HOUSE BUSINESS AND INDUSTRY COMMITTEE SUBSTITUTE FOR
HOUSE BILL 413
46th legislature - STATE OF NEW MEXICO - second session, 2004
AN ACT
RELATING TO TAXATION; ENACTING THE ADVANCED ENERGY PRODUCT MANUFACTURERS TAX CREDIT ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--This act may be cited as the "Advanced Energy Product Manufacturers Tax Credit Act".
Section 2. DEFINITIONS.--As used in the Advanced Energy Product Manufacturers Tax Credit Act:
A. "advanced energy" means alternative fuels, renewable energy and fuel cells;
B. "advanced energy business" means a taxpayer whose business activity is manufacturing of equipment, component parts, materials, electronic devices, hybrid electric vehicle component devices and testing equipment and related systems that are primarily related to advanced energy systems and alternative fueled vehicles;
C. "advanced energy system" means a system that converts advanced energy or hydrogen to electricity, including related cogeneration systems that produce heat or steam for space or water heating and agricultural or small industrial processes, or to create mechanical energy. "Advanced energy system" includes, but is not limited to, a:
(1) fuel cell energy system;
(2) photovoltaic energy system;
(3) solar-thermal energy system;
(4) wind energy system;
(5) combined heat and power energy system;
(6) microturbine energy system;
(7) mini-turbine energy system;
(8) sterling cycle energy system;
(9) battery cell energy system;
(10) electricity storage system; or
(11) hydrogen production or reforming system;
D. "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;
E. "alternative fueled vehicle" means a motor vehicle manufactured by an original equipment manufacturer that fully warrants and certifies that the motor vehicle meets the federal motor vehicle safety standards and is designed to be propelled in whole or in part by an alternative fuel;
F. "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;
G. "manufacturing equipment" means an essential machine, mechanism or tool, or a component or fitting thereof, used directly and exclusively in the taxpayer's manufacturing operation and subject to depreciation for purposes of the Internal Revenue Code of 1986 by the taxpayer carrying on the manufacturing operation. "Manufacturing equipment" does not include any vehicle that leaves the site of the manufacturing operation for purposes of transporting persons or property or any property for which the taxpayer claims the credit pursuant to Section 7-9-79 NMSA 1978;
H. "pass-through entity" means any business association other than:
(1) a sole proprietorship;
(2) an estate or trust;
(3) a corporation, limited liability company, partnership or other entity that is not a sole proprietorship taxed as a corporation for federal income tax purposes for the taxable year; or
(4) a partnership that is organized as an investment partnership in which the partners' income is derived solely from interest, dividends and sales of securities;
I. "qualified expenditure" means any expenditure made after July 1, 2004 by an advanced energy business for a facility located in New Mexico for the purchase of manufacturing equipment, component parts, materials, electronic devices, hybrid electric motor vehicle component devices and testing equipment and related systems that are primarily related to advanced energy systems and alternative fueled vehicles;
J. "renewable energy" means thermal or electrical energy generated by means of a low- or zero-emissions generation technology that has substantial long-term production potential, including solar, wind, geothermal, landfill gas or biomass; and
K. "taxpayer" means "taxpayer" as defined in the Tax Administration Act and, for purposes of the credit against the taxpayer's income tax pursuant to the Advanced Energy Product Manufacturers Tax Credit Act, the shareholders, members, partners or other owners of an entity treated as an S corporation, partnership or disregarded entity for federal income tax purposes.
Section 3. ADMINISTRATION OF ACT.--The department shall administer the Advanced Energy Product Manufacturers Tax Credit Act pursuant to the Tax Administration Act.
Section 4. CREDIT--AMOUNTS--CLAIMANT.--The credit provided for in the Advanced Energy Product Manufacturers Tax Credit Act is an amount equal to five percent of the taxpayer's qualified expenditures in a taxable year.
Section 5. ELIGIBILITY REQUIREMENTS.--A taxpayer manufacturing advanced energy technology at an advanced energy business facility located in New Mexico is eligible to claim the credit pursuant to the Advanced Energy Product Manufacturers Tax Credit Act if there is at least a fifty thousand dollar ($50,000) increase in the taxpayer's annual payroll expense for that facility for every one million dollars ($1,000,000) in qualified expenditures claimed by the taxpayer in a taxable year.
Section 6. CLAIMING THE CREDIT.--
A. A taxpayer may apply for approval of a credit within one year following the end of the calendar year in which the qualified expenditure was made.
B. A taxpayer having applied for and been granted approval for a credit by the department pursuant to the Advanced Energy Product Manufacturers Tax Credit Act may claim the amount of the approved credit against the taxpayer's personal income tax or corporate income tax due the state of New Mexico; provided that:
(1) no taxpayer may claim an amount of approved credit for any reporting period that exceeds the amount of the taxpayer's personal income tax or corporate income tax due for that reporting period; and
(2) 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 additional credit that would have been allowed them on a joint return.
C. Any amount of approved credit not claimed against the taxpayer's personal income tax or corporate income tax in a reporting period may be claimed in subsequent reporting periods. In the case of an advanced energy business that is operating as a pass-through entity, the business may pass through its credits to its owners, which may claim the credits against their personal income tax or corporate income tax liability. A pass-through entity may take the credit based on its percentage of ownership in the business.
Section 7. RECAPTURE.--If the taxpayer or a successor in the business of the taxpayer ceases operations in New Mexico for at least one hundred eighty consecutive days within a two-year period after the taxpayer has claimed the credit, the department shall grant no further credit to the taxpayer pursuant to the Advanced Energy Product Manufacturers Tax Credit Act with respect to that facility. In addition, any amount of the approved credit not claimed against the taxpayer's income tax or corporate income tax shall be extinguished, and within thirty days after the one hundred eightieth day of cessation of operations, the taxpayer shall pay the amount of income tax or corporate income tax against which an approved credit was taken. For purposes of this section, a taxpayer shall not be deemed to have ceased operations during reasonable periods for maintenance or retooling or for the repair or replacement of facilities damaged or destroyed or during the continuance of labor disputes.
Section 8. CREDIT CLAIM FORMS.--The department shall provide credit claim forms. A credit claim form shall accompany any return in which the taxpayer claims a credit, and the claim shall specify the amount of credit intended to apply to each return.
Section 9. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2004.
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