44th legislature - STATE OF NEW MEXICO - second session, 2000
RELATING TO TAXATION; PROMOTING RURAL AGRICULTURAL PROCESSING OPERATIONS; ESTABLISHING THE AGRICULTURE PROCESSING CLUSTER PILOT PROJECT; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. A new section of the Economic Development Department Act is enacted to read:
"[NEW MATERIAL] AGRICULTURE PROCESSING CLUSTER PILOT PROJECT--SECRETARY'S DUTIES--CRITERIA--DEFINITIONS.--
A. The secretary shall establish the "agriculture processing cluster pilot project" in consultation with the New Mexico department of agriculture to encourage the increased use of agricultural commodities produced in the state through the establishment of new and expansion of existing agricultural processing operations.
B. The secretary may select up to six applicants each year to participate in an agriculture processing cluster pilot project based on the following criteria:
(1) the feasibility of the existing or proposed agricultural processing operation to remain a viable enterprise and the degree to which the agricultural processing operation will increase the use of agricultural commodities produced in the state;
(2) the level of need of the region where the existing agricultural processing operation or the proposed agricultural processing operation is to be located;
(3) the degree to which the agricultural processing operation will provide new jobs in the state;
(4) the degree to which the agricultural processing operation produces a product that may be used in another agricultural processing operation in the area of operation; and
(5) whether the agricultural processing operation is participating in a regional or local government economic development plan or project pursuant to the Local Economic Development Act, is located in an enterprise zone as defined by the Enterprise Zone Act or is located in a rural area.
C. The secretary shall inform applicants of any tax credits and tax deductions for which participants in the agriculture processing cluster pilot project qualify.
D. As used in this section:
(1) "agricultural processing operation" means a plant, business or establishment at which personnel are employed for the purpose of processing agricultural products, including storage, handling, packaging and similar activities associated with processing; and
(2) "rural area" means any part of the state other than:
(a) an H class county;
(b) an incorporated municipality within a metropolitan statistical area if the municipality's population is thirty thousand or more according to the most recent federal decennial census; and
(c) any area within ten miles of the exterior boundaries of a municipality described in Subparagraph (b) of this paragraph."
Section 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:
"[NEW MATERIAL] CORPORATE INCOME AND FRANCHISE TAX--CREDIT--PRODUCTIVE CAPITAL OF CERTAIN AGRICULTURAL PROCESSING OPERATIONS--DEFINITIONS.--
A. An agricultural processing operation that is a qualified entity that files a New Mexico corporate income tax return may claim a tax credit against corporate income tax in an amount, not to exceed thirty thousand dollars ($30,000), equal to the following percentages of the cost of productive capital used exclusively for agricultural processing.
For taxable years beginning Percentage
on or after January 1 of the
year the taxpayer becomes a
qualified entity:
year 1 25 percent
year 2 20 percent
year 3 15 percent
year 4 10 percent
year 5 5 percent
year 6 0 percent.
B. To qualify for the credit pursuant to Subsection A of this section, the productive capital must be placed in service in New Mexico during the taxable year for which the credit is claimed.
C. The credit may be deducted from the taxpayer's corporate income tax liability; provided that, if the credit exceeds that liability for the taxable year in which the productive capital was placed in service, the taxpayer may carry forward the credit for up to a total of five taxable years, in which case the percentage indicated for the year in which the credit is initially available applies, or until the credit is exhausted, whichever occurs first. A taxpayer may claim the credit for each taxable year in which productive capital is placed in service; provided that the maximum aggregate credit allowable for any taxable year shall not exceed thirty thousand dollars ($30,000).
D. A taxpayer may not claim the credit provided by the provisions of this section if the taxpayer has claimed a credit for the same productive capital pursuant to the Investment Credit Act.
