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

RELATING TO TAXATION; PROVIDING A GROSS RECEIPTS TAX DEDUCTION FOR CERTAIN SOFTWARE DEVELOPMENT SERVICES; ENACTING A NEW SECTION OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT.

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

Section 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--SALE OF SOFTWARE DEVELOPMENT SERVICES.--

A. The receipts of an eligible software company from the sale of software development services that are performed in a qualified area may be deducted from gross receipts.

B. As used in this section:

(1) "eligible software company" means a taxpayer whose primary business in New Mexico is providing software development services and who had no business location in New Mexico other than in a qualified area during the period for which a deduction pursuant to this section is sought;

(2) "qualified area" means an area within New Mexico outside the boundaries of incorporated municipalities with populations of more than fifty thousand according to the most recent federal decennial census; and

(3) "software development services" means custom software design and development and web site design and development, but does not include software implementation or support services.

C. In the 2006 interim, the department and representatives of the software development industry shall report to the revenue stabilization and tax policy committee and the legislative finance committee on the fiscal and economic impact of the software development services deduction provided in this section. The report shall include data on the use of the deduction, the geographic locations of the eligible software companies claiming the deduction and increases in the payrolls and the number of software development companies in qualified areas in the state since enactment of the deduction. The committees shall report their findings and any recommendations to the first session of the forty-eighth legislature."