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SPONSOR: |
Cervantes |
DATE TYPED: |
|
HB |
961 |
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SHORT TITLE: |
Investment Credit Act Eligibility |
SB |
|
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|
ANALYST: |
Smith |
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REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
(1,000.0) |
(500.0) |
Recurring |
General Fund |
|
|
|
|
|
(Parenthesis
( ) Indicate Revenue Decreases)
Responses
Received From
TRD
SUMMARY
Synopsis of Bill
House Bill 961 allows taxpayers five years to apply
for credit approval on equipment that was introduced into
The Investment Credit
Act (Section 7-9A NMSA 1978) allows tax credits equal to 5% of the value of qualified
equipment purchased and incorporated into certain manufacturing operations in
the state. The credits may be claimed
against gross receipts, compensating, or withholding tax liability. Minimum new employment levels must be
achieved to qualify for the credits. A
taxpayer is required to apply for approval of a credit within one year
following the end of the calendar year in which the qualified equipment was
purchased or introduced into
FISCAL IMPLICATIONS
TRD evaluated denied applications for investment credit to determine the
fiscal impact.
TECHNICAL ISSUES
TRD points out that under current law, a taxpayer applies for credit, at which
point the department determines if the appropriate number of employees was
added in the year in which the taxpayer applies for credit. This proposal changes the employment
requirements for equipment purchased on
or before
OTHER
SUBSTANTIVE ISSUES
Currently, approximately
35 taxpayers actively claim credits totaling $10 to 12 million annually. Approximately 65% of the credits are applied
to withholding tax, 32% to compensating tax, and 3% to gross receipts tax liabilities. Taxpayers have more than $30 million in
credit balances still outstanding. These
amounts can be carried forward and applied against future year’s tax liability.
SS/njw