SENATE BILL 430
49th legislature - STATE OF NEW MEXICO - first session, 2009
INTRODUCED BY
Cynthia Nava
AN ACT
RELATING TO TAXATION; CREATING A CREDIT AGAINST PERSONAL INCOME TAX IN AN AMOUNT EQUAL TO CERTAIN PROPERTY TAXES PAID BY NONRESIDENT EMPLOYEES OF CERTAIN MANUFACTURING, DISTRIBUTION OR LOGISTICS BUSINESSES LOCATED WITHIN TWENTY MILES OF AN INTERNATIONAL BORDER; AMENDING THE STANDARDS REQUIRED TO ALLOCATE INCOME TO ANOTHER STATE.
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--NONRESIDENT EMPLOYEES OF QUALIFIED BUSINESSES--AMOUNT OF NONRESIDENT PROPERTY TAX.--
A. A nonresident taxpayer who files an individual New Mexico income tax return and who is not a dependent of another individual may claim a tax credit if the taxpayer is an employee of a business that has qualified pursuant to this section for the calendar year that includes the last day of the taxpayer's taxable year. The tax credit provided for in this section may be referred to as the "nonresident business employee tax credit".
B. The credit claimed pursuant to this section shall equal the lesser of:
(1) the amount of property tax paid by the taxpayer during the taxable year on the taxpayer's primary residence located in a state other than New Mexico; or
(2) one thousand nine hundred seventy-five dollars ($1,975).
C. The nonresident business employee tax credit shall only be deducted from the taxpayer's New Mexico income tax liability for the taxable year, and any portion of the credit that remains unused at the end of the taxpayer's taxable year shall not be carried forward.
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. To qualify for a calendar year pursuant to this section, a business shall submit documentation in a form determined by the department that includes a list of nonresident employees and that confirms that the business:
(1) is located in New Mexico within twenty miles of an international border;
(2) is a manufacturing, distribution or logistics business;
(3) has not, either in the previous calendar year or the current calendar year, qualified for an exemption from the gross receipts tax pursuant to Section 7-9-110 NMSA 1978;
(4) has a minimum of five full-time employees who are New Mexico residents; and
(5) meets one of the following criteria:
(a) the business had no payroll in New Mexico during the previous calendar year;
(b) the business had a payroll in New Mexico for less than the entire previous calendar year, and the first payroll of the current calendar year includes payments to New Mexico residents exceeding the highest monthly payroll for New Mexico residents in the previous calendar year; or
(c) the business had a payroll in New Mexico for the entire previous calendar year, and the first payroll of the current calendar year includes payments to New Mexico residents exceeding by at least ten percent the first payroll for New Mexico resident employees of the business in the previous calendar year.
F. A taxpayer may claim the nonresident business employee tax credit only for taxable years that begin within three years of the date that the taxpayer commences employment at the qualified business.
G. As used in this section:
(1) "business" means that portion of a business entity that is located within twenty miles of an international border;
(2) "distribution" means the process of transporting raw materials, components or finished products; (3) "logistics" means services, including packing, storage, transportation, document processing and services needed to distribute products; and
(4) "manufacturing" means combining or processing components or materials to increase their value for sale in the ordinary course of business. "Manufacturing" includes the generation of electricity but does not include construction, farming or the processing of natural resources and hydrocarbons."
Section 2. Section 7-2-11 NMSA 1978 (being Laws 1965, Chapter 202, Section 9, as amended) is amended to read:
"7-2-11. TAX CREDIT--INCOME ALLOCATION AND APPORTIONMENT.--
A. Net income of any individual having income that is taxable both within and without this state shall be apportioned and allocated as follows:
(1) during the first taxable year in which an individual incurs tax liability as a resident, only income earned on or after the date the individual became a resident and, in addition, income earned in New Mexico while a nonresident of New Mexico shall be allocated to New Mexico;
(2) except as provided otherwise in Paragraph (1) of this subsection, income other than compensation or gambling winnings shall be allocated and apportioned as provided in the Uniform Division of Income for Tax Purposes Act, but if the income is not allocated or apportioned by that act, then it may be allocated or apportioned in accordance with instructions, rulings or regulations of the secretary;
(3) except as provided otherwise in Paragraph (1) of this subsection, compensation and gambling winnings of a resident taxpayer shall be allocated to this state;
(4) compensation of a nonresident taxpayer shall be allocated to this state to the extent that such compensation is for activities, labor or personal services within this state; provided [(a)] that, if the activities, labor or services are performed in this state for fifteen or fewer days during the taxpayer's taxable year, the compensation may be allocated to the taxpayer's state of residence; [and
(b) if the compensation is for activities, labor or services performed for a business in the manufacturing industry in New Mexico that is located within twenty miles of an international border, that has a minimum of five full-time employees who are New Mexico residents, is not receiving development training funds under Section 21-19-7 NMSA 1978 and that meets the qualifications of one of Items 1) through 4) of this subparagraph, the compensation may be allocated to the taxpayer's state of residence: 1) the business had no payroll in New Mexico during the previous calendar year; 2) the business had a payroll in New Mexico for less than the entire previous calendar year, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding the highest monthly payroll for such residents in the previous calendar year; 3) the business had a payroll in New Mexico for the entire previous calendar year, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding by at least ten percent both the payroll for all employees in January 2001 and the payroll for New Mexico residents twelve months prior to the commencement of the new calendar year; or 4) the business had a payroll in New Mexico for the entire previous calendar year, but had no payroll in New Mexico within one year prior to January 1, 2001, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding by at least ten percent the payroll for such residents twelve months earlier;]
(5) gambling winnings of a nonresident shall be allocated to this state if the gambling winnings arose from a source within this state; and
(6) other deductions and exemptions allowable in computing net income and not specifically allocated in the Uniform Division of Income for Tax Purposes Act shall be equitably allocated or apportioned in accordance with instructions, rulings or regulations of the secretary.
B. For the purposes of this section, "non-New Mexico percentage" means the percentage determined by dividing the difference between the taxpayer's net income and the sum of the amounts allocated or apportioned to New Mexico by that net income.
C. A taxpayer may claim a credit in an amount equal to the amount of tax determined to be due under Section 7-2-7 or 7-2-7.1 NMSA 1978 multiplied by the non-New Mexico percentage."
Section 3. DELAYED REPEAL.--Section 1 of this act is repealed effective January 1, 2020.
Section 4. APPLICABILITY.--The provisions of this act are applicable to taxable years beginning on or after January 1, 2010 and prior to January 1, 2020.
Section 5. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2010.
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