SB0028

SENATE BILL 28

56th legislature - STATE OF NEW MEXICO - second session, 2024

INTRODUCED BY

Crystal Diamond Brantley and Siah Correa Hemphill and

Rod Montoya and Luis M. Terrazas and Joseph Cervantes

FOR THE ECONOMIC AND RURAL DEVELOPMENT AND POLICY COMMITTEE

AN ACT

RELATING TO TAXATION; CREATING THE RAIL INFRASTRUCTURE INCOME TAX CREDIT AND THE RAIL INFRASTRUCTURE CORPORATE INCOME TAX CREDIT; ALLOWING THE TAXATION AND REVENUE DEPARTMENT AND THE DEPARTMENT OF TRANSPORTATION TO SHARE INFORMATION CONCERNING RAIL INFRASTRUCTURE INCOME TAX CREDITS AND RAIL INFRASTRUCTURE CORPORATE INCOME TAX CREDITS.

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] RAIL INFRASTRUCTURE INCOME TAX CREDIT.--

A. For taxable years prior to January 1, 2035, a taxpayer that is a railroad that is classified by the federal surface transportation board as a class two or class three railroad located in New Mexico, or an owner or lessee of a rail siding, yard track, industrial spur or industry track located adjacent to any railroad in New Mexico, that incurs qualified reconstruction or replacement expenditures or qualified new rail infrastructure expenditures for the maintenance, reconstruction, replacement or new construction of railroad track infrastructure may apply for, and the department may allow, a tax credit against the taxpayer's tax liability pursuant to the Income Tax Act for the taxable year in which the credit is approved by the department pursuant to this section. The tax credit provided by this section may be referred to as the "rail infrastructure income tax credit".

B. The amount of credit that may be allowed pursuant to this section shall be equal to fifty percent of a taxpayer's qualified reconstruction or replacement expenditures or qualified new rail infrastructure expenditures; provided that:

(1) for qualified reconstruction or replacement expenditures, the amount of tax credit shall not exceed an amount equal to the product of five thousand dollars ($5,000) multiplied by the number of miles of railroad track owned or leased in the state by the taxpayer as of the close of the taxable year; and

(2) for qualified new rail infrastructure expenditures, the amount of tax credit shall not exceed one million dollars ($1,000,000) for each new rail-served customer project of the taxpayer; provided that the total amount of credits that may be allowed in a calendar year shall not exceed five million dollars ($5,000,000).

C. A taxpayer that seeks to claim a tax credit provided by this section shall apply for a certificate of eligibility from the department of transportation after completion of the maintenance, reconstruction, replacement or new construction of railroad track infrastructure in New Mexico for which qualified reconstruction or replacement expenditures or qualified new rail infrastructure expenditures are made to determine if the taxpayer is eligible to receive the tax credit provided by this section. The department of transportation may certify a maximum annual aggregate amount of credits of six million dollars ($6,000,000) per calendar year. That department shall publish to its website on a regular basis the number of rail infrastructure income tax credits that have been certified in that calendar year. Completed applications shall be made on forms and in the manner prescribed by that department and considered in the order received.

D. If the department of transportation determines that a taxpayer meets the requirements to claim a tax credit pursuant to this section, that department may issue a certificate of eligibility to the taxpayer. The certificate shall be numbered for identification and declare its date of issuance, the amount of the tax credit allowed pursuant to this section and the tax year in which the tax credit may be claimed. The department of transportation shall provide to the taxation and revenue department certification information for all taxpayers to whom certificates are issued in a secure and regular manner as agreed upon by both departments.

E. A certificate may be submitted by the taxpayer with that taxpayer's return or may be sold, exchanged or otherwise transferred to another taxpayer. The parties to such a transaction shall notify the department of the sale, exchange or transfer within ten days of the sale, exchange or transfer.

F. That portion of a tax credit that exceeds a taxpayer's tax liability in the taxable year in which the tax credit is claimed shall not be refunded but may be carried forward for a maximum of five consecutive taxable years.

