HOUSE BILL 193

53rd legislature - STATE OF NEW MEXICO - first session, 2017

INTRODUCED BY

Daymon Ely

AN ACT

RELATING TO TAXATION; MAKING THE SOLAR MARKET DEVELOPMENT INCOME TAX CREDIT PERMANENT; COMBINING THE SOLAR MARKET SYSTEMS AND PHOTOVOLTAIC SYSTEMS AGGREGATE CAPS INTO ONE AGGREGATE CAP; CREATING THE SOLAR MARKET DEVELOPMENT CORPORATE INCOME TAX CREDIT.

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

     SECTION 1. Section 7-2-18.14 NMSA 1978 (being Laws 2006, Chapter 93, Section 1, as amended) is amended to read:

     "7-2-18.14. SOLAR MARKET DEVELOPMENT INCOME TAX CREDIT--[RESIDENTIAL AND SMALL BUSINESS SOLAR THERMAL AND PHOTOVOLTAIC MARKET DEVELOPMENT TAX CREDIT].--

          A. [Except as provided in Subsection C of this section] A taxpayer who [files an individual New Mexico income tax return for a taxable year beginning on or after January 1, 2006] is not a dependent of another individual and who purchases and installs [after January 1, 2006 but before December 31, 2016] a solar thermal system or a photovoltaic system in a residence, business or agricultural enterprise in New Mexico owned by that taxpayer may apply for, and the department may allow, a [solar market development tax credit of up to ten percent of the purchase and installation costs of the system] credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The tax credit provided by this section may be referred to as the "solar market development income tax credit".

          B. A solar market development income tax credit shall not exceed the following percentages of the purchase and installation costs of the system:

                (1) fifteen percent if the taxpayer whose taxable income in the taxable year prior to the taxable year for which the credit is claimed is less than forty-three thousand eight hundred seventy-one dollars ($43,871); and

                (2) ten percent if the taxpayer whose taxable income in the taxable year prior to the taxable year for which the credit is claimed is forty-three thousand eight hundred seventy-one dollars ($43,871) or more.

           [B.] C. The total solar market development income tax credit allowed for [either] a photovoltaic system or a solar thermal system shall not exceed nine thousand dollars ($9,000). [The department shall allow solar market development tax credits only for solar thermal systems, and photovoltaic systems certified by the energy, minerals and natural resources department.]

          D. A taxpayer may claim a solar market development income tax credit for the taxable year in which the taxpayer completes installation of a solar thermal system or a photovoltaic system. To receive the tax credit, the taxpayer shall apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Subsection M of this section.

          [C.] E. Solar market development income tax credits may not be claimed or allowed for:

                (1) a heating system for a swimming pool or a hot tub; or

                (2) a commercial or industrial photovoltaic system other than an agricultural photovoltaic system on a farm or ranch that is not connected to an electric utility transmission or distribution system.

          [D.] F. The department [may] shall allow a maximum annual aggregate of

                [(1) two million dollars ($2,000,000) in solar market development tax credits for solar thermal systems; and

                (2) three million dollars ($3,000,000)] five million dollars ($5,000,000) each calendar year in solar market development income tax credits [for photovoltaic systems].

          [E.] G. A portion of the solar market development tax income credit that remains unused in a taxable year may be carried forward for a maximum of ten consecutive taxable years following the taxable year in which the credit originates until fully expended.

          [F. Prior to July 1, 2006] H. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the solar market development income tax credit that would have been claimed on a joint return.

          I. A taxpayer may be allocated the right to claim a solar market development income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to Subsection C of this section.

          J. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.

          K. The department shall compile an annual report on the solar market development income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. By December 15 of each year, the department shall compile and present the annual reports to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing the purpose for which it was created.

