2003 House Bill text for HB0014

HOUSE BILL 14

46th legislature - STATE OF NEW MEXICO - first special session, 2003

INTRODUCED BY

Ted Hobbs

AN ACT

RELATING TO PUBLIC FINANCES; PROVIDING ADDITIONAL INCOME TAX RELIEF FOR SENIOR CITIZENS, FAMILIES, INDIVIDUALS AND HEADS OF HOUSEHOLDS; PROVIDING INCENTIVES FOR ECONOMIC DEVELOPMENT INITIATIVES AND FOR THE USE OF ALTERNATIVE FUEL VEHICLES; PROVIDING GROSS RECEIPTS TAX RELIEF FOR HEALTH CARE PRACTITIONERS; PROVIDING FOR ADMINISTRATIVE REFORMS; MAKING DISTRIBUTIONS; AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA 1978; MAKING APPROPRIATIONS; DECLARING AN EMERGENCY.

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

Section 1. Section 7-1-24 NMSA 1978 (being Laws 1965, Chapter 248, Section 26, as amended) is amended to read:

"7-1-24. ADMINISTRATIVE HEARING--PROCEDURE.--

A. Any taxpayer may dispute the assessment to the taxpayer of any amount of tax, the application to the taxpayer of any provision of the Tax Administration Act or the denial of or failure to either allow or deny a claim for refund made in accordance with Section 7-1-26 NMSA 1978 by filing with the secretary a written protest against the assessment or against the application to the taxpayer of the provision or against the denial of or the failure to allow or deny the amount claimed to have been erroneously paid as tax. Every protest shall identify the taxpayer and the tax involved and state the grounds for the taxpayer's protest and the affirmative relief requested. The statement of grounds for protest shall specify individual grounds upon which the protest is based and a summary statement of the evidence expected to be produced supporting each ground asserted, if any; provided that the taxpayer may supplement the statement at any time prior to ten days before any hearing conducted on the protest pursuant to Subsection D of this section or, if a scheduling order has been issued, in accordance with the scheduling order. The secretary may, in appropriate cases, provide for an informal conference before setting a hearing of the protest or acting on any claim for refund.

B. Any protest by a taxpayer shall be filed within thirty days of the date of the mailing to the taxpayer by the department of the notice of assessment or mailing to, or service upon, the taxpayer of other peremptory notice or demand, or the date of mailing or filing a return. Upon written request of the taxpayer made within the time permitted for filing a protest, the secretary may grant an extension of time, not to exceed sixty days, within which to file the protest. If a protest is not filed within the time required for filing a protest or, if an extension has been granted, within the extended time, the secretary may proceed to enforce collection of any tax if the taxpayer is delinquent within the meaning of Section 7-1-16 NMSA 1978. Upon written request of the taxpayer made after the time for filing a protest but not more than sixty days after the expiration of the time for filing a protest, the secretary may grant a retroactive extension of time, not to exceed sixty days, within which to file the protest; provided that the taxpayer demonstrates to the secretary's satisfaction that the taxpayer was not able to file a protest or to request an extension within the time to file the protest and that the grounds for the protest have substantial merit. The fact that the department did not mail the assessment or other peremptory notice or demand by certified or registered mail or otherwise demand and receive acknowledgment of receipt by the taxpayer shall not be deemed to demonstrate the taxpayer's inability to protest or request an extension within the time for filing a protest within the required time. The secretary shall not grant a retroactive extension if a levy has already been served under Section 7-1-31 or 7-1-33 NMSA 1978 or a jeopardy assessment has been made under Section 7-1-59 NMSA 1978. No proceedings other than those to enforce collection of any amount assessed as tax and to protect the interest of the state by injunction, as provided in Sections 7-1-31, 7-1-33, 7-1-34, 7-1-40, 7-1-53, 7-1-56 and 7-1-58 NMSA 1978, are stayed by timely filing of a protest under this section.

C. Claims for refund shall be filed as provided for in Section 7-1-26 NMSA 1978.

D. Upon timely receipt of a protest, the department or hearing officer shall promptly set a date for hearing and on that date hear the protest or claim.

E. A hearing officer shall be designated by the secretary to conduct the hearing. Taxpayers may appear at a hearing for themselves or be represented by a bona fide employee, an attorney, a certified public accountant or a registered public accountant. Hearings shall not be open to the public except upon request of the taxpayer and may be postponed or continued at the discretion of the hearing officer.

F. A hearing officer shall not engage or participate in any way as an employee of the department in the areas of enforcement or formulating general tax policy other than to conduct hearings. A taxpayer may request that the secretary determine whether a hearing officer has engaged or participated in tax policy or enforcement in a way that might reasonably be expected to affect the hearing officer's impartiality in a particular matter. The secretary may designate another hearing officer for the matter to avoid actual or apparent prejudice.

G. A hearing officer shall not engage in ex-parte communications concerning the substantive issues of any matter that has been protested while that matter is still pending. If the secretary finds that a hearing officer has engaged in prohibited ex-parte communications, the secretary shall designate another hearing officer for that matter.

H. In hearings before the hearing officer, the taxpayer may elect that the Rules of Civil Procedure for the District Courts apply to the proceedings. The secretary shall prescribe by regulation the manner in which an election shall be made. In the absence of such an election, the technical rules of evidence shall not apply, but in ruling on the admissibility of evidence, the hearing officer may require reasonable substantiation of statements or records tendered, the accuracy or truth of which is in reasonable doubt. A taxpayer may request a written ruling on any contested question of evidence in a matter in which the taxpayer has filed a written protest and that protest is pending.

I. In hearings before the hearing officer when the Rules of Civil Procedure for the District Courts [shall] do not apply, [but] the hearing shall be conducted so that both complaints and defenses are amply and fairly presented. To this end, the hearing officer shall hear arguments, permit discovery, entertain and dispose of motions, require written expositions of the case as the circumstances justify and render a decision in accordance with the law and the evidence presented and admitted. A taxpayer may request a written ruling on any contested question of procedure in a matter in which the taxpayer has filed a written protest and that protest is pending.

J. In the case of the hearing of any protest, the hearing officer shall make and preserve a complete record of the proceedings. At the beginning of the hearing, the hearing officer shall inform the taxpayer of the taxpayer's right to representation. The hearing officer, within thirty days of the hearing, shall inform the protestant in writing of the decision, informing the protestant at the same time of the right to, and the requirements for perfection of, an appeal from the decision to the court of appeals and of the consequences of a failure to appeal. The written decision shall embody an order granting or denying the relief requested or granting such part thereof as seems appropriate.

