45th legislature - STATE OF NEW MEXICO - first session, 2001
RELATING TO TAXATION; REDUCING INCOME TAX RATES OVER TWO YEARS; INCREASING THE LOW-INCOME COMPREHENSIVE TAX REBATE; CHANGING THE JOB MENTORSHIP TAX CREDIT FROM A PILOT PROGRAM TO A PERMANENT TAX CREDIT; PROVIDING A GROSS RECEIPTS TAX DEDUCTION FOR RECEIPTS OF A FRANCHISOR FOR CERTAIN SHARED EXPENSES AND FOR CERTAIN RECEIPTS OF A RESERVATION FUND OR AN ADVERTISING COOPERATIVE FROM FRANCHISORS OR FRANCHISEES; EXPANDING THE GROSS RECEIPTS TAX DEDUCTION FOR MEDICAL AND OTHER HEALTH SERVICES; AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA 1978.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 7-2-2 NMSA 1978 (being Laws 1986, Chapter 20, Section 26, as amended) is amended to read:
"7-2-2. DEFINITIONS.--For the purpose of the Income Tax Act and unless the context requires otherwise:
A. "adjusted gross income" means adjusted gross income as defined in Section 62 of the Internal Revenue Code, as that section may be amended or renumbered;
B. "base income":
(1) means, for estates and trusts, that part of the estate's or trust's income defined as taxable income and upon which the federal income tax is calculated in the Internal Revenue Code for income tax purposes plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and taken by the taxpayer for that year;
(2) means, for taxpayers other than estates or trusts, that part of the taxpayer's income defined as adjusted gross income plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and taken by the taxpayer for that year; and
(3) includes, for all taxpayers, any other income of the taxpayer not included in adjusted gross income but upon which a federal tax is calculated pursuant to the Internal Revenue Code for income tax purposes, except amounts for which a calculation of tax is made pursuant to Section 55 of the Internal Revenue Code, as that section may be amended or renumbered; "base income" also includes interest received on a state or local bond;
C. "compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services;
D. "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;
E. "fiduciary" means a guardian, trustee, executor, administrator, committee, conservator, receiver, individual or corporation acting in any fiduciary capacity;
F. "filing status" means "married filing joint returns", "married filing separate returns", "head of household", "surviving spouse" and "single", as those terms are generally defined for federal tax purposes;
G. "fiscal year" means any accounting period of twelve months ending on the last day of any month other than December;
H. "head of household" means "head of household" as generally defined for federal income tax purposes;
I. "individual" means a natural person, an estate, a trust or a fiduciary acting for a natural person, trust or estate;
J. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended;
K. "lump-sum amount" means an amount that, for the purpose of determining liability for federal income tax, was not included in adjusted gross income but upon which the five-year-averaging or the ten-year-averaging method of tax computation provided in Section 402 of the Internal Revenue Code, as that section may be amended or renumbered, was applied;
L. "modified gross income" means all income of the taxpayer and, if any, the taxpayer's spouse and dependents, undiminished by losses and from whatever source derived, including:
(1) compensation;
(2) net profit derived from business;
(3) gains derived from dealings in property;
(4) interest;
(5) net rents;
(6) royalties;
(7) dividends;
(8) alimony and separate maintenance payments;
(9) annuities;
(10) income from life insurance and endowment contracts;
(11) pensions;
(12) discharge of indebtedness;
(13) distributive share of partnership income;
(14) income in respect of a decedent;
(15) income from an interest in an estate or trust;
(16) social security benefits;
(17) unemployment compensation benefits;
(18) workers' compensation benefits;
(19) public assistance and welfare benefits;
(20) cost-of-living allowances; and
(21) gifts;
M. "modified gross income" does not include:
(1) payments for hospital, dental, medical or drug expenses whether made to or on behalf of the taxpayer;
(2) the value of room and board provided by federal, state or local governments or by private individuals or agencies based upon financial need and not as a form of compensation;
(3) payments made pursuant to a federal, state or local government program directly or indirectly to a third party on behalf of the taxpayer when identified to a particular use or invoice by the payer; or
(4) payments made pursuant to Sections
7-2-14, [7-2-14.1] 7-2-18, 7-2-18.1 and 7-3-9 NMSA 1978;
N. "net income" means, for estates and trusts, base income adjusted to exclude amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States and means, for taxpayers other than estates or trusts, base income adjusted to exclude:
(1) an amount equal to the standard deduction allowed the taxpayer for the taxpayer's taxable year by Section 63 of the Internal Revenue Code, as that section may be amended or renumbered;
(2) an amount equal to the itemized deductions, as defined in Section 63 of the Internal Revenue Code, as that section may be amended or renumbered, allowed the taxpayer for the taxpayer's taxable year less the amount excluded pursuant to Paragraph (1) of this subsection;
(3) an amount equal to the product of the exemption amount allowed for the taxpayer's taxable year by Section 151 of the Internal Revenue Code, as that section may be amended or renumbered, multiplied by the number of personal exemptions allowed for federal income tax purposes;
(4) income from obligations of the United States of America less expenses incurred to earn that income;
(5) other amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States;
(6) for taxable years that began prior to January 1, 1991, an amount equal to the sum of:
(a) net operating loss carryback deductions to that year from taxable years beginning prior to January 1, 1991 claimed and allowed, as provided by the Internal Revenue Code; and
(b) net operating loss carryover deductions to that year claimed and allowed; and
(7) for taxable years beginning on or after January 1, 1991, an amount equal to the sum of any net operating loss carryover deductions to that year claimed and allowed, provided that the amount of any net operating loss carryover from a taxable year beginning on or after January 1, 1991 may be excluded only as follows:
(a) in the case of a timely filed return, in the taxable year immediately following the taxable year for which the return is filed; or
(b) in the case of amended returns or original returns not timely filed, in the first taxable year beginning after the date on which the return or amended return establishing the net operating loss is filed; and
(c) in either case, if the net operating loss carryover exceeds the amount of net income exclusive of the net operating loss carryover for the taxable year to which the exclusion first applies, in the next four succeeding taxable years in turn until the net operating loss carryover is exhausted; in no event shall a net operating loss carryover be excluded in any taxable year after the fourth taxable year beginning after the taxable year to which the exclusion first applies;
O. "net operating loss" means any net operating loss, as defined by Section 172(c) of the Internal Revenue Code, as that section may be amended or renumbered, for a taxable year as further increased by the income, if any, from obligations of the United States for that year less related expenses;
P. "net operating loss carryover" means the amount, or any portion of the amount, of a net operating loss for any taxable year that, pursuant to Paragraph (6) or (7) of Subsection N of this section, may be excluded from base income;
Q. "nonresident" means every individual not a resident of this state;
R. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, joint venture, syndicate or other association; "person" also means, to the extent permitted by law, any federal, state or other governmental unit or subdivision or agency, department or instrumentality thereof;
S. "resident" means an individual who is domiciled in this state during any part of the taxable year; but any individual who, on or before the last day of the taxable year, changed his place of abode to a place without this state with the bona fide intention of continuing actually to abide permanently without this state is not a resident for the purposes of the Income Tax Act;
T. "secretary" means the secretary of taxation and revenue or the secretary's delegate;
U. "state" means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico, any territory or possession of the United States or any political subdivision of a foreign country;
V. "state or local bond" means a bond issued by a state other than New Mexico or by a local government other than one of New Mexico's political subdivisions, the interest from which is excluded from income for federal income tax purposes under Section 103 of the Internal Revenue Code, as that section may be amended or renumbered;
W. "surviving spouse" means "surviving spouse" as generally defined for federal income tax purposes;
X. "taxable income" means net income less any lump-sum amount;
Y. "taxable year" means the calendar year or
fiscal year upon the basis of which the net income is computed
under the Income Tax Act and includes, in the case of the
return made for a fractional part of a year under the
provisions of the Income Tax Act, the period for which the
return is made; [and]
Z. "taxpayer" means any individual subject to the tax imposed by the Income Tax Act; and
AA. "zero bracket amount" means the maximum amount of taxable income in the first bracket of the tax rate table for a filing status, for which bracket the amount of tax due is zero."