E. As used in this section:
(1) "agricultural processing operation" means a plant, business or establishment at which personnel are employed for the purpose of processing agricultural products, including storage, handling, packaging and similar activities associated with processing;
(2) "productive capital" means tangible personal property that is depreciable, has a useful life of at least three years and is used exclusively as an integral part of the agricultural processing process; and
(3) "qualified entity" means an entity certified by the secretary of economic development as a part of the agriculture processing cluster pilot project and that is participating in a regional or local government economic development plan or project pursuant to the Local Economic Development Act, is located in an enterprise zone as defined by the Enterprise Zone Act or is located in a rural area. For purposes of this paragraph, "rural area" means any part of the state other than:
(a) an H class county;
(b) an incorporated municipality within a metropolitan statistical area if the municipality's population is thirty thousand or more according to the most recent federal decennial census; and
(c) any area within ten miles of the exterior boundaries of a municipality described in Subparagraph (b) of this paragraph."
Section 3. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:
"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--SALE OF CERTAIN SERVICES, MATERIALS AND EQUIPMENT FOR AGRICULTURAL PROCESSING OPERATIONS--DEFINITIONS.--
A. An agricultural processing operation that is a qualified entity may deduct from gross receipts:
(1) receipts from the sale of construction services to expand existing or construct new facilities for an agricultural processing operation located in New Mexico if the construction service is sold to a person who delivers a nontaxable transaction certificate to the person performing the construction service;
(2) receipts from the sale of construction materials purchased for use to expand existing or construct new facilities for an agricultural processing operation located in New Mexico if the materials are sold to a person who delivers a nontaxable transaction certificate to the person selling the materials;
(3) receipts from the sale of agricultural processing equipment purchased for use in a new or expanded agricultural processing operation located in New Mexico if the equipment is sold to a person who delivers a nontaxable transaction certificate to the person selling the equipment; and
(4) receipts from the sale of installation services necessary to install agricultural processing equipment in a new or expanded agricultural processing operation located in New Mexico if the installation service is sold to a person who delivers a nontaxable transaction certificate to the person performing the installation service.
B. As used in this section:
(1) "agricultural processing equipment" means equipment necessary to conduct a new or expanded agricultural processing operation;
(2) "agricultural processing operation" means a plant, business or establishment at which personnel are employed for the purpose of processing agricultural products, including storage, handling, packaging and similar activities associated with processing;
(3) "agricultural product" means a raw or unprocessed product of a plant or animal;
(4) "construction service" means a service necessary to construct or expand an agricultural processing operation;
(5) "installation service" means a service required to install and make operational agricultural processing equipment necessary to conduct an agricultural processing operation; and
(6) "qualified entity" means an entity certified by the secretary of economic development as a part of the agriculture processing cluster pilot project and that is participating in a regional or local government economic development plan or project pursuant to the Local Economic Development Act, is located in an enterprise zone as defined by the Enterprise Zone Act or is located in a rural area. For purposes of this paragraph, "rural area" means any part of the state other than:
(a) an H class county;
(b) the state fairgrounds;
(c) an incorporated municipality within a metropolitan statistical area if the municipality's population is thirty thousand or more according to the most recent federal decennial census; and
(d) any area within ten miles of the exterior boundaries of a municipality described in Subparagraph (c) of this paragraph.
C. Election by a taxpayer to deliver the nontaxable transaction certificate necessary to support a deduction for receipts from the sale of agricultural processing equipment, pursuant to the provisions of this section, shall preclude availability of the investment credit that would be available with regard to the same equipment pursuant to the provisions of the Investment Credit Act."
Section 4. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] INCOME TAX CREDIT--PRODUCTIVE CAPITAL OF CERTAIN AGRICULTURAL PROCESSING OPERATIONS--DEFINITIONS.--
A. A taxpayer who files an individual New Mexico income tax return, who is not a dependent of another individual and who is the owner of an agricultural processing operation that is a qualified entity may claim a credit in an amount, not to exceed thirty thousand dollars ($30,000), equal to the following percentages of the cost of productive capital used exclusively for agricultural processing.