K. A taxpayer with two or more protests containing related issues may request that such protests be combined and heard jointly. The designated hearing officer shall grant the request to combine protests unless it would create an unreasonable burden on the department.

L. Nothing in this section shall be construed to authorize any criminal proceedings hereunder or to authorize an administrative protest of the issuance of a subpoena or summons."

Section 2. Section 7-1-26 NMSA 1978 (being Laws 1965, Chapter 248, Section 28, as amended) is amended to read:

"7-1-26. CLAIM FOR REFUND.--

A. Any person who believes that an amount of tax has been paid by or withheld from that person in excess of that for which the person was liable, who has been denied any credit or rebate claimed or who claims a prior right to property in the possession of the department pursuant to a levy made under authority of Sections 7-1-31 through 7-1-34 NMSA 1978 may claim a refund by directing to the secretary, within the time limited by the provisions of Subsections D, E and F of this section, a written claim for refund. Except as provided in Subsection J of this section, a refund claim shall include the taxpayer's name, address and identification number, the type of tax for which a refund is being claimed, the sum of money being claimed, the period for which overpayment was made and the basis for the refund. As used in this subsection, "basis for the refund" means a brief statement of the facts and the law on which the claim is based. Upon receipt of a claim for refund of gross receipts tax, compensating tax, personal income tax for years other than the current tax year or corporate income tax for years other than the current tax year, other than a claim described in Subsection J of this section, the department shall promptly send a notice to the person filing the claim stating that it has received the claim and indicating whether it considers the claim to be complete. The department and the person filing the claim may agree to designate the claim as a protective claim.

B. The secretary or the secretary's delegate may allow the claim in whole or in part or may deny the claim.

(1) If the claim is denied in whole or in part in writing, no claim may be refiled with respect to that which was denied but the person, within ninety days after either the mailing or delivery of the denial of all or any part of the claim, may elect to pursue one, but not more than one, of the remedies in Subsection C of this section.

(2) For a claim other than a protective claim, if the department has neither granted nor denied any portion of a claim for refund within one hundred twenty days of the date the claim was mailed or delivered to the department, the person may refile it within the time limits set forth in Subsection C of this section or may within ninety days elect to pursue one, but only one, of the remedies in Subsection C of this section. After the expiration of the two hundred ten days from the date the claim was mailed or delivered to the department, the department may not approve or disapprove the claim unless the person has pursued one of the remedies under Subsection C of this section.

(3) For a protective claim, if the department has not acted within one hundred twenty days from either the date of a final decision in the lead case from which appeal may not be taken or the last date on which appeal may be taken when no appeal is taken, any part of the claim not granted or denied is denied.

C. A person may elect to pursue one, but only one, of the remedies in Paragraphs (1) and (2) of this subsection. In any case, if a person does timely pursue more than one remedy, the person shall be deemed to have elected the first remedy invoked. The remedies are as follows:

(1) the person may direct to the secretary a written protest against the denial of, or failure to either allow or deny the claim or portion thereof, which shall be set for hearing by a hearing officer designated by the secretary promptly after the receipt of the protest in accordance with the provisions of Section 7-1-24 NMSA 1978, and pursue the remedies of appeal from decisions adverse to the protestant as provided in Section 7-1-25 NMSA 1978; or

(2) the person may commence a civil action in the district court for Santa Fe county by filing a complaint setting forth the circumstance of the claimed overpayment, alleging that on account thereof the state is indebted to the plaintiff in the amount stated, together with any interest allowable, demanding the refund to the plaintiff of that amount and reciting the facts of the claim for refund. The plaintiff or the secretary may appeal from any final decision or order of the district court to the court of appeals.

D. Except as otherwise provided in Subsections E and F of this section, no credit or refund of any amount may be allowed or made to any person unless as the result of a claim made by that person as provided in this section:

(1) within three years of the end of the calendar year in which:

(a) the payment was originally due or the overpayment resulted from an assessment by the department pursuant to Section 7-1-17 NMSA 1978, whichever is later;

(b) the final determination of value occurs with respect to any overpayment that resulted from a disapproval by any agency of the United States or the state of New Mexico or any court of increase in value of a product subject to taxation under the Oil and Gas Severance Tax Act, the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act or the Natural Gas Processors Tax Act; or

(2) when an amount of a claim for credit under the provisions of the Investment Credit Act, Laboratory Partnership with Small Business Tax Credit Act, Technology Jobs Tax Credit Act, Capital Equipment Tax Credit Act or similar act or for the rural job tax credit pursuant to Sections 7-2E-1 and 7-2E-2 NMSA 1978 or similar credit has been denied, the taxpayer may claim a refund of the credit no later than one year after the date of the denial;

(3) when a taxpayer under audit by the department has signed a waiver of the limitation on assessments on or after July 1, 1993 pursuant to Subsection F of Section 7-1-18 NMSA 1978, the taxpayer may file a claim for refund of the same tax paid for the same period for which the waiver was given, until a date one year after the later of the date of the mailing of an assessment issued pursuant to the audit, the date of the mailing of final audit findings to the taxpayer or the date a proceeding is begun in court by the department with respect to the same tax and the same period;

(4) if the payment of an amount of tax was not made within three years of the end of the calendar year in which the original due date of the tax or date of the assessment of the department occurred, a claim for refund of that amount of tax can be made within one year of the date on which the tax was paid; or

(5) when a taxpayer has been assessed a tax on or after July 1, 1993 under Subsection B, C or D of Section 7-1-18 NMSA 1978 and when the assessment applies to a period ending at least three years prior to the beginning of the year in which the assessment was made, the taxpayer may claim a refund for the same tax for the period of the assessment or for any period following that period within one year of the date of the assessment unless a longer period for claiming a refund is provided in this section.

E. No credit or refund shall be allowed or made to any person claiming a refund of gasoline tax under Section

7-13-11 NMSA 1978 unless notice of the destruction of the gasoline was given the department within thirty days of the actual destruction and the claim for refund is made within six months of the date of destruction. No credit or refund shall be allowed or made to any person claiming a refund of gasoline tax under Section 7-13-17 NMSA 1978 unless the refund is claimed within six months of the date of purchase of the gasoline and the gasoline has been used at the time the claim for refund is made.

