0001|
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0002| HOUSE BILL 967
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0003| 43rd legislature - STATE OF NEW MEXICO - first session, 1997
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0004| INTRODUCED BY
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0005| DELORES C. WRIGHT
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0006|
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0007|
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0008|
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0009|
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0010|
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0011| AN ACT
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0012| RELATING TO TAXATION; PROVIDING A DEDUCTION FROM GROSS RECEIPTS
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0013| AND GOVERNMENTAL GROSS RECEIPTS FOR RECEIPTS FROM THE SALE OF
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0014| HEALTH SERVICES, PRESCRIPTION DRUGS AND PROSTHETIC DEVICES;
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0015| REPEALING THE INCOME TAX CREDIT FOR PRESCRIPTION DRUGS;
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0016| AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA 1978.
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0017|
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0018| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0019| Section 1. Section 7-9-3 NMSA 1978 (being Laws 1978,
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0020| Chapter 46, Section 1, as amended) is amended to read:
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0021| "7-9-3. DEFINITIONS.--As used in the Gross Receipts and
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0022| Compensating Tax Act:
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0023| A. "department" means the taxation and revenue
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0024| department, the secretary of taxation and revenue or any
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0025| employee of the department exercising authority lawfully
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0001| delegated to that employee by the secretary;
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0002| B. "buying" or "selling" means any transfer of
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0003| property for consideration or any performance of service for
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0004| consideration;
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0005| C. "construction" means building, altering,
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0006| repairing or demolishing in the ordinary course of business
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0007| any:
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0008| (1) road, highway, bridge, parking area or
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0009| related project;
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0010| (2) building, stadium or other structure;
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0011| (3) airport, subway or similar facility;
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0012| (4) park, trail, athletic field, golf course
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0013| or similar facility;
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0014| (5) dam, reservoir, canal, ditch or similar
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0015| facility;
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0016| (6) sewerage or water treatment facility,
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0017| power generating plant, pump station, natural gas compressing
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0018| station, gas processing plant, coal gasification plant,
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0019| refinery, distillery or similar facility;
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0020| (7) sewerage, water, gas or other pipeline;
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0021| (8) transmission line;
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0022| (9) radio, television or other tower;
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0023| (10) water, oil or other storage tank;
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0024| (11) shaft, tunnel or other mining
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0025| appurtenance;
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0001| (12) microwave station or similar facility; or
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0002| (13) similar work;
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0003| "construction" also means:
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0004| (14) leveling or clearing land;
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0005| (15) excavating earth;
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0006| (16) drilling wells of any type, including
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0007| seismograph shot holes or core drilling; or
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0008| (17) similar work;
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0009| D. "financial corporation" means any savings and
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0010| loan association or any incorporated savings and loan company,
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0011| trust company, mortgage banking company, consumer finance
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0012| company or other financial corporation;
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0013| E. "engaging in business" means carrying on or
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0014| causing to be carried on any activity with the purpose of
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0015| direct or indirect benefit;
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0016| F. "gross receipts" means the total amount of money
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0017| or the value of other consideration received from selling
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0018| property in New Mexico, from leasing property employed in New
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0019| Mexico, from selling services performed outside New Mexico the
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0020| product of which is initially used in New Mexico or from
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0021| performing services in New Mexico. In an exchange in which the
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0022| money or other consideration received does not represent the
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0023| value of the property or service exchanged, "gross receipts"
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0024| means the reasonable value of the property or service
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0025| exchanged.
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0001| (1) "Gross receipts" includes:
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0002| (a) any receipts from sales of tangible
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0003| personal property handled on consignment;
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0004| (b) the total commissions or fees
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0005| derived from the business of buying, selling or promoting the
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0006| purchase, sale or leasing, as an agent or broker on a
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0007| commission or fee basis, of any property, service, stock, bond
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0008| or security;
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0009| (c) amounts paid by members of any
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0010| cooperative association or similar organization for sales or
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0011| leases of personal property or performance of services by such
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0012| organization; and
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0013| (d) amounts received from transmitting
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0014| messages or conversations by persons providing telephone or
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0015| telegraph services.
