44th legislature - STATE OF NEW MEXICO - second session, 2000

FOR THE

ECONOMIC AND RURAL DEVELOPMENT AND TELECOMMUNICATIONS COMMITTEE

AN ACT

RELATING TO TAXATION; ENACTING THE TECHNOLOGY JOBS TAX CREDIT ACT FOR CERTAIN RESEARCH, DEVELOPMENT AND EXPERIMENTATION INVESTMENTS.

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

Section 1. SHORT TITLE.--This act may be cited as the "Technology Jobs Tax Credit Act".

Section 2. PURPOSE OF ACT.--It is the purpose of the Technology Jobs Tax Credit Act to provide a favorable tax climate for technology-based businesses engaging in research, development and experimentation and to promote increased employment and higher wages in those fields in New Mexico.

Section 3. DEFINITIONS.--As used in the Technology Jobs Tax Credit Act:

A. "annual payroll expense" means the salaries and wages and payroll taxes paid or payable by the taxpayer to employees for the one-year period ending on the day the taxpayer applies for an additional credit pursuant to the Technology Jobs Tax Credit Act;

B. "base payroll expense" means the salaries and wages and payroll taxes paid or payable by the taxpayer to employees for the one-year period ending on the day one year prior to the day the taxpayer applies for an additional credit pursuant to the Technology Jobs Tax Credit Act, reduced proportionately for any increase in the consumer price index for the United States for all items as published by the United States department of labor since that day;

C. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

D. "facility" means a factory, mill, plant, refinery, warehouse, dairy, feedlot, building or complex of buildings located within the state, including the land on which the facility is located and all machinery, equipment and other real and tangible personal property located at or within the facility and used in connection with the operation of the facility;

E. "qualified expenditure" means an expenditure by a taxpayer in connection with qualified research at a qualified facility, including expenditures for land, improvements, buildings, equipment, computer software, computer software upgrades, consultants, payroll, technical books and manuals and test materials, but not including any expenditure on property that is owned by a municipality or county in connection with an industrial revenue bond project or property for which the taxpayer has received any credit pursuant to the Capital Equipment Tax Credit Act or the Investment Credit Act;

F. "qualified facility" means a facility in New Mexico at which qualified research is conducted other than a facility operated by a taxpayer for the United States or any agency, department or instrumentality thereof;

G. "qualified research" means research:

(1) that is undertaken for the purpose of discovering information:

(a) that is technological in nature; and

(b) the application of which is intended to be useful in the development of a new or improved business component of the taxpayer; and

(2) substantially all of the activities of which constitute elements of a process of experimentation related to a new or improved function, performance, reliability or quality, but not related to style, taste or cosmetic or seasonal design factors;

H. "rural area" means any area of the state other than a class A county, a class B county that has a net taxable value for rate-setting purposes for any property tax year of more than three billion dollars ($3,000,000,000), the municipality of Rio Rancho and the area within three miles of the exterior boundaries of a class A county; and

I. "taxpayer" means:

(1) a person liable for payment of any tax;

(2) a person responsible for withholding and payment or collection and payment of any tax;

(3) a person to whom an assessment has been made if the assessment remains unabated or the assessed amount has not been paid; or

(4) for purposes of the additional credit against the taxpayer's income tax pursuant to the Technology Jobs Tax Credit Act and to the extent of their respective interest in that entity, the shareholders, members, partners or other owners of:

(a) a small business corporation that has elected to be treated as an S corporation for federal income tax purposes; or

(b) an entity treated as a partnership or disregarded entity for federal income tax purposes.

Section 4. ADMINISTRATION OF ACT.--The department shall administer the Technology Jobs Tax Credit Act pursuant to the Tax Administration Act.

Section 5. BASIC CREDIT--ADDITIONAL CREDIT--AMOUNTS--CLAIMANT.--

A. The basic credit provided for in the Technology Jobs Tax Credit Act is an amount equal to five percent of the amount of qualified expenditures made by a taxpayer conducting qualified research at a qualified facility.

B. The additional credit provided for in the Technology Jobs Tax Credit Act is an amount equal to five percent of the amount of qualified expenditures made by a taxpayer conducting qualified research at a qualified facility.

Section 6. ELIGIBILITY REQUIREMENTS.--

A. A taxpayer conducting qualified research at a qualified facility and making qualified expenditures is eligible to claim the basic credit pursuant to the Technology Jobs Tax Credit Act.

B. A taxpayer conducting qualified research at a qualified facility and making qualified expenditures is eligible to claim the additional credit pursuant to the Technology Jobs Tax Credit Act if:

(1) the taxpayer increases the taxpayer's annual payroll expense at the qualified facility by at least fifty thousand dollars ($50,000) over the base payroll expense of the taxpayer;

(2) the increase in Paragraph (1) of this subsection has not previously been used to meet the requirements of this subsection; and

(3) there is at least a fifty thousand dollar ($50,000) increase in the taxpayer's annual payroll expense for every one million dollars ($1,000,000) in qualified expenditures claimed by the taxpayer in a taxable year in the same claim.

Section 7. QUALIFIED EXPENDITURES.--The amount of a taxpayer's qualified expenditure is the purchase price for the relevant property or service; provided that if the equipment has been owned by the taxpayer for more than one year before its introduction into New Mexico and installation into a qualified facility, the qualified expenditure is the reasonable market value of the equipment at the time of its introduction into New Mexico.

Section 8. RURAL AREAS.--The amount of the basic and additional credit for which a taxpayer is otherwise eligible shall be doubled if the qualified expenditures were incurred with respect to a qualified facility in a rural area.

Section 9. CLAIMING THE CREDIT FOR CERTAIN TAXES.--

A. A taxpayer may apply for approval of a credit within one year following the end of the calendar year in which the qualified expenditure was made.

B. A taxpayer having applied for and been granted approval for a basic credit by the department pursuant to the Technology Jobs Tax Credit Act may claim the amount of the approved basic credit against the taxpayer's compensating tax, gross receipts tax or withholding tax due to the state of New Mexico, provided that no taxpayer may claim an amount of approved basic credit for any reporting period that exceeds the sum of the taxpayer's gross receipts tax, compensating tax and withholding tax due for that reporting period.

C. A taxpayer who has applied for and been granted approval for an additional credit by the department pursuant to the Technology Jobs Tax Credit Act may claim the amount of the approved additional credit against the taxpayer's income tax or corporate income tax due the state of New Mexico; provided that:

(1) no taxpayer may claim an amount of approved additional credit for any reporting period that exceeds the amount of the taxpayer's income tax or corporate income tax due for that reporting period; and

(2) a husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the additional credit that would have been allowed them on a joint return.

D. Any amount of approved basic credit not claimed against the taxpayer's gross receipts tax, compensating tax or withholding tax due and any amount of approved additional credit not claimed against the taxpayer's income tax or corporate income tax due for a reporting period may be claimed in subsequent reporting periods; provided that a husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the additional credit that would have been allowed them on a joint return.

Section 10. CREDIT CLAIM FORMS.--The department shall provide credit claim forms. A credit claim shall accompany any return in which the taxpayer wishes to apply for an approved basic or additional credit, and the claim shall specify the amount and type of credit intended to apply to each return.

Section 11. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2000.