SENATE BILL 309
47th legislature - STATE OF NEW MEXICO - first session, 2005
INTRODUCED BY
Mary Kay Papen
FOR THE WATER AND NATURAL RESOURCES COMMITTEE
AN ACT
RELATING TO TAXATION; PROVIDING A PERSONAL INCOME TAX CREDIT AND A CORPORATE INCOME TAX CREDIT FOR AGRICULTURAL WATER CONSERVATION EXPENSES; PROVIDING FOR A DELAYED REPEAL.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] TAX CREDIT--AGRICULTURAL WATER CONSERVATION EXPENSES.--
A. A taxpayer may claim a credit against the taxpayer's income tax liability equal to seventy-five percent of incurred expenses, not to exceed a maximum annual credit of ten thousand dollars ($10,000), for eligible improvements in irrigation systems or water management methods. The credit may be claimed for the taxable year in which the expenses are incurred if the taxpayer:
(1) in that year owned or leased a water right appurtenant to the land on which an eligible improvement was made;
(2) files an individual New Mexico income tax return for that year;
(3) in that year is not a dependent of another individual; and
(4) does not take a tax credit for the same expense on any corporate tax return filed by the taxpayer.
B. As used in this section, "eligible improvement in irrigation systems or water management methods" means an improvement that is:
(1) made after January 1, 2006;
(2) consistent and complies with a water conservation plan approved by the local soil and water conservation district in which the improvement is located; and
(3) primarily designed to substantially conserve water on land in New Mexico that is owned or leased by the taxpayer and used by the taxpayer or the taxpayer's lessee to:
(a) produce agricultural products;
(b) harvest or grow trees; or
(c) sustain livestock.
C. Taxpayers who are considered for federal income tax purposes as co-owners of the land on which an eligible improvement in irrigation systems or water management methods is made may claim the pro rata share of the credit allowed pursuant to this section based on the co-owner's ownership interest. The total of the credits allowed all the taxpayers considered co-owners may not exceed the amount that would have been allowed a sole owner of the land.
D. 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.
E. If the allowable tax credit in a taxable year exceeds the income taxes otherwise due from a taxpayer pursuant to the Income Tax Act, or if there are no income taxes due from the taxpayer, the taxpayer may carry forward the amount of the credit not used in that year to offset the taxpayer's liability for income taxes pursuant to the Income Tax Act for not more than five consecutive taxable years.
F. The soil and water conservation commission, with information provided by the state engineer, shall promulgate rules to implement this section, and those rules shall include detailed guidelines to assist the department in determining whether improvements in irrigation systems or water management methods qualify for the credit available under this section.
G. A taxpayer claiming the credit shall provide documentary evidence of the amount of water conserved during the period for which the credit is claimed if requested by the department.
H. Water conserved due to improvements in irrigation systems or water management methods and for which a credit is claimed shall not be subject to abandonment or forfeiture, nor shall the conserved water be put to consumptive beneficial use."
Section 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:
"[NEW MATERIAL] TAX CREDIT--AGRICULTURAL WATER CONSERVATION EXPENSES.--
A. A taxpayer may claim a credit against the taxpayer's corporate income tax liability equal to seventy-five percent of incurred expenses, not to exceed a maximum annual credit of ten thousand dollars ($10,000), for eligible improvements in irrigation systems or water management methods. The credit may be claimed for the taxable year in which the expenses are incurred if the taxpayer:
(1) in that year owned or leased a water right appurtenant to the land on which an eligible improvement was made; and
(2) files a New Mexico corporate income tax return for that year.
B. As used in this section, "eligible improvement in irrigation systems or water management methods" means an improvement that is:
(1) made after January 1, 2006;
(2) consistent and complies with a water conservation plan approved by the local soil and water conservation district in which the improvement is located; and
(3) primarily designed to substantially conserve water on land in New Mexico that is owned or leased by the taxpayer and used by the taxpayer or the taxpayer's lessee to:
(a) produce agricultural products;
(b) harvest or grow trees; or
(c) sustain livestock.
C. Taxpayers that are considered for federal income tax purposes as co-owners of the land, or co-owners of a pass-through entity that owns the land, on which an eligible improvement in irrigation systems or water management methods is made may claim the pro rata share of the credit allowed pursuant to this section based on the co-owner's ownership interest. The total of the credits allowed all the taxpayers considered co-owners may not exceed the amount that would have been allowed a sole owner of the land.
D. If the allowable tax credit in a taxable year exceeds the corporate income taxes otherwise due from a taxpayer pursuant to the Corporate Income and Franchise Tax Act, or if there are no taxes due pursuant to the Corporate Income and Franchise Tax Act, the taxpayer may carry forward the amount of the credit not used in that year to offset the taxpayer's liability for corporate income taxes pursuant to the Corporate Income and Franchise Tax Act for not more than five consecutive tax years.
E. The soil and water conservation commission, with information provided by the state engineer, shall promulgate rules to implement this section, including detailed guidelines to assist the department in determining whether improvements in irrigation systems or water management methods qualify for the credit available under this section.
F. A taxpayer claiming the credit shall provide documentary evidence of the amount of water conserved during the period for which the credit is claimed if requested by the department.
G. Water conserved due to improvements in irrigation systems or water management methods and for which a credit is claimed shall not be subject to abandonment or forfeiture, nor shall the conserved water be put to consumptive beneficial use."
Section 3. CONTINUED APPLICABILITY OF TAX CREDIT.--The balance of a tax credit granted before December 31, 2010 to a taxpayer pursuant to Section 1 or 2 of this act may be applied after that date in the manner provided for in Section 1 or 2 of this act against the taxpayer's personal or corporate income tax liability, as applicable, as if the provisions of Sections 1 and 2 of this act were still in effect.
Section 4. DELAYED REPEAL.--Sections 1 and 2 of this act are repealed effective January 1, 2011. Section 3 of this act is repealed effective January 1, 2015.
Section 5. APPLICABILITY.--The provisions of this act apply to taxable years beginning on and after January 1, 2006 and ending on or before December 31, 2010.
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