For taxable years beginning Percentage
on or after January 1 of the
year the taxpayer becomes a
qualified entity:
year 1 25 percent
year 2 20 percent
year 3 15 percent
year 4 10 percent
year 5 5 percent
year 6 0 percent.
B. To qualify for the credit pursuant to Subsection A of this section, the productive capital must be placed in service in New Mexico during the taxable year for which the credit is claimed.
C. The credit may be deducted from the taxpayer's individual income tax liability; provided that, if the credit exceeds that liability for the taxable year in which the productive capital was placed in service, the taxpayer may carry forward the credit for up to a total of five taxable years, in which case the percentage indicated for the year in which the credit is initially available applies, or until the credit is exhausted, whichever occurs first. A taxpayer may claim the credit for each taxable year in which productive capital is placed in service; provided that the maximum aggregate credit allowable for any taxable year shall not exceed thirty thousand dollars ($30,000).
D. A taxpayer may not claim the credit provided by the provisions of this section if the taxpayer has claimed a credit for the same productive capital pursuant to the Investment Credit Act.
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 credit that would have been allowed on a joint return.
F. A taxpayer who otherwise qualifies for and claims a credit pursuant to this section for a partnership, limited partnership, limited liability company, S corporation or other business association of which the taxpayer is a member may claim a credit only in proportion to his interest in the partnership, limited partnership, limited liability company, S corporation or association. The total credit claimed by all members of the business shall not exceed the maximum tax credit allowable pursuant to Subsection A of this section.
G. As used in this section:
(1) "agricultural processing operation" means a plant, business or establishment at which personnel are employed for the purpose of processing agricultural products, including storage, handling, packaging and similar activities associated with processing;
(2) "productive capital" means tangible personal property that is depreciable, has a useful life of at least three years and is used exclusively as an integral part of the agricultural processing process; and
(3) "qualified entity" means an entity certified by the secretary of economic development as a part of the agriculture processing cluster pilot project and that is participating in a regional or local government economic development plan or project pursuant to the Local Economic Development Act, is located in an enterprise zone as defined by the Enterprise Zone Act or is located in a rural area. For purposes of this paragraph, "rural area" means any part of the state other than:
(a) an H class county;
(b) an incorporated municipality within a metropolitan statistical area if the municipality's population is thirty thousand or more according to the most recent federal decennial census; and
(c) any area within ten miles of the exterior boundaries of a municipality described in Subparagraph (b) of this paragraph."
Section 5. Section 7-2E-1 NMSA 1978 (being Laws 1999, Chapter 183, Section 1) is amended to read:
"7-2E-1. TAX CREDIT--RURAL JOB TAX CREDIT.--
A. The tax credit created by this section may be referred to as the "rural job tax credit". Until June 30, 2006, every eligible employer may apply for, and the taxation and revenue department may allow, a tax credit for each qualifying job the employer creates in the period beginning July 1, 2000 and ending June 30, 2005. The maximum tax credit amount with respect to each qualifying job is equal to:
(1) twenty-five percent of the first sixteen thousand dollars ($16,000) in wages paid for the qualifying job if the job is performed or based at a location in a tier one area; or
(2) twelve and one-half percent of the first sixteen thousand dollars ($16,000) in wages paid if the qualifying job is performed or based at a location in a tier two area.