F. If, as a result of an audit by the internal revenue service or the filing of an amended federal return changing a prior election or making any other change for which federal approval is required by the Internal Revenue Code, any adjustment of federal tax is made with the result that there would have been an overpayment of tax if the adjustment to federal tax had been applied to the taxable period to which it relates, claim for credit or refund of only that amount based on the adjustment may be made as provided in this section within one year of the date of the internal revenue service audit adjustment or payment of the federal refund or within the period limited by Subsection D of this section, whichever expires later. Interest computed at the rate specified in Subsection B of Section 7-1-68 NMSA 1978 shall be allowed on any such claim for refund from the date one hundred twenty days after the claim is made until the date the final decision to grant the credit or refund is made.

G. If as a result of an audit by the department or a managed audit covering multiple periods an overpayment of tax is found in any period under the audit, that overpayment may be credited against an underpayment of the same tax found in another period under audit pursuant to Section 7-1-29 NMSA 1978, provided that the taxpayer files a claim for refund for the overpayments identified in the audit.
H. Any refund of tax paid under any tax or tax act administered under Subsection B of Section 7-1-2 NMSA 1978 may be made, at the discretion of the department, in the form of credit against future tax payments if future tax liabilities in an amount at least equal to the credit amount reasonably may be expected to become due.

I. For the purposes of this section, the term "oil and gas tax return" means a return reporting tax due with respect to oil, natural gas, liquid hydrocarbons or carbon dioxide pursuant to the Oil and Gas Severance Tax Act, the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act, the Natural Gas Processors Tax Act or the Oil and Gas Production Equipment Ad Valorem Tax Act.

J. The filing of a fully completed original income tax return, corporate income tax return, corporate income and franchise tax return, estate tax return or special fuel excise tax return that shows a balance due the taxpayer or a fully completed amended income tax return, an amended corporate income tax return, an amended corporate income and franchise tax return, an amended estate tax return, an amended special fuel excise tax return or an amended oil and gas tax return that shows a lesser tax liability than the original return constitutes the filing of a claim for refund for the difference in tax due shown on the original and amended returns.

K. For the purposes of this section:

(1) "protective claim" means a claim for refund filed by a person asserting that the person's entitlement to a refund will be established by a final decision of a New Mexico court of competent jurisdiction on a claim for refund or protest previously filed by that person or another; and

(2) "lead case" means the previously filed claim or protest described in Paragraph (1) of this subsection.

L. Disposition of a protective claim shall be postponed until a final decision is reached in the lead case."

Section 3. Section 7-2-5.2 NMSA 1978 (being Laws 1985, Chapter 114, Section 1, as amended) is amended to read:

"7-2-5.2. EXEMPTION--INCOME OF PERSONS SIXTY-FIVE AND OLDER OR BLIND.--Any individual sixty-five years of age or older or who, for federal income tax purposes, is blind may claim an exemption in an amount specified in Subsections A through C of this section not to exceed eight thousand dollars ($8,000) of income includable except for this exemption in net income. Individuals having income both within and without this state shall apportion this exemption in accordance with regulations of the secretary.

A. For married individuals filing separate returns, for any taxable year beginning on or after January 1, 1987:

The maximum amount of

If adjusted exemption allowable under

gross income is: this section shall be:

Not over $15,000 $8,000

Over $15,000 but not over $16,500 $7,000

Over $16,500 but not over $18,000 $6,000

Over $18,000 but not over $19,500 $5,000

Over $19,500 but not over $21,000 $4,000

Over $21,000 but not over $22,500 $3,000

Over $22,500 [but not over $24,000 $2,000] $2,500

[Over $24,000 but not over $25,500 $1,000

Over $25,500 0].

B. For heads of household, surviving spouses and married individuals filing joint returns, for any taxable year beginning on or after January 1, 1987:

The maximum amount of

If adjusted exemption allowable under

gross income is: this section shall be:

Not over $30,000 $8,000

Over $30,000 but not over $33,000 $7,000

Over $33,000 but not over $36,000 $6,000

Over $36,000 but not over $39,000 $5,000

Over $39,000 but not over $42,000 $4,000

Over $42,000 but not over $45,000 $3,000

Over $45,000 [but not over $48,000 $2,000] $2,500

[Over $48,000 but not over $51,000 $1,000

Over $51,000 0].

C. For single individuals, for any taxable year beginning on or after January 1, 1987:

The maximum amount of

If adjusted exemption allowable under

gross income is: this section shall be:

Not over $18,000 $8,000

Over $18,000 but not over $19,500 $7,000

Over $19,500 but not over $21,000 $6,000

Over $21,000 but not over $22,500 $5,000

Over $22,500 but not over $24,000 $4,000

Over $24,000 but not over $25,500 $3,000

Over $25,500 [but not over $27,000 $2,000] $2,500

[Over $27,000 but not over $28,500 $1,000

Over $28,500 0]."

Section 4. Section 7-2-7 NMSA 1978 (being Laws 2003, Chapter 2, Section 3), which is to become effective January 1, 2004, 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 in 2004:

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 $ 864 plus 6.8% of

excess over $ 20,000.

B. For heads of household, 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 $ 1,728 plus 6.8% of

excess over $ 40,000.

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 $1,104.50 plus 6.8% of

excess over $ 26,000.

[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 $1,405 plus 6.8% of

excess over $ 33,000.

E.] D. 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 5. Section 7-2-7 NMSA 1978 (being Laws 2003, Chapter 2, Section 4), which is to become effective January 1, 2005, 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 in 2005:

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 $ 384 plus 6.0% of excess over $ 12,000.

B. For heads of household, 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 $ 768 plus 6.0% of excess over $ 24,000.

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 $ 504.50 plus 6.0% of excess over $ 16,000.

[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 $ 625 plus 6.0% of

excess over $ 20,000.

E.] D. 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 6. Section 7-2-7 NMSA 1978 (being Laws 2003, Chapter 2, Section 5), which is to become effective January 1, 2006, 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 in 2006:

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 $ 384 plus 5.3% of excess over $ 12,000.

B. For heads of household, 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 $ 768 plus 5.3% of excess over $ 24,000.

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 $ 504.50 plus 5.3% of excess over $ 16,000.

[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 $ 625 plus 5.3% of

excess over $ 20,000.