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0016| (2) "Gross receipts" excludes:
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0017| (a) cash discounts allowed and taken;
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0018| (b) New Mexico gross receipts tax,
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0019| governmental gross receipts tax and leased vehicle gross
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0020| receipts tax payable on transactions for the reporting period;
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0021| (c) taxes imposed pursuant to the
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0022| provisions of any local option gross receipts tax that is
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0023| payable on transactions for the reporting period;
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0024| (d) any gross receipts or sales taxes
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0025| imposed by an Indian nation, tribe or pueblo provided that the
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0001| tax is approved, if approval is required by federal law or
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0002| regulation, by the secretary of the interior of the United
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0003| States and provided further that the gross receipts or sales
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0004| tax imposed by the Indian nation, tribe or pueblo provides a
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0005| reciprocal exclusion for gross receipts, sales or gross
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0006| receipts-based excise taxes imposed by the state or its
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0007| political subdivisions;
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0008| (e) any type of time-price differential;
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0009| and
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0010| (f) amounts received solely on behalf of
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0011| another in a disclosed agency capacity.
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0012| (3) When the sale of property or service is
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0013| made under any type of charge, conditional or time-sales
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0014| contract or the leasing of property is made under a leasing
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0015| contract, the seller or lessor may elect to treat all receipts,
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0016| excluding any type of time-price differential, under such
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0017| contracts as gross receipts as and when the payments are
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0018| actually received. If the seller or lessor transfers his
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0019| interest in any such contract to a third person, the seller or
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0020| lessor shall pay the gross receipts tax upon the full sale or
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0021| leasing contract amount, excluding any type of time-price
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0022| differential;
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0023| G. "manufacturing" means combining or processing
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0024| components or materials to increase their value for sale in the
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0025| ordinary course of business, but does not include construction;
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0001| H. "person" means:
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0002| (1) any individual, estate, trust, receiver,
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0003| cooperative association, club, corporation, company, firm,
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0004| partnership, limited liability company, limited liability
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0005| partnership, joint venture, syndicate or other entity,
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0006| including any gas, water or electric utility owned or operated
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0007| by a county, municipality or other political subdivision of the
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0008| state; or
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0009| (2) any national, federal, state, Indian or
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0010| other governmental unit or subdivision, or any agency,
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0011| department or instrumentality of any of the foregoing;
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0012| I. "property" means real property, tangible
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0013| personal property, licenses, franchises, patents, trademarks
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0014| and copyrights. Tangible personal property includes
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0015| electricity and manufactured homes;
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0016| J. "leasing" means any arrangement whereby, for a
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0017| consideration, property is employed for or by any person other
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0018| than the owner of the property, except that the granting of a
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0019| license to use property is the sale of a license and not a
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0020| lease;
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0021| K. "service" means all activities engaged in for
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0022| other persons for a consideration, which activities involve
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0023| predominantly the performance of a service as distinguished
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0024| from selling or leasing property. "Service" includes
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0025| activities performed by a person for its members or
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0001| shareholders. In determining what is a service, the intended
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0002| use, principal objective or ultimate objective of the
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0003| contracting parties shall not be controlling. "Service"
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0004| includes construction activities and all tangible personal
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0005| property that will become an ingredient or component part of a
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0006| construction project. Such tangible personal property retains
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0007| its character as tangible personal property until it is
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0008| installed as an ingredient or component part of a construction
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0009| project in New Mexico. However, sales of tangible personal
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0010| property that will become an ingredient or component part of a
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0011| construction project to persons engaged in the construction
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0012| business are sales of tangible personal property;
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0013| L. "use" or "using" includes use, consumption or
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0014| storage other than storage for subsequent sale in the ordinary
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0015| course of business or for use solely outside this state;
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0016| M. "secretary" means the secretary of taxation and
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0017| revenue or the secretary's delegate;
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0018| N. "manufactured home" means a moveable or portable
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0019| housing structure for human occupancy that exceeds either a
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0020| width of eight feet or a length of forty feet constructed to be
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0021| towed on its own chassis and designed to be installed with or
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0022| without a permanent foundation;
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0023| O. "initial use" or "initially used" means the
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0024| first employment for the intended purpose and does not include
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0025| the following activities:
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0001| (1) observation of tests conducted by the
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0002| performer of services;
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0003| (2) participation in progress reviews,
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0004| briefings, consultations and conferences conducted by the
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0005| performer of services;
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0006| (3) review of preliminary drafts, drawings and
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0007| other materials prepared by the performer of the services;
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0008| (4) inspection of preliminary prototypes
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0009| developed by the performer of services; or
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0010| (5) similar activities;
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0011| P. "research and development services" means any