Section 2. Section 7-2-7 NMSA 1978 (being Laws 1994, Chapter 5, Section 20, as amended) is amended to read:
"7-2-7. INDIVIDUAL INCOME TAX RATES.--The tax imposed by
Section 7-2-3 NMSA 1978 shall be at the following rates for
any taxable year beginning [on or after January 1, 1998] in
2001:
A. For married individuals filing separate returns:
If the taxable income is: The tax shall be:
[Not over $4,000 1.7% of taxable income
Over $ 4,000 but not over $ 8,000 $ 68.00 plus 3.2% of excess over $ 4,000
Over $ 8,000 but not over $ 12,000 $ 196 plus 4.7% of excess over $ 8,000
Over $ 12,000 but not over $ 20,000 $ 384 plus 6.0% of excess over $ 12,000
Over $ 20,000 but not over $ 32,000 $ 864 plus 7.1% of excess over $ 20,000
Over $ 32,000 but not over $ 50,000 $ 1,716 plus 7.9% of excess over $ 32,000
Over $ 50,000 $ 3,138 plus 8.2% of excess over $ 50,000]
Not over $1,500 $ 0
Over $ 1,500 but not over $ 5,000 2.0% of excess over
$1,500
Over $ 5,000 but not over $ 8,000 $ 70.00 plus 3.2% of
excess over $5,000
Over $ 8,000 but not over $ 12,000 $ 166 plus 4.7% of
excess over $8,000
Over $ 12,000 but not over $ 20,000 $ 354 plus 6.0% of
excess over $12,000
Over $ 20,000 but not over $ 32,000 $ 834 plus 7.1% of
excess over $20,000
Over $ 32,000 $ 1,686 plus 7.9% of
excess over $32,000.
B. For surviving spouses and married individuals filing joint returns:
If the taxable income is: The tax shall be:
[Not over $8,000 1.7% of taxable income
Over $ 8,000 but not over $ 16,000 $ 136 plus 3.2% of excess over $ 8,000
Over $ 16,000 but not over $ 24,000 $ 392 plus 4.7% of excess over $ 16,000
Over $ 24,000 but not over $ 40,000 $ 768 plus 6.0% of excess over $ 24,000
Over $ 40,000 but not over $ 64,000 $ 1,728 plus 7.1% of excess over $ 40,000
Over $ 64,000 but not over $100,000 $ 3,432 plus 7.9% of excess over $ 64,000
Over $100,000 $ 6,276 plus 8.2% of
excess over $100,000]
Not over $3,000 $ 0
Over $ 3,000 but not over $ 10,500 2.0% of excess over
$3,000
Over $ 10,500 but not over $ 16,000 $ 150 plus 3.2% of
excess over $10,500
Over $ 16,000 but not over $ 24,000 $ 326 plus 4.7% of
excess over $16,000
Over $ 24,000 but not over $ 40,000 $ 702 plus 6.0% of
excess over $24,000
Over $ 40,000 but not over $ 64,000 $1,662 plus 7.1% of
excess over $40,000
Over $ 64,000 $3,366 plus 7.9% of
excess over $ 64,000.
C. For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
[Not over $5,500 1.7% of taxable income
Over $ 5,500 but not over $ 11,000 $ 93.50 plus 3.2% of excess over $ 5,500
Over $ 11,000 but not over $ 16,000 $ 269.50 plus 4.7% of
excess over $ 11,000
Over $ 16,000 but not over $ 26,000 $ 504.50 plus 6.0% of
excess over $ 16,000
Over $ 26,000 but not over $ 42,000 $1,104.50 plus 7.1% of
excess over $ 26,000
Over $ 42,000 but not over $ 65,000 $2,240.50 plus 7.9% of
excess over $ 42,000
Over $ 65,000 $4,057.50 plus 8.2% of
excess over $ 65,000]
Not over $1,500 $ 0
Over $ 1,500 but not over $ 6,000 2.0% of excess over
$1,500
Over $ 6,000 but not over $ 11,000 $ 90.00 plus 3.2% of
excess over $6,000
Over $ 11,000 but not over $ 16,000 $ 250 plus 4.7% of
excess over $11,000
Over $ 16,000 but not over $ 26,000 $ 485 plus 6.0% of
excess over $16,000
Over $ 26,000 but not over $ 42,000 $1,085 plus 7.1% of
excess over $26,000
Over $ 42,000 $2,221 plus 7.9% of
excess over $42,000.
D. For heads of household filing returns:
If the taxable income is: The tax shall be:
[Not over $7,000 1.7% of taxable income
Over $ 7,000 but not over $ 14,000 $ 119 plus 3.2% of
excess over $ 7,000
Over $ 14,000 but not over $ 20,000 $ 343 plus 4.7% of
excess over $ 14,000
Over $ 20,000 but not over $ 33,000 $ 625 plus 6.0% of
excess over $ 20,000
Over $ 33,000 but not over $ 53,000 $1,405 plus 7.1% of
excess over $ 33,000
Over $ 53,000 but not over $ 83,000 $2,825 plus 7.9% of
excess over $ 53,000
Over $83,000 $5,195 plus 8.2% of
excess over $ 83,000]
Not over $2,500 $ 0
Over $ 2,500 but not over $ 8,000 2.0% of excess over
$2,500
Over $ 8,000 but not over $ 14,000 $ 110 plus 3.2% of
excess over $8,000
Over $ 14,000 but not over $ 20,000 $ 302 plus 4.7% of
excess over $14,000
Over $ 20,000 but not over $ 33,000 $ 584 plus 6.0% of
excess over $20,000
Over $ 33,000 but not over $ 53,000 $1,364 plus 7.1% of
excess over $33,000
Over $ 53,000 $2,784 plus 7.9% of
excess over $53,000.
