SENATE BILL 323

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

John Arthur Smith

FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE

AN ACT

RELATING TO TAXATION; PROVIDING FOR A MAXIMUM PENALTY FOR INCORRECT REPORTING OF GROSS RECEIPTS DEDUCTIONS FOR FOOD OR HEALTH CARE PRACTITIONER SERVICES; CHANGING DOCUMENTATION REQUIREMENTS FOR GROSS RECEIPTS TAX CREDIT CLAIMS INVOLVING SALES OF TANGIBLE PERSONAL PROPERTY OR LICENSES FOR RESALE.

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

     Section 1. Section 7-1-71.2 NMSA 1978 (being Laws 2004, Chapter 116, Section 3) is amended to read:

     "7-1-71.2. PENALTY FOR INCORRECT REPORTING OF FOOD DEDUCTION OR HEALTH CARE PRACTITIONER SERVICES DEDUCTION.--A taxpayer who claims a deduction pursuant to Section 7-9-92 or 7-9-93 NMSA 1978 and fails to correctly report the amount of the deduction to which the taxpayer is entitled shall pay a penalty in the amount of the difference between the incorrect deduction amount and the correct deduction amount multiplied by [twice] the total local option tax rates in effect at the taxpayer's business location for which the deduction was claimed; [This] provided that the penalty shall not exceed ten thousand dollars ($10,000). The penalty shall be in addition to other applicable penalties."

     Section 2. Section 7-9-47 NMSA 1978 (being Laws 1969, Chapter 144, Section 37, as amended) is amended to read:

     "7-9-47. DEDUCTION--GROSS RECEIPTS TAX--GOVERNMENTAL GROSS RECEIPTS TAX--SALE OF TANGIBLE PERSONAL PROPERTY OR LICENSES FOR RESALE.--Receipts from selling tangible personal property or licenses may be deducted from gross receipts or from governmental gross receipts if the sale is made to a person who delivers to the seller a nontaxable transaction certificate [to the seller] or other documentation in a form prescribed by the department. The buyer delivering the nontaxable transaction certificate or other documentation must resell the tangible personal property or license either by itself or in combination with other tangible personal property or licenses in the ordinary course of business."

     Section 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2006.

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