HOUSE BILL 194

46th legislature - STATE OF NEW MEXICO - second session, 2004

INTRODUCED BY

John A. Heaton

AN ACT

RELATING TO TAXATION; AMENDING THE LABORATORY PARTNERSHIP WITH SMALL BUSINESS TAX CREDIT ACT; INCREASING THE TAX CREDIT PER QUALIFIED EXPENDITURE INCURRED; INCREASING THE AGGREGATE ALLOWABLE TAX CREDIT; PERMITTING A SUPPLEMENTAL TAX CREDIT UNDER CERTAIN CIRCUMSTANCES.

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

     Section 1. Section 7-9E-1 NMSA 1978 (being Laws 2000 (2nd S.S.), Chapter 20, Section 1) is amended to read:

     "7-9E-1. SHORT TITLE.--[This act] Chapter 7, Article 9E NMSA 1978 may be cited as the "Laboratory Partnership with Small Business Tax Credit Act"."

     Section 2. Section 7-9E-3 NMSA 1978 (being Laws 2000 (2nd S.S.), Chapter 20, Section 3) is amended to read:

     "7-9E-3. DEFINITIONS.--As used in the Laboratory Partnership with Small Business Tax Credit Act:

          A. "base year" means the calendar year of January 1, 2003 through December 31, 2003;

          [A.] B. "contractor" means an entity that has the capability to provide small business assistance, may enter into a contract with a national laboratory to provide small business assistance and is:

                (1) an individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, limited liability partnership, joint venture, syndicate or other entity, including any gas, water or electric utility owned or operated by a county, municipality or other political subdivision of the state; or

                (2) [any] a national, federal, state, Indian or other governmental unit or subdivision, or [any] an agency, department or instrumentality of [any] a of the foregoing;

          [B.] C. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

          [C.] D. "national laboratory" means a prime contractor designated as a national laboratory by act of congress that is operating a facility in New Mexico;

          [D.] E. "qualified expenditure" means an expenditure by a national laboratory in providing small business assistance, limited to the following expenditures incurred in providing the assistance:

                (1) employee salaries, [and] wages and fringe benefits and employer payroll taxes;

                (2) [fringe benefits, employer payroll taxes and other] administrative costs related directly to the provision of small business assistance, the total of which is limited to forty-nine percent of [employee salaries and wages] the amount allowed pursuant to Paragraph (1) of this subsection;

                (3) in-state travel expenses, including per diem and mileage at the internal revenue service standard rates; and

                (4) supplies and services of contractors related to the provision of small business assistance;

          [E.] F. "rural area" means any area of the state other than a class A county that has a net taxable value for rate-setting purposes for any property tax year of more than seven billion dollars ($7,000,000,000);

          [F.] G. "small business" means a business in New Mexico that conforms to the definition of small business found in the federal Small Business Act (Public Law 85-536), as amended; and

          [G.] H. "small business assistance" means assistance rendered by a national laboratory related to the transfer of technology, including software and manufacturing, mining, oil and gas, environmental, agricultural, information and solar and other alternative energy source technologies. "Small business assistance" also includes nontechnical assistance related to expanding the New Mexico base of suppliers, including training and mentoring individual small businesses; assistance in developing business systems to meet audit, reporting and quality assistance requirements; and other supplier development initiatives for individual small businesses."

     Section 3. Section 7-9E-7 NMSA 1978 (being Laws 2000 (2nd S.S.), Chapter 20, Section 7) is amended to read:

     "7-9E-7. TAX CREDITS--AMOUNTS.--Each tax credit provided for pursuant to the Laboratory Partnership with Small Business Tax Credit Act shall be an amount equal to the qualified expenditure incurred by the national laboratory, not to exceed [five thousand dollars ($5,000)] ten thousand dollars ($10,000) for each small business outside of a rural area for which small business assistance is rendered in a calendar year or [ten thousand dollars ($10,000)] fifteen thousand dollars ($15,000) if the small business assistance was provided to a small business located in a rural area."

