SB0121

SENATE BILL 121

56th legislature - STATE OF NEW MEXICO - first session, 2023

INTRODUCED BY

Michael Padilla

AN ACT

RELATING TO TAXATION; CREATING A TEMPORARY GROSS RECEIPTS TAX DEDUCTION FOR CERTAIN FOOD AND BEVERAGE ESTABLISHMENTS THAT HAVE NOT RECEIVED CERTAIN GRANT FUNDS; DISTRIBUTING THE LOSS OF LOCAL OPTION GROSS RECEIPTS TAX REVENUE ATTRIBUTABLE TO THE DEDUCTION TO LOCAL GOVERNMENTS; MAKING AN APPROPRIATION; DECLARING AN EMERGENCY.

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

SECTION 1. Section 7-1-6.66 NMSA 1978 (being Laws 2021, Chapter 4, Section 1) is amended to read:

"7-1-6.66. DISTRIBUTION--OFFSET FOR FOOD AND BEVERAGE ESTABLISHMENTS [DEDUCTION] DEDUCTIONS.--

A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the sum of the deductions claimed pursuant to Subsection A of Section [3 of this 2021 act] 7-9-118 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2021 plus one and two hundred twenty-five thousandths percent.

B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the sum of the deductions claimed pursuant to Subsection B of Section 7-9-118 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2023 plus one and two hundred twenty-five thousandths percent.

[B.] C. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the sum of the total deductions claimed pursuant to Subsection A of Section [3 of this 2021 act] 7-9-118 NMSA 1978 for the month by taxpayers from business locations:

(1) within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2021 that are imposed in the county; and

(2) in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2021 that are imposed in the county area not within a municipality.

D. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the sum of the total deductions claimed pursuant to Subsection B of Section 7-9-118 NMSA 1978 for the month by taxpayers from business locations:

(1) within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2023 that are imposed in the county; and

(2) in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2023 that are imposed in the county area not within a municipality.

[C.] E. 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.] F. For the purposes of this section, "business locations attributable to the municipality" means business locations:

(1) within the municipality;

(2) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of the municipality;

(3) outside the boundaries of the municipality on land owned by the municipality; and

(4) on an Indian reservation or pueblo grant in an area that is contiguous to the 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."

SECTION 2. Section 7-9-118 NMSA 1978 (being Laws 2021, Chapter 4, Section 3) is amended to read:

"7-9-118. [DEDUCTION] DEDUCTIONS--GROSS RECEIPTS--FOOD OR BEVERAGE ESTABLISHMENTS.--

A. Beginning March 1, 2021 and prior to July 1, 2021, receipts of a food or beverage establishment from the sale of prepared food or non-packaged beverages that are served or picked up at the food or beverage establishment by or delivered to customers for immediate consumption may be deducted from gross receipts.

B. Beginning March 1, 2023 and prior to July 1, 2023, receipts of a food or beverage establishment that has not received a grant from the restaurant revitalization fund administered by the United States small business administration, as evidenced by documentation required by the department, from the sale of prepared food or non-packaged beverages that are served or picked up at the food or beverage establishment by or delivered to customers for immediate consumption may be deducted from gross receipts.

[B.] C. The [deduction] deductions provided by this section shall be applied only to gross receipts remaining after all other allowable deductions available under the Gross Receipts and Compensating Tax Act have been taken and shall be separately stated by the taxpayer.

[C.] D. As used in this section:

(1) "craft distiller" means an establishment owned or managed by person issued a craft distiller's license pursuant to Section 60-6A-6.1 NMSA 1978 that is in good standing;

(2) "dispenser" means an establishment that is held out to the public as a place where alcoholic beverages are prepared and served for on-premises consumption to the general public in consideration of payment and that has the facilities and employees necessary for preparing and serving alcoholic beverages; provided that the dispenser has been issued a license pursuant to the Liquor Control Act as a dispenser;

(3) "food or beverage establishment" means a craft distiller; dispenser; mobile food service establishment; restaurant; small brewer; or winegrower;

(4) "mobile food service establishment" means a mobile establishment where meals are prepared for sale to or consumption by the general public either on or off the premises and has been issued a permit pursuant to Section 25-1-7 NMSA 1978 that is in good standing;

(5) "restaurant" means an establishment that is held out to the public as a place where meals and beverages are prepared and primarily intended to be served for on-premises consumption to the general public in consideration of payment and that has a dining room, a kitchen and the employees necessary for preparing, cooking and serving meals; provided the restaurant has been issued a permit pursuant to Section 25-1-7 NMSA 1978 that is in good standing and, if the restaurant serves alcoholic beverages, has been issued a license pursuant to Section 60-6A-4 NMSA 1978. "Restaurant" does not include an establishment commonly known as a fast food restaurant that dispenses food intended to be ordered, prepared and served quickly, with minimal or no table service, and prepared in quantity by a standardized method for consumption on and off premises, and that tends to have any of the following characteristics:

(a) a menu consisting primarily of pre-cooked items or items prepared in advance and heated quickly;

(b) placement of orders at a fast serve drive-through or walk-up window;

(d) a menu that exclusively sells hamburgers, sandwiches, salads and other fast foods;

(6) "small brewer" means an establishment owned or managed by a person issued a small brewer's license pursuant to Section 60-6A-26.1 NMSA 1978 that is in good standing; and

(7) "winegrower" means an establishment owned or managed by a person issued a winegrower's license pursuant to Section 60-6A-11 NMSA 1978 that is in good standing."

SECTION 3. TEMPORARY PROVISION--AMOUNTS IN LIEU OF GROSS RECEIPTS.--Any amount passed on to a customer in lieu of a gross receipts tax on receipts for which a food or beverage establishment may deduct pursuant to Section 2 of this 2023 act shall not be considered gross receipts.

SECTION 4. APPROPRIATION.--One hundred fifty thousand dollars ($150,000) is appropriated from the general fund to the taxation and revenue department for expenditure in fiscal years 2023 and 2024 to administer the gross receipts tax deduction pursuant to Section 2 of this act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2024 shall revert to the general fund.

SECTION 5. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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