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F I S C A L I M P A C T R E P O R T

SPONSOR:	Garcia		DATE TYPED:	02/01/02		HB
SHORT TITLE:		Physicians Income Tax Credit				SB	325
					ANALYST:		Neel

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY02

FY03

($0.1)

Undetermined

($0.1)

Undetermined

($0.1)

Undetermined

Recurring

Local Government

(Parenthesis ( ) Indicate Revenue Decreases) In thousands

SOURCES OF INFORMATION

LFC files

No Response

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 325 enacts a new section of the Income Tax Act and the Corporate Income and Franchise Tax Act to provide a credit for gross receipts paid on medical and health services provided by physicians. Physicians can claim the credit for medical, health services, and for receipts of a pass-through business that the taxpayer is an owner. If taxes are paid by the pass-through entity, which the physician is the owner, the gross receipts paid by will be determined as the percent ownership of the business by the business.

The credit provided under SB 325 can be deducted from the taxpayer’s personal or corporate income tax liability or can be carried forward for three consecutive years. Physicians are defined as those licensed pursuant to the Medical Practice Act.

Effective Date – Tax Year January 1, 2002

FISCAL IMPLICATIONS

Undetermined

OTHER SUBSTANTIVE ISSUES

All receipts are Gross Receipts Taxes are deposited in the tax administration suspense fund in the state treasury; after payment of necessary refunds and interest, the balance is distributed monthly as follows:

1.225 percent of the taxable gross receipts reported for the month of deposit for each municipality is distributed to that municipality – Section 7-1-6.4 NMSA 1978;

3.59 percent of gross receipts attributable to the sale of jet fuel is distributed to the state aviation fund for general purposes, and from July 1, 2002 through June 30, 2007, an additional .046 percent of the gross receipts attributable to the sale of jet fuel is distributed to the state aviation fund for carrying out the provisions of the air service assistance program – Section 7-1-6.7 and 64-1-15 NMSA 1978.

Effective July 1, 2001, $500,000 from the net receipts attributable to the gross receipts tax is made to the state office building bonding fund – Section 7-1-6.42 NMSA 1978;

Local option gross receipts taxes are distributed to the appropriate county or municipality – Section 7-1-6.12 and 7-1-6.13 NMSA 1978; and

County health care gross receipts taxes are distributed to the county-supported Medicaid fund – Section 7-20E-18 NMSA 1978.

SN/ar