E.] D. 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 7. Section 7-2-7 NMSA 1978 (being Laws 2003, Chapter 2, Section 6), which is to become effective January 1, 2007, 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, 2007:

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 $ 384 plus 4.9% of excess over $ 12,000.

B. For heads of household, 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 $ 768 plus 4.9% of excess over $ 24,000.

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 $ 504.50 plus 4.9% of excess over $ 16,000.

[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 $ 625 plus 4.9% of

excess over $ 20,000.

E.] D. 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 8. 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] FAMILY AND INDIVIDUAL 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 two additional exemptions for each individual domiciled in New Mexico included in the return who is sixty-five years of age or older plus 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 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]

But Not 7 or

Over Over 1 2 3 4 5 6 More

$ 0 $1,000 $180 $281 $373 $460 $515 $605 $704

1,000 3,000 180 281 373 460 515 640 745

3,000 5,000 180 281 373 460 520 640 745

5,000 6,000 160 261 353 445 520 620 722

6,000 7,000 135 216 293 370 440 560 652

7,000 8,000 125 201 268 330 390 485 564

8,000 9,000 115 191 258 320 360 430 500

9,000 10,000 103 181 238 295 340 395 459

10,000 11,000 85 166 223 280 320 375 436

11,000 12,000 65 156 213 260 300 350 407

12,000 13,000 50 144 208 250 280 330 383

13,000 14,000 50 137 208 250 280 330 383

14,000 15,000 45 120 198 240 270 310 360

15,000 16,000 40 105 193 235 260 300 348

16,000 17,000 35 90 170 230 250 295 343

17,000 18,000 30 78 155 220 245 285 331

18,000 19,000 25 61 130 210 235 270 313

19,000 20,000 20 49 105 195 225 255 296

20,000 21,000 15 37 80 175 215 245 284

21,000 22,000 10 20 70 160 205 235 273

22,000 23,000 0 0 45 115 155 183 220

23,000 24,000 0 0 0 105 145 176 210

24,000 25,000 0 0 0 60 135 169 200

25,000 26,000 0 0 0 45 125 145 190

26,000 27,000 0 0 0 30 115 138 180

27,000 28,000 0 0 0 15 105 131 170

28,000 29,000 0 0 0 0 95 124 150

29,000 30,000 0 0 0 0 45 117 130

30,000 31,000 0 0 0 0 30 105 120

31,000 32,000 0 0 0 0 0 93 115

32,000 33,000 0 0 0 0 0 81 100

33,000 34,000 0 0 0 0 0 45 85

34,000 35,000 0 0 0 0 0 30 73

35,000 36,000 0 0 0 0 0 15 61

36,000 37,000 0 0 0 0 0 0 49

37,000 38,000 0 0 0 0 0 0 37

38,000 39,000 0 0 0 0 0 0 25.

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:

(1) "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; and

(2) "modified gross income" means "modified gross income" as defined in Section 7-2-2 NMSA 1978 but also includes the value of food stamp program benefits."

Section 9. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] ADDITIONAL EXEMPTION AMOUNT.--

A. An individual may claim an additional exemption amount as specified in Subsections B, C and D of this section; provided that the additional exemption amount shall not exceed an amount equal to the number of federal exemptions multiplied by three thousand dollars ($3,000) of income includable, except for this exemption, in net income. Individuals having income both within and without this state shall apportion this exemption in accordance with regulations of the secretary.

B. For single individuals:

(1) if the number of federal exemptions is one, the additional exemption amount shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting eight thousand dollars ($8,000) from the adjusted gross income;

(2) if the number of federal exemptions is two, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting eleven thousand dollars ($11,000) from the adjusted gross income;

(3) if the number of federal exemptions is three, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting fourteen thousand dollars ($14,000) from the adjusted gross income;

(4) if the number of federal exemptions is four, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting seventeen thousand dollars ($17,000) from the adjusted gross income;

(5) if the number of federal exemptions is five, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twenty thousand dollars ($20,000) from the adjusted gross income;

(6) if the number of federal exemptions is six, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twenty-three thousand dollars ($23,000) from the adjusted gross income; and

(7) if the number of federal exemptions is seven or more, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twenty-six thousand dollars ($26,000) from the adjusted gross income.

C. For heads of household, surviving spouses and married individuals filing joint returns:

(1) if the number of federal exemptions is one, the additional exemption amount shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twelve thousand dollars ($12,000) from the adjusted gross income;

(2) if the number of federal exemptions is two, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting fifteen thousand dollars ($15,000) from the adjusted gross income;

(3) if the number of federal exemptions is three, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting eighteen thousand dollars ($18,000) from the adjusted gross income;

(4) if the number of federal exemptions is four, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twenty-one thousand dollars ($21,000) from the adjusted gross income;

(5) if the number of federal exemptions is five, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twenty-four thousand dollars ($24,000) from the adjusted gross income;

(6) if the number of federal exemptions is six, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twenty-seven thousand dollars ($27,000) from the adjusted gross income; and

(7) if the number of federal exemptions is seven or more, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting thirty thousand dollars ($30,000) from the adjusted gross income.

D. For married individuals filing separate returns:

(1) if the number of federal exemptions is one, the additional exemption amount shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting six thousand dollars ($6,000) from the adjusted gross income;

(2) if the number of federal exemptions is two, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting seven thousand five hundred dollars ($7,500) from the adjusted gross income;

(3) if the number of federal exemptions is three, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting nine thousand dollars ($9,000) from the adjusted gross income;

(4) if the number of federal exemptions is four, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting ten thousand five hundred dollars ($10,500) from the adjusted gross income;

(5) if the number of federal exemptions is five, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting twelve thousand dollars ($12,000) from the adjusted gross income;

(6) if the number of federal exemptions is six, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting thirteen thousand five hundred dollars ($13,500) from the adjusted gross income; and

(7) if the number of federal exemptions is seven or more, the additional exemption amount for each federal exemption shall be three thousand dollars ($3,000) less fifteen percent of the amount obtained by subtracting fifteen thousand dollars ($15,000) from the adjusted gross income.

E. For the purposes of this section, "federal exemption" means an exemption allowable for federal income tax purposes for an individual included in the return who is domiciled in New Mexico.

F. In lieu of the computations required to determine the amount of the additional exemption provided by this section, the secretary may adopt regulations allowing the use of tables to determine the additional exemption amount. The tables may be established either by regulation or instruction but shall be computed substantially on the basis of the computations prescribed in this section."