E. The tax on the sum of any lump-sum amounts included in net income is an amount equal to five multiplied by the difference between:
(1) the amount of tax due on the taxpayer's taxable income; and
(2) the amount of tax that would be due on an amount equal to the taxpayer's taxable income and twenty percent of the taxpayer's lump-sum amounts included in net income."
Section 3. Section 7-2-7 NMSA 1978 (being Laws 1994, Chapter 5, Section 20, as amended and as further amended by Section 2 of this act) is repealed and a new Section 7-2-7 NMSA 1978 is enacted to read:
"7-2-7. [NEW MATERIAL] INDIVIDUAL INCOME TAX RATES.--The tax imposed by Section 7-2-3 NMSA 1978 shall be at the following rates for any taxable year beginning on or after January 1, 2002:
A. For married individuals filing separate returns:
If the taxable income is: The tax shall be:
Not over $1,500 $ 0
Over $ 1,500 but not over $ 5,000 2.0% of excess over
$1,500
Over $ 5,000 but not over $ 8,000 $ 70.00 plus 3.2% of
excess over $5,000
Over $ 8,000 but not over $ 12,000 $ 166 plus 4.7% of
excess over $8,000
Over $ 12,000 but not over $ 20,000 $ 354 plus 6.0% of
excess over $12,000
Over $ 20,000 but not over $ 40,000 $ 834 plus 7.1% of
excess over $20,000
Over $ 40,000 $ 2,254 plus 7.8% of
excess over $40,000.
B. For surviving spouses and married individuals filing joint returns:
If the taxable income is: The tax shall be:
Not over $3,000 $ 0
Over $ 3,000 but not over $ 10,500 2.0% of excess over
$3,000
Over $ 10,500 but not over $ 16,000 $ 150 plus 3.2% of
excess over $10,500
Over $ 16,000 but not over $ 24,000 $ 326 plus 4.7% of
excess over $16,000
Over $ 24,000 but not over $ 40,000 $ 702 plus 6.0% of
excess over $24,000
Over $ 40,000 but not over $ 80,000 $1,662 plus 7.1% of
excess over $40,000
Over $ 80,000 $4,502 plus 7.8% of
excess over $ 80,000.
C. For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
Not over $1,500 $ 0
Over $ 1,500 but not over $ 6,000 2.0% of excess over
$1,500
Over $ 6,000 but not over $ 11,000 $ 90.00 plus 3.2% of
excess over $6,000
Over $ 11,000 but not over $ 16,000 $ 250 plus 4.7% of
excess over $11,000
Over $ 16,000 but not over $ 26,000 $ 485 plus 6.0% of
excess over $16,000
Over $ 26,000 but not over $ 52,000 $1,085 plus 7.1% of
excess over $26,000
Over $ 52,000 $2,937 plus 7.8% of
excess over $52,000.
D. For heads of household filing returns:
If the taxable income is: The tax shall be:
Not over $2,500 $ 0
Over $ 2,500 but not over $ 8,000 2.0% of excess over
$2,500
Over $ 8,000 but not over $ 14,000 $ 110 plus 3.2% of
excess over $8,000
Over $ 14,000 but not over $ 20,000 $ 302 plus 4.7% of
excess over $14,000
Over $ 20,000 but not over $ 33,000 $ 584 plus 6.0% of
excess over $20,000
Over $ 33,000 but not over $ 65,000 $1,364 plus 7.1% of
excess over $33,000
Over $ 65,000 $3,636 plus 7.8% of
excess over $65,000.
E. The tax on the sum of any lump-sum amounts included in net income is an amount equal to five multiplied by the difference between:
(1) the amount of tax due on the taxpayer's taxable income; and
(2) the amount of tax that would be due on an amount equal to the taxpayer's taxable income and twenty percent of the taxpayer's lump-sum amounts included in net income."