G. To receive a tax credit provided by this section, a taxpayer shall apply to the department on forms and in the manner prescribed by the department within twelve months following the calendar year in which the certificate of eligibility was issued. The application shall include a certificate of eligibility issued by the department of transportation pursuant to this section.

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 a tax credit that would have been claimed on a joint return.

I. A taxpayer may be allocated the right to claim a tax credit provided by this section 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 or limited liability company 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 amount of credit pursuant to this section.

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

K. The taxation and revenue department shall compile an annual report on the tax credit provided by this section 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.

L. As used in this section:

(1) "qualified new rail infrastructure expenditures" means gross expenditures for new rail infrastructure incurred by a taxpayer, including the new construction of industrial leads, switches, sidings, rail loading docks and transloading structures involved with servicing new customer locations or existing customer expansions adjacent to a railroad located in New Mexico; and

(2) "qualified reconstruction or replacement expenditures" means gross expenditures for maintenance, reconstruction or replacement of railroad infrastructure, including track, roadbed, bridges, industrial leads, sidings and track-related structures in New Mexico that are owned or leased by a taxpayer claiming the credit provided by this section. "Qualified reconstruction or replacement expenditures" does not include expenditures used to generate a federal tax credit or expenditures funded by a state or federal grant."

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

"[NEW MATERIAL] RAIL INFRASTRUCTURE CORPORATE INCOME TAX CREDIT.--

A. For taxable years prior to January 1, 2035, a taxpayer that is a railroad that is classified by the federal surface transportation board as a class two or class three railroad located in New Mexico, or an owner or lessee of a rail siding, yard track, industrial spur or industry track located adjacent to any railroad in New Mexico, that incurs qualified reconstruction or replacement expenditures or qualified new rail infrastructure expenditures for the maintenance, reconstruction, replacement or new construction of railroad track infrastructure may apply for, and the department may allow, a tax credit against the taxpayer's tax liability pursuant to the Corporate Income and Franchise Tax Act for the taxable year in which the credit is approved by the department pursuant to this section. The tax credit provided by this section may be referred to as the "rail infrastructure corporate income tax credit".

C. A taxpayer that seeks to claim a tax credit provided by this section shall apply for a certificate of eligibility from the department of transportation after completion of the maintenance, reconstruction, replacement or new construction of railroad track infrastructure in New Mexico for which qualified reconstruction or replacement expenditures or qualified new rail infrastructure expenditures are made to determine if the taxpayer is eligible to receive the tax credit provided by this section. The department of transportation may certify a maximum annual aggregate amount of credits of six million dollars ($6,000,000) per calendar year. That department shall publish to its website on a regular basis the number of rail infrastructure corporate income tax credits that have been certified in that calendar year. Completed applications shall be made on forms and in the manner prescribed by the department of transportation and considered in the order received.

E. A certificate of eligibility issued pursuant to this section may be submitted by the taxpayer with that taxpayer's return or may be sold, exchanged or otherwise transferred to another taxpayer. The parties to such a transaction shall notify the department of the sale, exchange or transfer within ten days of the sale, exchange or transfer.

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

I. The taxation and revenue department shall compile an annual report on the tax credit provided by this section 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.

J. As used in this section:

SECTION 3. Section 7-1-8.8 NMSA 1978 (being Laws 2019, Chapter 87, Section 2, as amended) is amended to read:

"7-1-8.8. INFORMATION THAT MAY BE REVEALED TO OTHER STATE AND LEGISLATIVE AGENCIES.--An employee of the department may reveal confidential return information to the following agencies; provided that a person who receives the information on behalf of the agency shall be subject to the penalties in Section 7-1-76 NMSA 1978 if the person fails to maintain the confidentiality required:

A. a committee of the legislature for a valid legislative purpose, return information concerning any tax or fee imposed pursuant to the Cigarette Tax Act;