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0012| activity engaged in for other persons for consideration, for
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0013| one or more of the following purposes:
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0014| (1) advancing basic knowledge in a recognized
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0015| field of natural science;
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0016| (2) advancing technology in a field of
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0017| technical endeavor;
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0018| (3) the development of a new or improved
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0019| product, process or system with new or improved function,
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0020| performance, reliability or quality, whether or not the new or
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0021| improved product, process or system is offered for sale, lease
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0022| or other transfer;
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0023| (4) the development of new uses or
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0024| applications for an existing product, process or system,
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0025| whether or not the new use or application is offered as the
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0001| rationale for purchase, lease or other transfer of the product,
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0002| process or system;
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0003| (5) analytical or survey activities
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0004| incorporating technology review, application, trade-off study,
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0005| modeling, simulation, conceptual design or similar activities,
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0006| whether or not offered for sale, lease or other transfer; or
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0007| (6) the design and development of prototypes
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0008| or the integration of systems incorporating advances,
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0009| developments or improvements included in Paragraphs (1) through
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0010| (5) of this subsection; [and]
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0011| Q. "local option gross receipts tax" means a tax
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0012| authorized to be imposed by a county or municipality upon the
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0013| taxpayer's gross receipts and required to be collected by the
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0014| department at the same time and in the same manner as the gross
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0015| receipts tax; "local option gross receipts tax" includes the
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0016| taxes imposed pursuant to the Municipal Local Option Gross
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0017| Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax
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0018| Act, Special Municipal Gross Receipts Tax Act, County Local
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0019| Option Gross Receipts Taxes Act, Local Hospital Gross Receipts
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0020| Tax Act, County Correctional Facility Gross Receipts Tax Act
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0021| and such other acts as may be enacted authorizing counties or
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0022| municipalities to impose taxes on gross receipts, which taxes
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0023| are to be collected by the department;
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0024| R. "health service" means a service provided to a
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0025| human being for the prevention, amelioration or cure of any
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0001| traumatic, virulent or bacteriological disease, any injury or
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0002| disfigurement to the human body, however inflicted, that
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0003| requires professional attention, any degenerative disease of
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0004| the human body or any serious mental disturbance, and which
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0005| service is provided by:
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0006| (1) a licensed practitioner if the service is
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0007| within the scope of the practitioner's profession as defined by
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0008| law; or
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0009| (2) a facility licensed by the department of
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0010| health as a hospital, nursing facility, clinic or health
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0011| facility of other similar designation;
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0012| S. "licensed practitioner" means a chiropractor,
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0013| dentist, dental assistant, dental hygienist, medical doctor,
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0014| osteopath, optometrist, physician assistant, podiatrist,
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0015| practical nurse, professional nurse or psychologist who is
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0016| licensed or certified under state law to practice in the state;
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0017| T. "prescription drugs" means insulin and
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0018| substances that are:
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0019| (1) dispensed by or under the supervision of a
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0020| licensed pharmacist or by a physician or other person
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0021| authorized under state law to dispense the substance;
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0022| (2) prescribed for a specified human being by
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0023| a person authorized under state law to prescribe the substance;
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0024| and
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0025| (3) subject to the restrictions on sale
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0001| contained in 21 U.S.C.A. 353(b)(1); and
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0002| U. "prosthetic device" means:
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0003| (1) orthopedic prosthesis, orthopedic braces
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0004| and supports and orthopedic shoes;
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0005| (2) ocular prosthesis;
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0006| (3) a prosthesis or prosthetic device ordered
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0007| as a result of surgery;
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0008| (4) crutches and wheelchairs; and
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0009| (5) replacement parts or related supplies
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0010| designed specifically for any of the items specified in
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0011| Paragraphs (1) through (4) of this subsection."
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0012| Section 2. A new section of the Gross Receipts and
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0013| Compensating Tax Act is enacted to read:
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0014| "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX AND
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0015| GOVERNMENTAL GROSS RECEIPTS TAX--HEALTH SERVICES--PRESCRIPTION
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0016| DRUGS--PROSTHETIC DEVICES.--Receipts from the following may be
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0017| deducted from gross receipts:
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0018| A. the provision of health services;
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0019| B. sales other than sales for resale of
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0020| prescription drugs; and
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0021| C. sales of prosthetic devices when made by a
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0022| licensed practitioner to the user or consumer of the device and
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0023| sales of prosthetic devices made by a person on the basis of a
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0024| written order issued by a licensed practitioner ordering the
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0025| device for a specific individual."
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0001| Section 3. REPEAL.--Section 7-2-18.3 NMSA 1978 (being
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0002| Laws 1994, Chapter 5, Section 17) is repealed.
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0003| Section 4. APPLICABILITY.--The provisions of Section 3 of
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0004| this act apply to taxable years beginning on or after January
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0005| 1, 1998.
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0006| Section 5. EFFECTIVE DATE.--The effective date of the
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0007| provisions of this act is July 1, 1997.
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0008|
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