Section 4. Section 7-2-12 NMSA 1978 (being Laws 1965, Chapter 202, Section 10, as amended) is amended to read:
"7-2-12. TAXPAYER RETURNS--PAYMENT OF TAX.--
A. Every resident of this state and every
individual deriving income from any business transaction,
property or employment within this state and not exempt from
tax under the Income Tax Act [who] shall file a complete tax
return with the department in form and content as prescribed
by the secretary if the individual:
(1) is required by the laws of the United
States to file a federal income tax return [shall file a
complete tax return with the department in form and content
as prescribed by the secretary] or files a federal income
tax return; and
(2) the taxpayer's taxable income exceeds the zero bracket amount for the taxpayer's filing status.
B. Unless otherwise required under the Income Tax Act or prescription of the secretary, in completing a return for a taxable year, the taxpayer shall declare the same filing status and number of personal exemptions as the taxpayer declared for federal income tax purposes for that same taxable year or, if the taxpayer was not required to file a federal income tax return for the taxable year, the filing status and number of personal exemptions that would have been required or allowed for that taxpayer by the Internal Revenue Code and regulations thereunder for the taxable year.
C. The return required and the tax imposed on individuals under the Income Tax Act are due and payment is required on or before the fifteenth day of the fourth month following the end of the taxable year."
Section 5. Section 7-2-14 NMSA 1978 (being Laws 1972, Chapter 20, Section 2, as amended) is amended to read:
"7-2-14. LOW-INCOME COMPREHENSIVE TAX REBATE.--
A. Except as otherwise provided in Subsection B of this section, any resident who files an individual New Mexico income tax return and who is not a dependent of another individual may claim a tax rebate for a portion of state and local taxes to which the resident has been subject during the taxable year for which the return is filed. The tax rebate may be claimed even though the resident has no income taxable under the Income Tax Act. 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 tax rebate that would have been allowed on a joint return.
B. No claim for the tax rebate provided in this section shall be filed by a resident who was an inmate of a public institution for more than six months during the taxable year for which the tax rebate could be claimed or who was not physically present in New Mexico for at least six months during the taxable year for which the tax rebate could be claimed.
C. For the purposes of this section, the total number of exemptions for which a tax rebate may be claimed or allowed is determined by adding the number of federal exemptions allowable for federal income tax purposes for each individual included in the return who is domiciled in New Mexico plus:
(1) two additional exemptions for each
individual domiciled in New Mexico included in the return
who is sixty-five years of age or older; [plus]
(2) one additional exemption for each
individual domiciled in New Mexico included in the return
who, for federal income tax purposes, is blind; [plus one
exemption]
(3) two additional exemptions for each minor child or stepchild of the resident; and
(4) three exemptions for each minor child
or stepchild of the resident who would be a dependent for federal income tax purposes if the public assistance contributing to the support of the child or stepchild was considered to have been contributed by the resident.
D. The tax rebate provided for in this section may be claimed in the amount shown in the following table:
Modified gross And the total number
income is: of exemptions is:
But Not 6 or Over Over 1 2 3 4 5 More
[$ 0 $ 500 $ 120 $ 160 $ 200 $ 240 $ 280 $ 320
500 1,000 135 195 250 310 350 415
1,000 1,500 135 195 250 310 350 435
1,500 2,000 135 195 250 310 350 450
2,000 2,500 135 195 250 310 350 450
2,500 3,000 135 195 250 310 350 450
3,000 3,500 135 195 250 310 350 450
3,500 4,000 135 195 250 310 355 450
4,000 4,500 135 195 250 310 355 450
4,500 5,000 125 190 240 305 355 450
5,000 5,500 115 175 230 295 355 430
5,500 6,000 105 155 210 260 315 410
6,000 7,000 90 130 170 220 275 370
7,000 8,000 80 115 145 180 225 295
8,000 9,000 70 105 135 170 195 240
9,000 10,000 65 95 115 145 175 205
10,000 11,000 60 80 100 130 155 185
11,000 12,000 55 70 90 110 135 160
12,000 13,000 50 65 85 100 115 140
13,000 14,000 50 65 85 100 115 140
14,000 15,000 45 60 75 90 105 120
15,000 16,000 40 55 70 85 95 110
16,000 17,000 35 50 65 80 85 105
17,000 18,000 30 45 60 70 80 95
18,000 19,000 25 35 50 60 70 80
19,000 20,000 20 30 40 50 60 65
20,000 21,000 15 25 30 40 50 55
21,000 22,000 10 20 25 35 40 45]
$ 0 $ 500 $ 130 $ 170 $ 215 $ 260 $ 300 $ 345
500 1,000 145 210 270 335 375 445
1,000 1,500 145 210 270 335 375 465
1,500 2,000 145 210 270 335 375 485
2,000 2,500 145 210 270 335 375 485
2,500 3,000 145 210 270 335 375 485
3,000 3,500 145 210 270 335 375 485
3,500 4,000 145 210 270 335 380 485
4,000 4,500 145 210 270 335 380 485
4,500 5,000 135 205 260 330 380 485
5,000 5,500 125 185 245 320 380 460
5,500 6,000 115 165 225 280 340 440
6,000 7,000 95 140 185 235 295 400
7,000 8,000 85 125 155 195 240 320
8,000 9,000 75 115 145 185 210 260
9,000 10,000 70 105 125 155 190 220
10,000 11,000 65 90 110 140 170 200
11,000 12,000 60 75 100 120 145 175
12,000 13,000 55 70 90 110 125 150
13,000 14,000 55 70 90 110 125 150
14,000 15,000 50 65 80 100 115 130
15,000 16,000 45 60 75 95 105 120
16,000 17,000 40 55 70 90 95 115
17,000 18,000 35 50 65 80 90 105
18,000 19,000 30 40 55 65 75 90
19,000 20,000 25 35 45 55 65 70
20,000 21,000 20 30 35 45 55 60
21,000 22,000 15 25 30 40 45 50. E. If a taxpayer's modified gross income is zero, the taxpayer may claim a credit in the amount shown in the first row of the table appropriate for the taxpayer's number of exemptions.