B. As used in this section:
(1) "eligible employee" means any individual other than 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 any individual who owns, directly or indirectly, more than fifty percent of the capital and profits interests 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; or
(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 any individual who owns, directly or indirectly, more than fifty percent of the capital and profits interests in the entity or, if the employer is an estate or trust, of a grantor, beneficiary or fiduciary of the estate or trust;
(2) "eligible employer" means an employer
who has been approved for in-plant training assistance pursuant to Section 21-19-7 NMSA 1978 or is part of the agriculture processing cluster pilot project;
(3) "metropolitan statistical area" means a metropolitan statistical area in New Mexico as determined by the United States bureau of the census;
(4) "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 that 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 rural job 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;
(5) "qualifying job" means a job established by the employer that:
(a) qualifies for in-plant training assistance or the agriculture processing cluster pilot project; and
(b) is occupied by an eligible employee for at least forty-eight weeks of a qualifying period;
(6) "qualifying period" means the period of twelve months beginning on the day an eligible employee begins working in a qualifying job or the period of twelve months beginning on the anniversary of the day an eligible employee began working in a qualifying job;
(7) "rural area" means any part of the state other than:
(a) an H class county;
(b) the state fairgrounds;
(c) an incorporated municipality within a metropolitan statistical area if the municipality's population is thirty thousand or more according to the most recent federal decennial census; and
(d) any area within ten miles of the exterior boundaries of a municipality described in Subparagraph (c) of this paragraph;
(8) "tier one area" means:
(a) any municipality within the rural area if the municipality's population according to the most recent federal decennial census is fifteen thousand or less; or
(b) any part of the rural area that is not within the exterior boundaries of a municipality;
(9) "tier two area" means any municipality within the rural area if the municipality's population according to the most recent federal decennial census is more than fifteen thousand; and
(10) "wages" means wages as defined by Paragraphs (1), (2) and (3) of 26 U.S.C. Section 51(c).
C. The amount of the rural job tax credit shall be six and one-fourth percent of the first sixteen thousand dollars ($16,000) in wages paid for the qualifying job in a qualifying period. The rural job tax credit may be claimed for each qualifying job for a maximum of:
(1) four qualifying periods for each qualifying job performed or based at a location in a tier one area; and
(2) two qualifying periods for each qualifying job performed or based at a location in a tier two area.
D. With respect to each qualifying job for which an eligible employer seeks the rural job tax credit, the employer shall request the economic development department to certify the amount of wages paid to each eligible employee during each qualifying period, the number of weeks during the qualifying period the position was occupied and whether the qualifying job was in a tier one or tier two area. The economic development department may require the employer to submit such information as is necessary for the economic development department to make the certification requested. When the economic development department obtains sufficient information, either from its own records or from the employer, the economic development department shall make the certification requested.
E. The economic development department shall determine which employers are eligible employers and shall report the listing of eligible businesses to the taxation and revenue department in a manner and at times the departments shall agree upon.
F. To receive a rural job tax credit with respect to any qualifying period, an eligible employer must apply to the taxation and revenue department on forms and in the manner the department may prescribe. The application shall include a copy of the certification from the economic development department made pursuant to Subsection D of this section. If all the requirements of this section have been complied with, the taxation and revenue department may issue to the applicant a document granting a tax credit for the respective qualifying period. The tax credit document shall be numbered for identification and declare its date of issuance and the amount of rural job tax credit allowed for the respective jobs created. Such tax credit documents may be sold, exchanged or otherwise transferred and can be carried forward for a period of three years from the date of issuance. The parties to such a transaction shall notify the department of the sale, exchange or transfer within ten days of the sale, exchange or transfer.
G. The holder of the tax credit document may apply all or a portion of the rural job tax credit granted by the document against the holder's modified combined tax liability, personal income tax liability or corporate income tax liability. Any balance of rural job tax credit granted by the document may be carried forward for up to three years from the date of issuance of the tax credit document. No amount of rural job tax credit may be applied against a gross receipts tax imposed by a municipality or county.
H. Notwithstanding the provisions of Section 7-1-8 NMSA 1978, the taxation and revenue department may disclose to any person the balance of rural job tax credit remaining on any tax credit document and the balance of credit remaining on that document for any period.
I. The secretary of economic development, the secretary of taxation and revenue and the secretary of labor or their designees shall annually evaluate the effectiveness of the rural job tax credit in stimulating economic development in the rural areas of New Mexico and make a joint report of their findings to each session of the legislature so long as the rural job tax credit is in effect."