          L. The energy, minerals and natural resources department shall adopt rules establishing procedures to [provide certification] certify the eligibility of solar thermal systems and photovoltaic systems for purposes of obtaining a solar market development income tax credit. The rules shall address technical specifications and requirements relating to safety, code and standards compliance, solar collector orientation and sun exposure, minimum system sizes, system applications and lists of eligible components. The energy, minerals and natural resources department may modify the specifications and requirements as necessary to maintain a high level of system quality and performance.

          M. The energy, minerals and natural resources department may issue a certificate of eligibility only if the total amount of solar market development income tax credits represented by certificates of eligibility does not exceed in any calendar year an aggregate amount of five million dollars ($5,000,000). If a taxpayer applies for a certificate of eligibility but is unable to receive the certificate because applications have exceeded the limitation provided in this subsection, the taxpayer shall be placed for the subsequent calendar year at the front of a queue of taxpayers submitting applications in the subsequent calendar year. Completed applications for a certificate of eligibility shall be considered in the order received by that department.

          [G.] N. As used in this section:

                (1) "photovoltaic system" means an energy system that collects or absorbs sunlight for conversion into electricity; and

                (2) "solar thermal system" means an energy system that collects or absorbs solar energy for conversion into heat for the purposes of space heating, space cooling or water heating."

     SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

     "[NEW MATERIAL] SOLAR MARKET DEVELOPMENT CORPORATE INCOME TAX CREDIT.--

          A. A taxpayer that files a New Mexico corporate income tax return that purchases and installs a solar thermal system or a photovoltaic system in a facility in New Mexico may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act. The tax credit provided by this section may be referred to as the "solar market development corporate income tax credit".

          B. A solar market development corporate income tax credit shall not exceed ten percent of the purchase and installation costs of the system.

          C. The total solar market development corporate income tax credit allowed for a solar thermal system or a photovoltaic system shall not exceed fifty thousand dollars ($50,000).

          D. A taxpayer may claim a solar market development corporate income tax credit for the taxable year in which the taxpayer completes installation of a solar thermal system or a photovoltaic system. To receive the tax credit, the taxpayer shall apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Subsection K of this section.

          E. Solar market development corporate income tax credits may not be claimed or allowed for a heating system for a swimming pool or a hot tub.

          F. The department shall allow a maximum annual aggregate of twenty million dollars ($20,000,000) each calendar year in solar market development corporate income tax credits.

          G. A portion of the solar market development corporate income tax credit that remains unused in a taxable year may be carried forward for a maximum of ten consecutive taxable years following the taxable year in which the credit originates until fully expended.

          H. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.

          I. The department shall compile an annual report on the solar market development corporate income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. By December 15 of each year, the department shall compile and present the annual reports to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing the purpose for which it was created.

          J. The energy, minerals and natural resources department shall adopt rules establishing procedures to certify the eligibility of solar thermal systems and photovoltaic systems for purposes of obtaining a solar market development corporate income tax credit. The rules shall address technical specifications and requirements relating to safety, code and standards compliance, solar collector orientation and sun exposure, minimum system sizes, system applications and lists of eligible components. The energy, minerals and natural resources department may modify the specifications and requirements as necessary to maintain a high level of system quality and performance.

          K. The energy, minerals and natural resources department may issue a certificate of eligibility only if the total amount of solar market development corporate income tax credits represented by certificates of eligibility does not exceed in any calendar year an aggregate amount of five million dollars ($5,000,000). If a taxpayer applies for a certificate of eligibility but is unable to receive the certificate because applications have exceeded the limitation provided in this subsection, the taxpayer shall be placed for the subsequent calendar year at the front of a queue of taxpayers submitting applications in the subsequent calendar year. Completed applications for a certificate of eligibility shall be considered in the order received by that department.

          L. As used in this section:

                (1) "photovoltaic system" means an energy system that collects or absorbs sunlight for conversion into electricity; and

                (2) "solar thermal system" means an energy system that collects or absorbs solar energy for conversion into heat for the purposes of space heating, space cooling or water heating."

     SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2017.

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