F. The tax rebates provided for in this section may be deducted from the taxpayer's New Mexico income tax liability for the taxable year. If the tax rebates exceed the taxpayer's income tax liability, the excess shall be refunded to the taxpayer.
G. For purposes of this section, "dependent" means "dependent" as defined by Section 152 of the Internal Revenue Code of 1986, as that section may be amended or renumbered, but also includes any minor child or stepchild of the resident who would be a dependent for federal income tax purposes if the public assistance contributing to the support of the child or stepchild was considered to have been contributed by the resident."
Section 6. Section 7-2-18.6 NMSA 1978 (being Laws 1999, Chapter 217, Section 1) is amended to read:
"7-2-18.6. JOB MENTORSHIP TAX CREDIT.--
A. To encourage New Mexico businesses to hire youth participating in certified school-to-career programs, any taxpayer who files an individual New Mexico income tax return, who is not a dependent of another individual and who is the owner of a New Mexico business may claim a credit in an amount equal to fifty percent of gross wages paid to qualified students who are employed by the business during the taxable year for which the return is filed. The tax credit may be known as the "job mentorship tax credit".
B. A taxpayer who is the owner of a New Mexico business may claim the credit provided in this section for each taxable year in which the business employs one or more qualified students. The maximum aggregate credit allowable shall not exceed fifty percent of the gross wages paid to not more than ten qualified students employed by the business for up to three hundred twenty hours of employment of each qualified student in each taxable year for a maximum of three taxable years for each qualified student. In no event shall a taxpayer claim a credit in excess of twelve thousand dollars ($12,000) in any taxable year. The taxpayer shall certify that hiring the qualified student does not displace or replace a current employee.
C. [The number of qualified students whose
employment qualifies for a job mentorship tax credit pursuant
to this section or the Corporate Income and Franchise Tax Act
shall be limited to a pilot program of one thousand qualified
students in any calendar year.] The department shall allocate
annually to the state school-to-work director [one thousand
pilot program] certificates that shall be distributed by the
state school-to-work director to administrators of certified
school-to-career programs. The [pilot program] certificates,
when properly executed, shall serve as evidence of the
taxpayer's eligibility for the job mentorship tax credit. The
maximum number of [pilot program] certificates that may be
issued to a single school-to-career program administrator is
equal to the number of qualified school-to-career participants
in that program on May 1 of the current calendar year. The
[pilot program] certificates shall be issued in the order in
which they are requested. To claim the credit pursuant to this
section, the taxpayer must submit with respect to each employee
for whom the credit is claimed:
(1) a properly executed [pilot program]
certificate;
(2) information required by the secretary with respect to the employee's employment by the business during the taxable year for which the credit is claimed; and
(3) information required by the secretary that the employee was not also employed in the same taxable year by another New Mexico business qualifying for and claiming a job mentorship tax credit for that employee pursuant to this section or the Corporate Income and Franchise Tax Act.
D. The credit provided pursuant to this section may only be deducted from the taxpayer's New Mexico income tax liability for the taxable year. Any portion of the maximum tax credit provided by this section that remains unused at the end of the taxpayer's taxable year may be carried forward for three consecutive taxable years; provided the total tax credits claimed under this section shall not exceed the maximum allowable pursuant to Subsection B of this section.