Section 10. [NEW MATERIAL] BUSINESS SERVICES TAX CREDIT.--

A. The tax credit provided in this section may be referred to as the "business services tax credit". An eligible taxpayer may apply for, and the taxation and revenue department may allow, a tax credit in an amount equal to six hundred twenty-five thousandths percent of qualified business service expenditures by the taxpayer.

B. The business services tax credit may be claimed by an eligible taxpayer for qualified business service expenditures paid on or after July 1, 2004 and within three years of the end of the calendar year in which the expenditure was made.

C. The business services tax credit may be claimed against state gross receipts tax, compensating tax or withholding tax for which the taxpayer would be liable for a tax reporting period in which the qualified business service expenditure was paid or later periods. In no case may the credit taken exceed the total gross receipts tax, compensating tax or witholding tax due for the reporting period. After the initial reporting period in which part of the credit for a qualified expenditure was claimed, any excess credit may be carried forward and used in future reporting periods.

D. For the purposes of this section:

(1) "department means "department" as defined in the Tax Administration Act;

(2) "eligible taxpayer" means "taxpayer" as defined in the Tax Administration Act but does not include:

(a) a federal, state or other governmental unit or subdivision or an agency, department, institution or instrumentality thereof; or

(b) a taxpayer qualified to take the exemption granted under Section 7-9-29 NMSA 1978; and

(3) "qualified business service expenditure" means an amount paid to purchase services performed in New Mexico if the receipts from that purchase are subject to gross receipts tax and are not eligible for a deduction or exemption from the gross receipts tax, but does not include expenditures for:

(a) entertainment or recreational services, including expenditures not deductible for purposes of determining net income under the Internal Revenue Code and expenditures deductible only under Section 274 of the Internal Revenue Code;

(b) janitorial services;

(d) services in respect to which the taxpayer applies for and is granted any other New Mexico tax credit; and

(e) gross receipts taxes.

E. The department shall provide forms and instructions for claiming the business services tax credit as a reduction of tax due on the tax return on which the taxpayer reports gross receipts tax, compensating tax or witholding tax.

F. The department shall administer the business services tax credit pursuant to the provisions of the Tax Administration Act.

Section 11. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] HIGH-WAGE JOBS TAX CREDIT.--

A. A taxpayer who is an eligible employer may apply for, and the taxation and revenue department may allow, a tax credit for each new high-wage economic-based job. The credit provided in this section may be referred to as the "high-wage jobs tax credit".

B. The high-wage jobs tax credit may be claimed and allowed in an amount equal to ten percent of the wages distributed to an eligible employee in a new high-wage economic-based job, but shall not exceed twelve thousand dollars ($12,000).

C. The high-wage jobs tax credit may be claimed by an eligible employer for each new high-wage economic-based job performed for the year in which the new high-wage economic-based job is created and for the three following qualifying periods.

D. A new high-wage economic-based job shall not be eligible for a credit pursuant to this section unless the eligible employer's total number of employees with new high-wage economic-based jobs on the last day of the qualifying period at the location at which the job is performed or based is at least one more than the number on the day prior to the date the job was created.

E. With respect to each new high-wage economic-based job for which an eligible employer seeks the high-wage jobs tax credit, the employer shall certify:

(1) the amount of wages paid to each eligible employee in a new high-wage economic-based job during each qualifying period;

(2) the number of weeks the position was occupied during the qualifying period;

(3) whether the new high-wage economic-based job was performed or based in:

(a) a municipality with a population of forty thousand or more according to the most recent federal decennial census;

(b) a municipality with a population of less than forty thousand according to the most recent federal decennial census; or

(4) the total number of employees employed by the employer at the job location on the day prior to the qualifying period and on the last day of the qualifying period.

F. To receive a high-wage jobs tax credit with respect to any qualifying period, an eligible employer shall apply to the taxation and revenue department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Subsection E of this section.

G. The credit provided in this section may be deducted from the modified combined tax liability of a taxpayer. If the credit exceeds the modified combined tax liability of the taxpayer, the excess shall be refunded to the taxpayer.

H. As used in this section:

(1) "eligible employee" means an individual who is employed by an eligible employer and who is a resident of New Mexico; "eligible employee" does not include an individual who:

(a) bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to the employer or, if the employer is a corporation, to an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, to an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interest in the entity;

(b) if the employer is an estate or trust, is a grantor, beneficiary or fiduciary of the estate or trust or is an individual who bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to a grantor, beneficiary or fiduciary of the estate or trust;

(c) is a dependent, as that term is described in 26 U.S.C. Section 152(a)(9), of the employer or, if the taxpayer is a corporation, of an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, of an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interests in the entity or, if the employer is an estate or trust, of a grantor, beneficiary or fiduciary of the estate or trust; or

(d) is working or has worked as an employee or as an independent contractor for an entity that directly or indirectly owns stock in a corporation of the eligible employer or other interest of the eligible employer that represents fifty percent or more of the total voting power of that entity or has a value equal to fifty percent or more of the capital and profits interest in the entity;

(2) "eligible employer" means an employer that:

(a) made more than fifty percent of its sales to persons outside New Mexico during the most recent twelve months of the employer's modified combined tax liability reporting periods ending prior to claiming a high-wage jobs tax credit; and

(b) is eligible for training assistance pursuant to Section 21-19-7 NMSA 1978;

(3) "modified combined tax liability" means the total liability for the reporting period for the gross receipts tax imposed by Section 7-9-4 NMSA 1978 together with any tax collected at the same time and in the same manner as the gross receipts tax, including the compensating tax, withholding tax, interstate telecommunications gross receipts tax, surcharges imposed by Section 63-9D-5 NMSA 1978 and the surcharge imposed by Section 63-9F-11 NMSA 1978, minus the amount of any credit other than the high-wage jobs tax credit applied against any or all of these taxes or surcharges; but "modified combined tax liability" excludes all amounts collected with respect to local option gross receipts taxes;

(4) "new high-wage economic-based job" means a job created by an eligible employer on or after July 1, 2004 and prior to July 1, 2009 that is occupied for at least forty-eight weeks of a qualifying period by an eligible employee who is paid wages calculated for the qualifying period to be at least:

(a) forty thousand dollars ($40,000) if the job is performed or based in a municipality with a population of forty thousand or more according to the most recent federal decennial census; and

(b) twenty-eight thousand dollars ($28,000) if the job is performed or based in a municipality with a population of less than forty thousand according to the most recent federal decennial census or in the unincorporated area of a county;

(5) "qualifying period" means the period of twelve months beginning on the day an eligible employee begins working in a new high-wage economic-based job or the period of twelve months beginning on the anniversary of the day an eligible employee began working in a new high-wage economic-based job; and

(6) "wages" means wages as defined in Paragraphs (1), (2) and (3) of 26 U.S.C. Section 51(c)."

