45th legislature - STATE OF NEW MEXICO - second session, 2002

RELATING TO TAXATION; CREATING THE NEW JOB TAX CREDIT; PROVIDING FOR A TAX CREDIT FOR NEW JOBS CREATED IN TIMES OF INCREASED STATEWIDE UNEMPLOYMENT.

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

Section 1. TAX CREDIT--NEW JOB TAX CREDIT.--

A. The tax credit created by this section may be referred to as the "new job tax credit". An eligible employer may apply for, and the taxation and revenue department may allow, a tax credit for each qualifying job the employer creates in a distressed period beginning July 1, 2002. The maximum tax credit amount with respect to each qualifying job is equal to twenty-five percent of the first sixteen thousand dollars ($16,000) in wages paid for the qualifying job.

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 a nongovernmental employer, other than one whose business is registered with the taxation and revenue department as primarily a retail business, whose place of business is located in New Mexico;

(3) "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 the compensating tax and the withholding tax, minus the amount of any credit other than the new job tax credit applied against any or all of these taxes; but "modified combined tax liability" excludes all amounts collected with respect to local option gross receipts taxes;

(4) "qualifying job" means a permanent full-time position in a business located in the state during a distressed period statewide, or in a county during a distressed period for that county, paying a wage of least ten dollars ($10.00) per hour that is occupied by an eligible employee who has not been counted to meet this employment requirement for any prior claim in addition to the number of full-time employees employed on the day six months prior to the day on which the taxpayer applies for the credit; the new position must be occupied by a full-time employee for at least forty-eight weeks of a qualifying period;

(5) "qualifying period" means the period of twelve months beginning on the day an eligible employee begins working in a qualifying job during a distressed period or the period of twelve months beginning on the anniversary of the day an eligible employee began working in a qualifying job during a distressed period;

(6) "distressed period" statewide means the period beginning with the month during which the seasonally adjusted monthly state unemployment rate exceeds the state's rate for that month the previous year by more than five-tenths percent; for an individual county, "distressed period" means the period beginning with the month during which that county's seasonally adjusted monthly unemployment rate exceeds the county's rate for that month the previous year by more than five-tenths percent; and

(7) "wages" means wages as defined by Paragraphs (1), (2) and (3) of 26 U.S.C. Section 51(c).

C. The amount of the new job tax credit shall be twenty-five percent of the first sixteen thousand dollars ($16,000) in wages paid for the qualifying job in a qualifying period. The new job tax credit may be claimed for each qualifying job for a maximum of two qualifying periods for each qualifying job performed in the state.

D. With respect to each qualifying job for which an eligible employer seeks the new job tax credit, the employer shall certify the amount of wages paid to each eligible employee during each qualifying period and the number of weeks during the qualifying period the position was occupied. The taxpayer may begin taking the tax credit at the end of the first month the new position is filled by an eligible employee provided that the taxpayer shall reimburse the department for any new job tax credit claimed if during the qualifying period the position does not meet the specifications for a qualifying job.

E. To receive a new job tax credit with respect to and during any qualifying period, an eligible employer shall apply to the taxation and revenue department on forms and in the manner the department may prescribe.

F. The taxpayer may apply all or a portion of the new job tax credit against the taxpayer's:

(1) modified combined tax liability; and

(2) personal income tax liability or corporate income tax liability minus the amount of any credit, other than the new job tax credit, applied against the taxpayer's personal or corporate income tax liability for the taxable year. No amount of new job tax credit may be applied against a gross receipts tax imposed by a municipality or county.

G. 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 new job tax credit in alleviating unemployment and stimulating the economy of New Mexico and make a joint report of their findings to each session of the legislature so long as the new job tax credit is in effect.