NOTE: As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

The most recent FIR version (in HTML & Adobe PDF formats) is available on the Legislative Website. The Adobe PDF version includes all attachments, whereas the HTML version does not. Previously issued FIRs and attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR:	Cervantes		DATE TYPED:	10/31/03		HB	20
SHORT TITLE:		Amend Tax Administration Act				SB
					ANALYST:		Taylor, Neel, Valenzuela

REVENUE

Estimated Revenue		Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
FY04	FY05
	(3,000.0)	(7,500.0)	Recurring	General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Agency analysis not received on HB 20. This preliminary analysis assumes sections are similar to comparable sections in SB 5 and HB 15.

SOURCES OF INFORMATION

NM Taxation and Revenue Department (TRD)

NM Department of Transportation (DOT)

NM Finance Authority (NMFA)

Related Bills:

SB 5, SB 21, HB 15 , HB 14

SUMMARY

SYNOPSIS OF BILL

Tax Administration Issues. Sections 1 through 23 address tax administration matters. Section 1 increases the minimum tax liability threshold after which TRD must assess the taxpayer from ten dollars ($10.00) to twenty-five dollars ($25.00). Section 2 allows taxpayers to elect the “Rules of Civil Procedures for the District Courts” in TRD administrative hearings. Section 3 provides taxpayers with the right to designate certain refund claims as a protective claim. A protective claim is a claim for refund filed by someone based upon the arguments advanced by another person in a previously filed claim that has not been resolved. TRD would not take action on the protective claim until the previously filed claim is resolved. Section 4 and 5 change the interest rate charged and paid by TRD on tax deficiencies and overpayments. The current 15 percent rate would be changed to 10 percent on July 1, 2004. Starting January 2006, the rate would be set equal to the IRS underpayment rate—a floating rate that reflects market interest rates. Section 6 increases the minimum penalty for failing to pay or file a tax return by the date due from five dollars ($5.00) to one hundred and fifty dollars ($150.00). Effective Date: July 1, 2004.

Nontaxable Transaction Certificates (NTTCs). Section 7 changes the law associated with NTTC’s. It eliminates the requirement that taxpayers be in possession of an NTTC within 60 days from the date required to allow for a deduction. It also provides use of other evidence in certain circumstances, including bankruptcy, death or an entity no longer existing as a business. Effective date: July 1, 2004.

Tax Administration—Request for Regulations. Section 8 allows taxpayers or other interested parties to request TRD regulations. Effective date: July 1, 2004.

Emergency Clause. The act takes effect immediately.

SIGNIFICANT REVENUE ISSUES

Tax Administrative Issues. The fiscal impact of reducing the interest rate on tax delinquencies will be higher in later years. In FY07, the rate is reduced to the IRS rate, which corresponds to market interest rates. This could increase the cost in those years to more than $5 million.

FISCAL IMPLICATIONS BY FUND AND GOVERNMENT ENTITY

The Fiscal Implications are summarized in table below. The table is denominated in millions.