Section 12. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--RESEARCH AND DEVELOPMENT SMALL BUSINESSES.--

A. Receipts of a qualified research and development small business may be deducted from gross receipts to the extent that such receipts are directly related to the subject matter of its qualified research, as defined in Paragraph (3) of Subsection B of this section. The deduction provided by this section may be claimed only for a period ending thirty-five consecutive calendar months after the first calendar month for which the deduction is claimed by the taxpayer or by a person to whom the taxpayer is a successor pursuant to Section 7-1-61 NMSA 1978.

B. As used in this section:

(1) "qualified research and development small business" means a business, including a corporation, general partnership, limited partnership, limited liability company, sole proprietorship or other similar entity, that:

(a) employed no more than twenty-five employees on a full-time-equivalent basis in any prior calendar month;

(b) had total revenues of no more than ten million dollars ($10,000,000) in any prior fiscal year;

(c) did not in any prior calendar month have more than fifty percent of its voting securities or other equity interest with the right to designate or elect the board of directors or other governing body of the qualified business owned directly or indirectly by another business; and

(d) has made qualified research expenditures for the period of twelve calendar months ending with the month for which the deduction is sought of at least twenty percent of its total revenues for those twelve calendar months;

(2) "qualified research expenditure" means an expenditure in connection with qualified research, but does not include any expenditure on research funded by any grant, contract or similar mechanism by another person or governmental entity, and does not include 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, the Investment Credit Act or the Technology Jobs Tax Credit Act; and

(3) "qualified research" means research:

(a) that is undertaken for the purpose of discovering information that is technological in nature and the application of which is intended to be useful in the development of a new or improved business component of the taxpayer; and

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

Section 13. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] DEDUCTION--COMPENSATING TAX--RESEARCH AND DEVELOPMENT SMALL BUSINESSES.--

A. A qualified research and development small business may deduct the value of tangible personal property in computing the compensating tax due if the property is used in connection with a qualified research expenditure. The deduction provided by this section may be claimed only for a period ending thirty-five consecutive calendar months after the first calendar month for which the deduction is claimed.

B. As used in this section:

(a) employed no more than twenty-five employees on a full-time-equivalent basis in any prior calendar month;

(b) had total revenues of no more than ten million dollars ($10,000,000) in any prior fiscal year;

(3) "qualified research" means research:

Section 14. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--CERTAIN RECEIPTS FROM SERVICES PROVIDED BY LICENSED HEALTH CARE PRACTITIONERS.--

A. Receipts of a licensed health care practitioner from payments by a managed health care provider for medicare part C services or commercial contract services may be deducted from gross receipts.

B. As used in this section:

(1) "commercial contract services" means health care services performed pursuant to a contract with a managed health care provider other than those health care services provided for medicare patients pursuant to Title 18 of the federal Social Security Act or for medicaid patients pursuant to Title 19 or Title 21 of the federal Social Security Act;

(2) "licensed health care practitioner" means:

(a) a chiropractic physician licensed pursuant to the provisions of the Chiropractic Physician Practice Act;

(b) a dentist or dental hygienist licensed pursuant to the provisions of the Dental Health Care Act;

(d) an osteopathic physician licensed pursuant to the provisions of Chapter 61, Article 10 NMSA 1978 or an osteopathic physician's assistant licensed pursuant to the provisions of the Osteopathic Physicians' Assistants Act;

(e) a doctor of oriental medicine licensed pursuant to the provisions of the Acupuncture and Oriental Medicine Practice Act;

(f) a podiatrist licensed pursuant to the provisions of the Podiatry Act;

(g) a psychologist licensed pursuant to the provisions of the Professional Psychologist Act;

(h) a registered nurse or licensed practical nurse licensed pursuant to the provisions of the Nursing Practice Act;

(i) a registered lay midwife registered by the department of health;

(j) a physical therapist licensed pursuant to the provisions of the Physical Therapy Act;

(k) an optometrist licensed pursuant to the provisions of the Optometry Act;

(l) a registered occupational therapist registered pursuant to the provisions of the Occupational Therapy Act;

(m) a respiratory care practitioner licensed pursuant to the provisions of the Respiratory Care Act;

(n) a clinical laboratory accredited pursuant to 42 USCA 263; and

(o) a speech-language pathologist or audiologist licensed pursuant to the Speech-Language Pathology, Audiology and Hearing Aid Dispensing Practices Act;

(3) "managed health care provider" means a person licensed by the insurance division of the public regulation commission that provides for the delivery of comprehensive basic health care services and medically necessary services to individuals enrolled in a plan through its own employed health care providers or by contracting with selected or participating health care providers; and

(4) "medicare part C services" means services performed pursuant to a contract with a managed health care provider for medicare patients pursuant to Title 18 of the federal Social Security Act."

Section 15. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] EXEMPTION--GROSS RECEIPTS TAX--RECEIPTS FROM CERTAIN ATHLETIC CONTESTS, SPORTING EVENTS AND CONCERTS.--Exempted from the gross receipts tax are:

A. receipts from promoting professional contests subject to the regulatory fee imposed pursuant to Section 60-2A-23 NMSA 1978 and from exhibiting live professional contests subject to the supervisory fee imposed pursuant to Section 60-2A-26 NMSA 1978;

B. receipts from ticket sales or admission fees for professional contests as defined in Section 60-2A-2 NMSA 1978, auto racing and one-time sporting events; and

C. receipts from ticket sales or admission fees for a live concert held at a venue capable of accommodating at least two thousand five hundred persons."

Section 16. Section 7-9-22 NMSA 1978 (being Laws 1969, Chapter 144, Section 15, as amended) is amended to read:

"7-9-22. EXEMPTION--GROSS RECEIPTS TAX--VEHICLES.--Exempted from the gross receipts tax are the receipts from selling vehicles on which a tax is imposed by the Motor Vehicle Excise Tax Act, [and on] vehicles subject to registration under Section 66-3-16 NMSA 1978 and vehicles exempt from the motor vehicle excise tax pursuant to Subsection F of Section 7-14-6 NMSA 1978."