B. the attorney general, return information acquired pursuant to the Cigarette Tax Act for purposes of Section 6-4-13 NMSA 1978 and the master settlement agreement defined in Section 6-4-12 NMSA 1978;

C. the commissioner of public lands, return information for use in auditing that pertains to rentals, royalties, fees and other payments due the state under land sale, land lease or other land use contracts;

D. the secretary of [human services] health care authority or the secretary's delegate under a written agreement with the department:

(1) the last known address with date of all names certified to the department as being absent parents of children receiving public financial assistance, but only for the purpose of enforcing the support liability of the absent parents by the child support enforcement division or any successor organizational unit;

(2) return information needed for reports required to be made to the federal government concerning the use of federal funds for low-income working families;

(3) return information of low-income taxpayers for the limited purpose of outreach to those taxpayers; provided that the [human services] health care authority department shall pay the department for expenses incurred by the department to derive the information requested by the [human services] health care authority department if the information requested is not readily available in reports for which the department's information systems are programmed;

(4) return information required to administer the Health Care Quality Surcharge Act; and

(5) return information in accordance with the provisions of the Easy Enrollment Act;

E. the department of information technology, by electronic media, a database updated quarterly that contains the names, addresses, county of address and taxpayer identification numbers of New Mexico personal income tax filers, but only for the purpose of producing the random jury list for the selection of petit or grand jurors for the state courts pursuant to Section 38-5-3 NMSA 1978;

F. the state courts, the random jury lists produced by the department of information technology under Subsection E of this section;

G. the director of the New Mexico department of agriculture or the director's authorized representative, upon request of the director or representative, the names and addresses of all gasoline or special fuel distributors, wholesalers and retailers;

H. the public regulation commission, return information with respect to the Corporate Income and Franchise Tax Act required to enable the commission to carry out its duties;

I. the state racing commission, return information with respect to the state, municipal and county gross receipts taxes paid by racetracks;

J. the gaming control board, tax returns of license applicants and their affiliates as provided in Subsection E of Section 60-2E-14 NMSA 1978;

K. the director of the workers' compensation administration or to the director's representatives authorized for this purpose, return information to facilitate the identification of taxpayers that are delinquent or noncompliant in payment of fees required by Section 52-1-9.1 or 52-5-19 NMSA 1978;

L. the secretary of workforce solutions or the secretary's delegate, return information for use in enforcement of unemployment insurance collections pursuant to the terms of a written reciprocal agreement entered into by the department with the secretary of workforce solutions for exchange of information;

M. the New Mexico finance authority, information with respect to the amount of municipal and county gross receipts taxes collected by municipalities and counties pursuant to any local option municipal or county gross receipts taxes imposed, and information with respect to the amount of governmental gross receipts taxes paid by every agency, institution, instrumentality or political subdivision of the state pursuant to Section 7-9-4.3 NMSA 1978;

N. the superintendent of insurance, return information with respect to the premium tax and the health insurance premium surtax;

O. the secretary of finance and administration or the secretary's designee, return information concerning a credit pursuant to the Film Production Tax Credit Act;

P. the secretary of economic development or the secretary's designee, return information concerning a credit pursuant to the Film Production Tax Credit Act;

Q. the secretary of public safety or the secretary's designee, return information concerning the Weight Distance Tax Act;

R. the secretary of transportation or the secretary's designee, return information concerning the Weight Distance Tax Act and return information concerning rail infrastructure income tax credits and rail infrastructure corporate income tax credits for which eligibility is certified or otherwise determined by the secretary or the secretary's designee;

S. the secretary of energy, minerals and natural resources or the secretary's designee, return information concerning tax credits or deductions for which eligibility is certified or otherwise determined by the secretary or the secretary's designee;

T. the secretary of environment or the secretary's designee, return information concerning tax credits for which eligibility is certified or otherwise determined by the secretary or the secretary's designee; and

U. the secretary of state or the secretary's designee, taxpayer information required to maintain voter registration records and as otherwise provided in the Election Code."

SECTION 4. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2024.

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