     Section 4. Section 7-9E-8 NMSA 1978 (being Laws 2000 (2nd S.S.), Chapter 20, Section 8) is amended to read:

     "7-9E-8. CLAIMING THE TAX CREDIT--LIMITATION.--A national laboratory eligible for the tax credit pursuant to the Laboratory Partnership with Small Business Tax Credit Act may claim the amount of each tax credit by crediting that amount against gross receipts taxes otherwise due pursuant to the Gross Receipts and Compensating Tax Act. The tax credit shall be taken on each monthly gross receipts tax return filed by the laboratory against gross receipts taxes due the state and shall not impact any local government tax distribution. [In no event shall the tax credits taken exceed one million eight hundred thousand dollars ($1,800,000)] The total tax credits issued by the department pursuant to this section shall equal an amount of at least two million five hundred thousand dollars ($2,500,000) but shall not exceed four million two hundred thousand dollars ($4,200,000) in a [given] calendar year."

     Section 5. A new section of the Laboratory Partnership with Small Business Tax Credit Act is enacted to read:

     "[NEW MATERIAL] SUPPLEMENTAL TAX CREDIT.-- 

          A. In addition to the tax credit authorized pursuant to the Laboratory Partnership with Small Business Tax Credit Act, a national laboratory may claim a tax credit in an amount not to exceed one-third of the amount calculated by the laboratory and approved by the department pursuant to Subsection B of this section.  

          B. A supplemental credit shall not be taken pursuant to this section by a national laboratory pursuant to the Laboratory Partnership with Small Business Tax Credit Act unless the gross receipts tax due for a calendar year from that national laboratory exceeds the gross receipts tax paid by the national laboratory for the base year.

          C. On the last day of each calendar year, a national laboratory shall calculate the excess of gross receipts taxes due for the calendar year over the gross receipts taxes paid by the national laboratory for the base year. The department shall approve or disapprove the amount calculated within thirty days of submission of the amount calculated by the national laboratory."

     Section 6. A new section of the Laboratory Partnership with Small Business Tax Credit Act is enacted to read:

     "[NEW MATERIAL] OVERSIGHT--REPORTING.--  

          A. A national laboratory eligible for a tax credit or a supplemental tax credit pursuant to the Laboratory Partnership with Small Business Tax Credit Act shall report quarterly to the department. A quarterly report shall be provided within thirty days after the end of each calendar quarter. The quarterly report shall include:

                (1) information related to each small business for which assistance is provided, including:

                     (a) the name of the small business;

                     (b) the address of the small business;

                     (c) the county in which the small business is located;

                     (d) identification of the small business as being located within or outside of a rural area;

                     (e) the direct cost of the assistance, including labor, fringe benefits, purchases and travel;

                     (f) the indirect costs of the assistance;

                     (g) a description of the assistance provided; and

                      (h) identification of the contractor or other entity that provided the small business assistance;

                (2) certification from the small business that the small business could not receive the same service for a reasonable cost from private industry;

                (3) documentation by the national laboratory that it exerted due diligence to determine that the small business assistance is not otherwise available to the small business at a reasonable cost from private industry; and

                 (4) identification of small businesses to which assistance was denied and the reasons for denial.

          B. An annual report shall be submitted by a national laboratory providing small business assistance pursuant to the Laboratory Partnership with Small Business Tax Credit Act to the department, the economic development department and an appropriate legislative interim committee. The annual report shall be submitted no later than June of each year. The annual report shall summarize activities related to and the results of its small business assistance program and shall include:

                (1) a summary of the program results and the number of small businesses assisted in each county;

                (2) a description of projects involving multiple small businesses requiring the same type of small business assistance and the results of the small business assistance provided;

                (3) results of surveys of the small businesses to which small business assistance was rendered;

                (4) the amount of tax credit claimed for the calendar year on which the report is based; and

                (5) an economic impact study of jobs created, jobs retained, cost savings and increased sales of small businesses for which small business assistance was rendered.

          C. At any time after receipt of a report from a national laboratory eligible for the tax credit authorized pursuant to the Laboratory Partnership with Small Business Tax Credit Act, the department may provide written instructions to the national laboratory related to future improvements in the laboratory's small business assistance program for which it is receiving tax credits."

     Section 7. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2004.

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