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|
SPONSOR: |
Lujan |
DATE TYPED: |
02/04/02 |
HB |
321 |
||
|
SHORT TITLE: |
Administrative and Accounting Tax Deduction |
SB |
|
||||
|
|
ANALYST: |
Neel |
|||||
REVENUE
|
Estimated Revenue |
Subsequent Years
Impact |
Recurring or Non-Rec |
Fund Affected |
|
|
FY02 |
FY03 |
|
|
|
|
|
($150.0) |
($164.0) |
Recurring |
General Fund |
|
|
($125.0) |
($136.0) |
Recurring |
Local Governments |
(Parenthesis ( ) Indicate Revenue Decreases)
LFC files
Taxation and Revenue Department (TRD).
SUMMARY
Synopsis
of Bill
House Bill 321 amends statute to expand the
eligibility for a deduction from Gross Receipts Tax for accounting and
administrative services to “business entities.” Business entities are defines as corporations, limited liability
companies, partnerships, limited partnerships, limited liability partnerships
or real estate investment trusts.
Individuals or joint ventures are expressly excluded.
Significant
Issues
According
to TRD, currently deductions can be claimed for receipts from the affiliate to
the corporation or for receipts flowing from the corporation to the
subsidiary. Provisions of HB 321 are
restricted to allow the deduction only for receipts of a business entity from
providing qualified services to an affiliate.
Receipts of an affiliate from
providing services to a business entity would not qualify for the deduction
under this proposal.
FISCAL IMPLICATIONS
TRD notes the following assumptions when
determining the fiscal impact:
· According
to data from the 1997 Economic Census results in an estimate of $300 million in
total receipts from accounting and administrative services for fiscal year
2003;
· Provisions
included in HB 321 are limited to transactions among closely-held businesses;
and
· It
is assumed that less than 1.7% of the total sector receipts (approximately $5)
million would qualify for this deduction.
ADMINISTRATIVE IMPLICATIONS
TRD notes slight administrative implications to
enacting HB 321 including training and form changes, etc.
TECHNICAL ISSUES:
TRD notes:
As the bill is currently written, the provisions are restricted to allow the deduction only for receipts of a business entity from providing qualified services to an affiliate. Receipts of an affiliate from providing services to a business entity would not qualify for the deduction under this proposal. It is not known if this is the intent of the proposed legislation.
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