HOUSE COMMERCE AND ECONOMIC DEVELOPMENT
COMMITTEE SUBSTITUTE FOR
HOUSE BILL 163
56th legislature - STATE OF NEW MEXICO - first session, 2023
AN ACT
RELATING TO TAXATION; PROVIDING A GROSS RECEIPTS TAX CREDIT AGAINST THE STATE GROSS RECEIPTS TAX FOR CERTAIN SMALL BUSINESSES; INCLUDING THE AMOUNT OF GROSS RECEIPTS FOR WHICH THE CREDIT MAY BE APPLIED IN A CALCULATION FOR A DISTRIBUTION TO MUNICIPALITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-1-6.4 NMSA 1978 (being Laws 1983, Chapter 211, Section 9, as amended) is amended to read:
"7-1-6.4. DISTRIBUTION--MUNICIPALITY FROM GROSS RECEIPTS TAX.--
A. Except as provided in Subsection B of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the product of the quotient of one and two hundred twenty-five thousandths percent divided by the tax rate imposed by Section 7-9-4 NMSA 1978 multiplied by the sum of the net receipts, except net receipts attributable to a nonprofit hospital licensed by the department of health, for the month attributable to the gross receipts tax from the following business locations plus the net receipts for the month that would have been attributable to the gross receipts tax from the following locations but for which a credit is applied pursuant to Section 2 of this 2023 act:
(1) within that municipality;
(2) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of that municipality;
(3) outside the boundaries of any municipality on land owned by that municipality; and
(4) on an Indian reservation or pueblo grant in an area that is contiguous to that municipality and in which the municipality performs services pursuant to a contract between the municipality and the Indian tribe or Indian pueblo if:
(a) the contract describes an area in which the municipality is required to perform services and requires the municipality to perform services that are substantially the same as the services the municipality performs for itself; and
(b) the governing body of the municipality has submitted a copy of the contract to the secretary.
B. If the reduction made by Laws 1991, Chapter 9, Section 9 to the distribution under this section impairs the ability of a municipality to meet its principal or interest payment obligations for revenue bonds outstanding prior to July 1, 1991 that are secured by the pledge of all or part of the municipality's revenue from the distribution made under this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet any required payment, provided that the distribution amount does not exceed the amount that would have been due that municipality under this section as it was in effect on June 30, 1992.
C. A distribution pursuant to this section may be adjusted for a distribution made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a municipality pursuant to the Tax Increment for Development Act.
D. As used in this section, "nonprofit hospital" means a hospital that has been granted exemption from federal income tax by the United States commissioner of internal revenue as an organization described in Section 501(c)(3) of the Internal Revenue Code."
SECTION 2. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:
"[NEW MATERIAL] CREDIT--GROSS RECEIPTS TAX CREDIT--CERTAIN SMALL BUSINESSES.--
A. Prior to July 1, 2028, a small business may claim a tax credit in an amount equal to twenty-five percent of the small business's tax liabilities in a taxable period against the state gross receipts tax due; provided that the small business received no more than one million dollars ($1,000,000) in gross receipts in the calendar year prior to the taxable period in which the credit is claimed. The amount of credit shall not exceed twenty thousand dollars ($20,000) per small business per calendar year.
B. To receive a credit provided by this section, a small business shall apply to the department on forms and in the manner required by the department.
C. That portion of credit that exceeds a taxpayer's tax liability in the taxable period in which the credit is claimed may be carried forward to succeeding taxable periods.
D. A taxpayer that claims another credit against the gross receipts tax shall not be eligible to claim the credit provided by this section in the same taxable period.
E. 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.
F. The department shall compile an annual report on the 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 credit. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
G. As used in this section:
(1) "small business" means a business that employs no more than four full- or part-time employees who are employed by the business for at least forty-four weeks in the twelve months prior to the month for which the deduction pursuant to this section is claimed; and
(2) "tax liabilities" means state gross receipts tax liability and any local option gross receipts tax liabilities in a taxable period."
SECTION 3. APPLICABILITY.--The provisions of Section 2 of this act apply to tax liabilities from taxable periods beginning on or after July 1, 2023.
SECTION 4. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2023.
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