSA 1978 (being Laws 1999, Chapter 205, Section 1, as amended) is amended to read:

     "7-2-34. DEDUCTION--NET CAPITAL GAIN INCOME.--

          A. Except as provided in Subsection C of this section, a taxpayer may claim a deduction from net income in an amount equal to the greater of:

                (1) the taxpayer's net capital gain income for the taxable year for which the deduction is being claimed, but not to exceed one thousand dollars ($1,000); or

                (2) the following percentage of the taxpayer's net capital gain income for the taxable year for which the deduction is being claimed:

                     (a) for a taxable year beginning in 2003, ten percent;

                     (b) for a taxable year beginning in 2004, twenty percent;

                     (c) for a taxable year beginning in 2005, thirty percent;

                     (d) for a taxable year beginning in 2006, forty percent; [and]

                     (e) for taxable years beginning [on or after January 1] in 2007 through 2012, fifty percent; and

                     (f) for taxable years beginning on or after January 1, 2013, twenty-five percent.

          B. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the deduction provided by this section that would have been allowed on the joint return.

          C. A taxpayer may not claim the deduction provided in Subsection A of this section if the taxpayer has claimed the credit provided in Section 7-2D-8.1 NMSA 1978.

          D. As used in this section, "net capital gain" means "net capital gain" as defined in Section 1222 (11) of the Internal Revenue Code."

     SECTION 2. A new section of the Income Tax Act is enacted to read:

     "[NEW MATERIAL] TAX CREDIT--BUSINESS SERVICES.--

          A. A taxpayer who files an individual New Mexico income tax return for a taxable year beginning on or after January 1, 2013, who is not a dependent of another taxpayer and who paid gross receipts taxes on business services during the taxable year pursuant to the Gross Receipts and Compensating Tax Act may claim and the department may allow a tax credit equal to five and one hundred twenty-five thousandths percent of the value of business services purchased in the taxable year. The tax credit that may be claimed pursuant to this section may be referred to as the "business services income tax credit". The business services income tax credit allowed shall not exceed thirteen thousand dollars ($13,000) for a taxpayer for a taxable year.

          B. The purpose of the business services income tax credit is to reduce the effects of pyramiding of gross receipts taxes and therefore reduce the price of goods produced in New Mexico by providing a credit for certain gross receipts taxes for business services that occur between businesses.

          C. Prior to July 1, 2013, the department shall adopt rules to identify or limit the types of business services that are eligible for the business services income tax credit.

          D. A taxpayer who otherwise qualifies and claims a business services income tax credit that may be claimed by a partnership of which the taxpayer is a member may only claim a credit in proportion to the taxpayer's interest in the partnership. The total credit claimed by all members of the partnership shall not exceed the aggregate of the allowable costs pursuant to Subsection A of this section.

          E. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the business services income tax credit that would have been allowed on a joint return.

          F. The department shall compile an annual report that includes the number of taxpayers approved by the department to receive a business services income tax credit and the total allowed amount of business services income tax credits. Notwithstanding any other section of law to the contrary, the department may disclose the number of taxpayers allowed to receive the business services income tax credit, the amount of each credit approved and any other information required by the legislature or the department to aid in evaluating the impact of the business services income tax credit.

          G. As used in this section, "business services" means the services of architects, archaeologists, engineers, surveyors, landscape architects, medical arts practitioners, scientists, management and systems analysts, certified public accountants, registered public accountants, lawyers, psychologists, planners, researchers, construction managers and other persons or businesses providing similar professional services, which may be designated as such by a determination issued by the department, that occur between businesses and that are subject to the gross receipts tax and are not subject to any other tax credit or exemption under the Income Tax Act other than the business services income tax credit."