E. 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 credit that would have been allowed on a joint return.
F. A taxpayer who otherwise qualifies for and claims a job mentorship tax credit for employment of qualified students by a partnership, limited partnership, limited liability company, S corporation or other business association of which the taxpayer is a member may claim a credit only in proportion to his interest in the partnership, limited partnership, limited liability company, S corporation or association. The total credit claimed by all members of the business shall not exceed the maximum tax credit allowable pursuant to Subsection B of this section.
G. As used in this section:
(1) "certified school-to-career program" means a summer employment program certified by the state school-to-work office as a school-to-career program designed for secondary school students to create academic and career goals and objectives and find employment in a job meeting those goals and objectives;
(2) "New Mexico business" means a partnership, limited partnership, limited liability company treated as a partnership for federal income tax purposes, S corporation or sole proprietorship that carries on a trade or business in New Mexico and that employs in New Mexico less than three hundred full-time employees at any one time during the taxable year; and
(3) "qualified student" means an individual who is at least fourteen years of age but not more than twenty-one years of age who is attending full time an accredited New Mexico secondary school and who is a participant in a certified school-to-career program."
Section 7. Section 7-2A-17 NMSA 1978 (being Laws 1999, Chapter 217, Section 2) is amended to read:
"7-2A-17. JOB MENTORSHIP TAX CREDIT.--
A. To encourage New Mexico businesses to hire youth participating in certified school-to-career programs, any taxpayer who is a New Mexico business and who files a corporate income tax return may claim a credit in an amount equal to fifty percent of gross wages paid to qualified students who are employed by the taxpayer during the taxable year for which the return is filed. The tax credit may be known as the "job mentorship tax credit".
B. A taxpayer may claim the credit provided in this section for each taxable year in which the taxpayer employs one or more qualified students. The maximum aggregate credit allowable shall not exceed fifty percent of the gross wages paid to not more than ten qualified students employed by the taxpayer for up to three hundred twenty hours of employment of each qualified student in each taxable year for a maximum of three taxable years for each qualified student. In no event shall a taxpayer claim a credit in excess of twelve thousand dollars ($12,000) in any taxable year. The employer shall certify that hiring the qualified student does not displace or replace a current employee.
C. [The number of qualified students whose
employment qualifies for a job mentorship tax credit pursuant
to this section or the Income Tax Act shall be limited to a
pilot program of one thousand qualified students in any
calendar year.] The department shall allocate annually to the
state school-to-work director [one thousand pilot program]
certificates that shall be distributed by the state school-to-work director to administrators of certified school-to-career
programs. The [pilot program] certificates, when properly
executed, shall serve as evidence of the taxpayer's eligibility
for the job mentorship tax credit. The maximum number of
[pilot program] certificates that may be issued to a single
school-to-career program administrator is equal to the number
of qualified school-to-career participants in that program on
May 1 of the current calendar year. The [pilot program]
certificates shall be issued in the order in which they are
requested. To claim the credit under this section, the
taxpayer must submit with respect to each employee for whom the
credit is claimed:
(1) a properly executed [pilot program]
certificate;
(2) information required by the secretary with respect to the employee's employment by the taxpayer during the taxable year for which the credit is claimed; and
(3) information required by the secretary that the employee was not also employed in the same taxable year by another New Mexico business qualifying for and claiming a job mentorship tax credit for that employee pursuant to this section or the Income Tax Act.
D. The credit provided [under] pursuant to this
section may only be deducted from the taxpayer's corporate
income tax liability for the taxable year. Any portion of the
maximum tax credit provided by this section that remains unused
at the end of the taxpayer's taxable year may be carried
forward for three consecutive taxable years; provided the total
tax credits claimed [under] pursuant to this section shall not
exceed the maximum allowable under Subsection B of this
section.
E. As used in this section:
(1) "certified school-to-career program" means a summer employment program certified by the state school-to-work office as a school-to-career program designed for secondary school students to create academic and career goals and objectives and find employment in a job meeting those goals and objectives;
(2) "New Mexico business" means a corporation that carries on a trade or business in New Mexico and that employs in New Mexico less than three hundred full-time employees during the taxable year; and
(3) "qualified student" means an individual who is at least fourteen years of age but not more than twenty-one years of age who is attending full time an accredited New Mexico secondary school and who is a participant in a certified school-to-career program."