Section 17. Section 7-9-23 NMSA 1978 (being Laws 1969, Chapter 144, Section 16, as amended) is amended to read:

"7-9-23. EXEMPTION--COMPENSATING TAX--VEHICLES.--Exempted from the compensating tax is the use of vehicles on which the tax imposed by the Motor Vehicle Excise Tax Act has been paid, [and on] the use of vehicles subject to registration under Section 66-3-16 NMSA 1978 and the use of vehicles exempt from the motor vehicle excise tax pursuant to Subsection F of Section 7-14-6 NMSA 1978."

Section 18. Section 7-14-6 NMSA 1978 (being Laws 1988, Chapter 73, Section 16, as amended) is amended to read:

"7-14-6. EXEMPTIONS FROM TAX.--

A. Persons who acquire a vehicle out of state thirty or more days before establishing a domicile in this state are exempt from the tax if the vehicle was acquired for personal use.

B. Persons applying for a certificate of title for a vehicle registered in another state are exempt from the tax if they have previously registered and titled the vehicle in New Mexico and have owned the vehicle continuously since that time.

C. Certificates of title for all vehicles owned by this state or any political subdivision are exempt from the tax.

D. A vehicle subject to registration under Section 66-3-16 NMSA 1978 is exempt from the tax.

E. Persons who acquire vehicles for subsequent lease shall be exempt from the tax if:

(1) the person does not use the vehicle in any manner other than holding it for lease or sale or leasing or selling it in the ordinary course of business;

(2) the lease is for a term of more than six months;

(3) the receipts from the subsequent lease are subject to the gross receipts tax; and

(4) the vehicle does not have a gross vehicle weight of over twenty-six thousand pounds.

F. Vehicles that are manufactured to operate exclusively on alternative fuel or are gasoline-electric hybrid vehicles with a United States environmental protection agency fuel economy rating of at least twenty-two and one-half miles per gallon are eligible for a one-time exemption from the tax at the time of the issuance of the original certificate of title for the vehicle. For purposes of this subsection, "alternative fuel" means natural gas, liquefied petroleum gas, electricity, hydrogen, a fuel mixture containing not less than eighty-five percent ethanol or methanol, a fuel mixture containing not less than twenty percent vegetable oil or a water-phased hydrocarbon fuel emulsion consisting of a hydrocarbon base and water in an amount not less than twenty percent by volume of the total water-phased fuel emulsion."

Section 19. Section 9-11-6.2 NMSA 1978 (being Laws 1995, Chapter 31, Section 3) is amended to read:

"9-11-6.2. ADMINISTRATIVE REGULATIONS, RULINGS, INSTRUCTIONS AND ORDERS--PRESUMPTION OF CORRECTNESS.--

A. The secretary is empowered and directed to issue and file as required by law all regulations, rulings, instructions or orders necessary to implement and enforce any provision of any law the administration and enforcement of which the department, the secretary, any division of the department or any director of any division of the department is charged, including all rules and regulations necessary by reason of any alteration of any such law. In order to accomplish its purpose, this provision is to be liberally construed.

B. Directives issued by the secretary shall be in form substantially as follows:

(1) regulations shall be written statements of the secretary of general application, interpreting and exemplifying or implementing the [statues] statutes to which they relate and may be issued in response to a request from a taxpayer or other interested party;

(2) rulings shall be written statements of the secretary, of limited application to one or a small number of persons, interpreting the statutes to which they relate, ordinarily issued in response to a request for clarification of the consequences of a specified set of circumstances;

(3) orders shall be written statements of the secretary or a hearing officer or other delegate of the secretary to implement a decision after a hearing; and

(4) instructions shall be other written statements or directives of the secretary or secretary's delegate not dealing with the merits of any law but otherwise in aid of the accomplishment of the duties of the secretary.

C. To be effective, any ruling or regulation issued by the secretary shall be reviewed by the attorney general or other legal counsel of the department prior to being filed as required by law, and the fact of the review shall be indicated on the ruling or regulation.

D. To be effective, a regulation shall first be issued as a proposed regulation and filed for public inspection in the office of the secretary. Unless otherwise provided by statute, no regulation affecting any person or agency outside the department shall be adopted, amended or repealed without a public hearing on the proposed action before the secretary or a hearing officer designated by the secretary. The public hearing shall be held in Santa Fe unless otherwise permitted by statute. Notice of the subject matter of the regulation, the action proposed to be taken, the time and place of the hearing, the manner in which interested parties may present their views and the method by which copies of the proposed regulation, proposed amendment or repeal of an existing regulation may be obtained shall be published at least thirty days prior to the hearing date in [a] the New Mexico register and mailed at least thirty days prior to the hearing date to all persons who have made a written request for advance notice of hearing. After the proposed regulation has been on file for not less than sixty days and a public hearing on the proposed action has been held by the secretary or a hearing officer designated by the secretary, the secretary may issue it as a final regulation by signing the regulation and filing the regulation in the manner required by law. The secretary shall not delegate the authority to sign regulations.

E. In addition to filing copies of regulations with the state records center as required by law, the secretary shall maintain in the office of the secretary a duplicate official set of current and superseded regulations, a set of current and superseded rulings and such additional sets of those regulations and rulings as appear necessary, which duplicate or additional sets shall be available for inspection by the public, but superseded regulations need be maintained for no longer than ten years from the date of supersession.

F. The secretary shall develop and maintain a file of names and addresses of individuals and professional and industry groups having an interest in the promulgation of new, revised or proposed regulations. At convenient times, the secretary shall distribute to these persons all such regulations and all pertinent rulings, making such charges as will defray the expense incurred in their physical preparation and mailing. Such charges are appropriated to the department to defray the costs of preparing and distributing regulations and rulings.

G. Any regulation, ruling, instruction or order issued by the secretary or order or instruction issued by a hearing officer or other delegate of the secretary is presumed to be a proper implementation of the provisions of the laws that are charged to the department, the secretary, any division of the department or any director of any division of the department.

H. The extent to which regulations, rulings and orders will have retroactive effect shall be stated and, if no such statement is made, they will be applied prospectively only."