     SECTION 3. Section 7-2A-8.3 NMSA 1978 (being Laws 1983, Chapter 213, Section 12, as amended by Laws 1993, Chapter 307, Section 4 and also by Laws 1993, Chapter 309, Section 2) is amended to read:

     "7-2A-8.3. COMBINED RETURNS.--

          A. A unitary corporation that is subject to taxation under the Corporate Income and Franchise Tax Act and that has not previously filed [a combined return pursuant to this section or] a consolidated return pursuant to Section 7-2A-8.4 NMSA 1978 [may elect to] shall file a combined return with other unitary corporations as though the entire combined net income were that of one corporation. The return filed under this method of reporting shall include the net income of all the unitary corporations. Transactions among the unitary corporations may be eliminated by applying the appropriate rules for reporting income for a consolidated federal income tax return. Any corporation that has filed an income tax return with New Mexico pursuant to Section 7-2A-8.4 NMSA 1978 shall not file pursuant to this section unless the secretary gives prior permission to file on a combined return basis.

          B. Once corporations have reported net income through a combined return for any taxable year, they shall file combined returns for subsequent taxable years, so long as they remain unitary corporations, unless the corporations elect to file pursuant to Section 7-2A-8.4 NMSA 1978 or unless the secretary grants prior permission for one or more of the corporations to file individually.

          [C. For taxable years beginning on or after January 1, 1993, no unitary corporation once included in a combined return may elect, or be granted permission by the secretary, for any subsequent taxable year to separately account pursuant to Paragraph (4) of Subsection A of Section 7-2A-8 NMSA 1978.]"

     SECTION 4. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

     "[NEW MATERIAL] TAX CREDIT--BUSINESS-TO-BUSINESS TRANSACTIONS.--

          A. A taxpayer that files a New Mexico corporate income tax return for a taxable year beginning on or after January 1, 2013 and that has paid gross receipts tax on business services during the taxable year pursuant to the Gross Receipts and Compensating Tax Act may claim and the department may allow a tax credit against the taxpayer's corporate income tax liability equal to five and one hundred twenty-five thousandths percent of the value of business services purchased in the taxable year. The tax credit provided in this section may be referred to as the "business services corporate income tax credit". The business services corporate income tax credit allowed by the department shall not exceed thirteen thousand dollars ($13,000) for a taxpayer for a taxable year.

          B. The purpose of the business services corporate income tax credit is to reduce pyramiding of gross receipts taxes and therefore reduce the price of goods produced in New Mexico by providing a credit for certain gross receipts taxes for business services that occur between businesses.

          C. Prior to July 1, 2013, the department shall adopt rules to identify or limit the types of business services that will be eligible for the business services corporate income tax credit.

          D. The department shall compile an annual report that includes the number of taxpayers approved by the department to receive a business services corporate income tax credit and the total allowed amount of business services corporate income tax credits. Notwithstanding any other section of law to the contrary, the department may disclose the number of taxpayers allowed to receive the business services corporate income tax credit, the amount of each credit approved and any other information required by the legislature or the department to aid in evaluating the impact of the business services corporate income tax credit.

          E. As used in this section, "business services" means the services of architects, archaeologists, engineers, surveyors, landscape architects, medical arts practitioners, scientists, management and systems analysts, certified public accountants, registered public accountants, lawyers, psychologists, planners, researchers, construction managers and other persons or businesses providing similar professional services, which may be designated as such by a determination issued by the department, that occur between businesses and that are subject to the gross receipts tax and are not subject to any other tax credit or exemption under the Corporate Income and Franchise Tax Act other than the business services corporate income tax credit." 

     SECTION 5. Section 7-14-4 NMSA 1978 (being Laws 1988, Chapter 73, Section 14) is amended to read:

     "7-14-4. DETERMINATION OF AMOUNT OF MOTOR VEHICLE EXCISE TAX.--The rate of the motor vehicle excise tax is [three] four percent and is applied to the price paid for the vehicle. If the price paid does not represent the value of the vehicle in the condition that existed at the time it was acquired, the tax rate shall be applied to the reasonable value of the vehicle in such condition at such time. [However, allowances granted for vehicle trade-ins may be deducted from the price paid or the reasonable value of the vehicle purchased.]"

     SECTION 6. APPLICABILITY.--The provisions of Sections 1 through 4 of this act apply to taxable years beginning on or after January 1, 2013.

     SECTION 7. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2013.

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