44th legislature - STATE OF NEW MEXICO - 2nd special session, 2000

RELATING TO TAXATION; ENACTING THE TECHNOLOGY STARTUP TAX CREDIT ACT.

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

Section 1. SHORT TITLE.--This act may be cited as the "Technology Startup Tax Credit Act".

Section 2. PURPOSE OF ACT.--It is the purpose of the Technology Startup Tax Credit Act to provide a favorable tax climate for startup technology businesses in New Mexico, thereby promoting increased employment and higher wages in New Mexico.

Section 3. DEFINITIONS.--As used in the Technology Startup Tax Credit Act:

A. "business" means a corporation, general partnership, limited partnership, limited liability company or other similar entity;

B. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

C. "qualified business" means a business that has made qualified expenditures for the relevant period of at least twenty percent of its total revenues for that period;

D. "qualified expenditure" means an expenditure by a taxpayer in connection with qualified research, but not including any expenditure on property that is owned by a municipality or county in connection with an industrial revenue bond project or property for which the taxpayer has received any credit pursuant to the Capital Equipment Tax Credit Act or the Investment Credit Act;

E. "qualified research" means research:

(1) that is undertaken for the purpose of discovering information:

(a) that is technological in nature; and

(b) the application of which is intended to be useful in the development of a new or improved business component of the taxpayer; and

(2) substantially all of the activities that constitute elements of a process of experimentation related to new or improved function, performance, reliability or quality, but not related to style, taste, cosmetic or seasonal design factors; and

F. "taxpayer" means a person liable for payment of any tax, a person responsible for withholding and payment or collection and payment of any tax or a person to whom an assessment has been made if the assessment remains unabated or the amount thereof has not been paid.

Section 4. ADMINISTRATION OF THE ACT.--The department shall administer the Technology Startup Tax Credit Act pursuant to the Tax Administration Act.

Section 5. CREDIT--AMOUNT--CLAIMANT.--The credit provided by the Technology Startup Tax Credit Act is an amount equal to any gross receipts taxes, compensating taxes or withholding taxes due to the state of New Mexico paid or payable by a taxpayer with respect to a qualified business.

Section 6. ELIGIBILITY REQUIREMENTS.--A taxpayer may claim the credit pursuant to the Technology Startup Tax Credit Act for a period ending fifty-nine calendar months after the first calendar month for which a claim for the credit is made but may not claim the credit for any calendar month:

A. that is more than fifty-nine consecutive calendar months after the first month for which a claim for the credit is made;

B. after which the qualified business employs more than fifty employees on a full-time-equivalent basis;

C. in a fiscal year of the qualified business after the first fiscal year in which that business has total revenues in excess of ten million dollars ($10,000,000);

D. after the calendar month in which more than fifty percent of the qualified business's voting securities or other equity interests having the right to designate or elect the board of directors or other governing body of that business are owned directly or indirectly by another business; or

E. if the business was not a qualified business in the twelve-calendar-month period ending with that calendar month.

Section 7. CLAIMING THE CREDIT FOR CERTAIN TAXES.--

A. A taxpayer shall apply for approval of a credit within one year after the end of the calendar month for which the credit is claimed.

B. A taxpayer having applied for and been granted approval for a credit pursuant to the Technology Startup Tax Credit Act may claim the amount of the credit first against the taxpayer's withholding tax and thereafter against the taxpayer's gross receipts tax and compensating tax due to the state of New Mexico; provided that no taxpayer may claim an amount of credit for any reporting period that exceeds the sum of the taxpayer's gross receipts tax, compensating tax and withholding tax for that period.

C. A credit not claimed against the taxpayer's gross receipts tax, compensating tax or withholding tax due for a reporting period may be claimed in subsequent reporting periods.

Section 8. CREDIT CLAIM FORMS.--The department shall provide credit claim forms. A credit claim form shall accompany any return in which the taxpayer applies for an approved credit, and the claim shall specify the amount of credit intended to apply to each return.