Section 20. Section 60-2A-23 NMSA 1978 (being Laws 1980, Chapter 90, Section 23, as amended) is amended to read:

"60-2A-23. [PRIVILEGE TAX] REGULATORY FEES ON PROMOTIONS.--

A. In addition to any other taxes or fees provided by law, there is imposed upon every promoter for the privilege of promoting a professional [contests] contest a [tax at the rate of] regulatory fee in an amount determined pursuant to the rules of the commission to be sufficient to cover the costs of regulating the contest; provided that the fee may not exceed four percent of the total gross receipts of any professional contest conducted live in New Mexico.

B. The commission shall adopt rules and regulations for the administration, collection and enforcement of the [tax] fee imposed [in] pursuant to this section.

C. As used in this section, "total gross receipts of any professional contest" includes:

(1) the gross price charged for the sale, lease or other exploitation of broadcasting, television or motion picture rights of [such] the professional contest without any deductions for commissions, brokerage fees, distribution fees, advertising or other expenses or charges;

(2) the face value of all tickets sold and complimentary tickets issued; and

(3) any sums received as consideration for holding a professional contest at a particular location."

Section 21. Section 60-2A-24 NMSA 1978 (being Laws 1980, Chapter 90, Section 24) is amended to read:

"60-2A-24. ATHLETIC COMMISSION FUND.--The proceeds of the [privilege tax] regulatory fee on promotions and of the [privilege tax] supervisory fee on closed-circuit television or motion pictures, together with any license fees or other fees authorized [under] pursuant to the Professional Athletic Competition Act, shall be deposited with the state treasurer to the credit of the "athletic commission fund", which is hereby created. Expenditures from the athletic commission fund shall only be made on vouchers issued and signed by the person designated by the commission upon warrants drawn by the department of finance and administration in accordance with the budget approved by the department of finance and administration."

Section 22. Section 60-2A-25 NMSA 1978 (being Laws 1980, Chapter 90, Section 25) is amended to read:

"60-2A-25. TIME OF PAYMENT OF [PRIVILEGE TAX] REGULATORY FEE.--

A. Any person upon whom the [privilege tax] regulatory fee is imposed [by] pursuant to Section [23 of the Professional Athletic Competition Act] 60-2A-23 NMSA 1978 shall, within seventy-two hours after the completion of any professional contest for which an admission fee is charged and received or a contribution is requested and received, furnish to the commission a written report on forms prescribed by the commission showing:

(1) the number of tickets sold and issued or sold or issued for [such] the professional contest;

(2) the amount of the gross receipts or value thereof;

(3) the amount of gross receipts derived from the sale, lease or other exploitation of broadcasting, motion picture or television rights of [such] the professional contest, [and] without any deductions for commissions, brokerage fees, distribution fees, advertising or any other expenses or charges; and

(4) such other matters as the commission may prescribe.

B. The commission or any of its authorized employees may inspect the books, ticket stubs or any other data necessary for the proper enforcement of the [privilege tax] regulatory fee and supervisory fee imposed [in] pursuant to the Professional Athletic Competition Act."

Section 23. Section 60-2A-26 NMSA 1978 (being Laws 1980, Chapter 90, Section 26, as amended) is amended to read:

"60-2A-26. [PRIVILEGE TAX] SUPERVISORY FEE ON CLOSED-CIRCUIT TELECASTS OR MOTION PICTURES--REPORT TO COMMISSION.--

A. Any person who charges and receives an admission fee for exhibiting any live professional contest on a closed-circuit telecast or motion picture shall, within seventy-two hours after the event, furnish to the commission a verified written report on a form prescribed by the commission showing the number of tickets sold and issued or sold or issued and the gross receipts for the exhibition without any deductions.

B. There is imposed a [tax] supervisory fee upon the privilege of exhibiting for an admission fee any live professional contest [except a live professional boxing contest held in New Mexico between the effective date of this 1997 act and July 1, 1999] on a closed-circuit telecast or motion picture. [The rate of the tax imposed is] A supervisory fee is imposed in an amount determined pursuant to the rules of the commission to be sufficient to cover the costs of supervising the exhibition; provided that the fee may not exceed five percent of the gross receipts derived from the exhibition.

C. The [privilege tax] fee imposed [in] pursuant to this section shall be administered, collected, enforced and the proceeds deposited as provided in Section 60-2A-24 NMSA 1978."

Section 24. Section 60-2A-27 NMSA 1978 (being Laws 1980, Chapter 90, Section 27) is amended to read:

"60-2A-27. PENALTY--NONPAYMENT OF FEE.--Any person who willfully attempts to evade or defeat any [tax] regulatory or supervisory fee or the payment thereof imposed [by] pursuant to the Professional Athletic Competition Act is guilty of a fourth degree felony."

Section 25. Section 60-2A-28 NMSA 1978 (being Laws 1980, Chapter 90, Section 28) is amended to read:

"60-2A-28. CIVIL PENALTY.--In the case of failure due to negligence or disregard of rules and regulations of the commission, but without intent to defraud, to pay when due any amount of [tax] regulatory or supervisory fee required to be paid by the Professional Athletic Competition Act, there shall be added to the amount two percent per month or a fraction [thereof] of a month from the date the tax was due or from the date the report was required to be filed, not to exceed ten percent [thereof] of the fee due."

Section 26. A new section of the Professional Athletic Competition Act is enacted to read:

"[NEW MATERIAL] COOPERATIVE AGREEMENTS WITH TRIBAL GOVERNMENTS.--

A. The commission may enter into a cooperative agreement with an Indian nation, tribe or pueblo whose tribal lands lie wholly or partly in New Mexico for the exchange of information and for the reciprocal, joint or common direction, management or control of professional contests conducted, held or given in New Mexico. To be effective, an agreement must be signed by the governor of this state.

B. Money collected by the commission on behalf of an Indian nation, tribe or pueblo in accordance with an agreement entered into pursuant to this section is not money of this state and shall be collected and disbursed in accordance with the terms of the agreement, notwithstanding any other provision of law.

C. Nothing in an agreement entered into pursuant to this section shall be construed as an assertion or an admission by either this state or by the Indian nation, tribe or pueblo that the fees of one have precedence over the fees of the other when the person, event or transaction is subject to the jurisdiction of both governments. An agreement entered into pursuant to this section shall be construed solely as an agreement between the two party governments and shall not alter or affect the government-to-government relations between this state and any other Indian nation, tribe or pueblo."

Section 27. APPLICABILITY.--The provisions of Sections 3 through 9 of this act apply to taxable years beginning on or after January 1, 2004.

Section 28. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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