Section 8. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:
"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--FRANCHISORS AND FRANCHISEES--CERTAIN SHARED EXPENSES AND COOPERATIVE ADVERTISING RECEIPTS.--
A. Receipts of a reservation fund from a franchisor or its franchisees for the purpose of developing, maintaining or modifying a reservation system are deductible from gross receipts. Such receipts must be used by the fund for the primary purposes of developing, operating, maintaining or modifying a reservation system for the benefit of the franchisor or franchisees that make payment to the fund.
B. Receipts of a franchisor engaged in the hospitality industry from a franchisee for the purpose of reimbursing a franchisor for payments made by the franchisor to travel agents for commission earned for booking a guest in the franchisee's facility are deductible from gross receipts.
C. Receipts of a franchisor engaged in the hospitality industry from a franchisee for the purpose of reimbursing a franchisor for the costs of providing training off the franchisee's premises to a franchisee and its employees regarding procedures required for compliance with the franchise agreement are deductible from gross receipts.
D. Receipts of an advertising cooperative from franchisors or franchisees are deductible from gross receipts. Such receipts must be used by the advertising cooperative for the primary purpose of procuring advertising or marketing services for the benefit of the members that make payments to it.
E. For the purposes of this section:
(1) "advertising cooperative" means any form of pooling of funds or other cost-sharing arrangement that is contractually or otherwise limited to expending the funds only on advertising and marketing, including:
(a) any form of escrow, actual or constructive trust or segregated account; or
(b) any entity that directly or indirectly derives receipts from its members or other contributors for the primary purpose of procuring advertising or marketing services for the benefit of the members;
(2) "hospitality industry" means a hotel, motel, resort or similar facility that provides accommodations for overnight stays; and
(3) "reservation fund" means any form of pooling of funds or other cost-sharing arrangements in which a franchisor is contractually or otherwise limited to expending the funds for the primary purposes of developing, operating, maintaining and modifying a reservation system, including:
(a) any form of escrow, actual or constructive trust or segregated account maintained by a franchisor; or
(b) any entity designated by a franchisor that directly or indirectly derives receipts from a franchisor
or its franchisees for the primary purposes of developing, operating, maintaining or modifying a reservation system for the benefit of the franchisor or its franchisees."
Section 9. Section 7-9-77.1 NMSA 1978 (being Laws 1998, Chapter 96, Section 1, as amended) is amended to read:
"7-9-77.1. DEDUCTION--GROSS RECEIPTS TAX--CERTAIN MEDICAL AND HEALTH CARE SERVICES.--
A. Receipts of any person from payments by the
United States government or any agency thereof for provision of
medical and other health services, [by medical doctors and
osteopaths or of medical, other health and palliative services
by a] hospice care or home health services to medicare
beneficiaries pursuant to the provisions of Title [XVIII] 18 of
the federal Social Security Act may be deducted from gross
receipts.
B. Receipts from payments by a third-party administrator of the federal TRICARE program for provision of medical and other health services by medical doctors and osteopathic physicians to covered beneficiaries may be deducted from gross receipts.
[B.] C. For the purposes of this section:
[(1) "hospice" means a for-profit entity
licensed and certified by the department of health as a
hospice; and]
(1) "home health services" means "home health services" as defined in 42 USCA 1395x(m) for purposes of Title 18 of the federal Social Security Act;
(2) "hospice care" means "hospice care" as defined in 42 USCA 1395x(dd) for purposes of Title 18 of the federal Social Security Act;
(3) "medical and other health services" means "medical and other health services" as defined in 42 USCA 1395x(s) for purposes of Title 18 of the federal Social Security Act;
[(2)] (4) "medical [doctors and osteopaths]
doctor" means [persons] a person licensed as a physician to
practice [under Section 61-6-11 or 61-10-11 NMSA 1978] medicine
pursuant to the provisions of the Medical Practice Act;
(5) "osteopathic physician" means a person licensed as an osteopathic physician pursuant to the provisions of Chapter 61, Article 10 NMSA 1978; and
(6) "TRICARE program" means the program defined in 10 USCA 1072(7)."
Section 10. REPEAL.--Laws 1999, Chapter 217, Section 4 is repealed.
Section 11. APPLICABILITY.--
A. The provisions of Sections 1 and 4 through 7 of this act apply to taxable years beginning on or after January 1, 2001.
B. The provisions of Section 2 this act apply to taxable years beginning in 2001.
C. The provisions of Section 3 of this act apply to taxable years beginning on or after January 1, 2002.
Section 12. EFFECTIVE DATE.--
A. The effective date of the provisions of Sections 8 through 10 of this act is July 1, 2001.
B. The effective date of the provisions of Section 3 of this act is January 1, 2002.