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AN ACT
RELATING TO TAXATION; CLARIFYING THE TREATMENT OF RECEIPTS
FROM THE SALE OR LICENSING OF PROPERTY IN THE DEFINITION OF
"GROSS RECEIPTS" PURSUANT TO THE GROSS RECEIPTS AND
COMPENSATING TAX ACT; ELIMINATING PATENTS, TRADEMARKS AND
COPYRIGHTS FROM THE DEFINITION OF "PROPERTY" PURSUANT TO THAT
ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 7-9-3 NMSA 1978 (being Laws 1978,
Chapter 46, Section 1, as amended) is amended to read:
"7-9-3. DEFINITIONS.--As used in the Gross Receipts and
Compensating Tax Act:
A. "buying" or "selling" means a transfer of
property for consideration or the performance of service for
consideration;
B. "department" means the taxation and revenue
department, the secretary of taxation and revenue or an
employee of the department exercising authority lawfully
delegated to that employee by the secretary;
C. "financial corporation" means a savings and
loan association or an incorporated savings and loan company,
trust company, mortgage banking company, consumer finance
company or other financial corporation;
D. "initial use" or "initially used" means the
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first employment for the intended purpose and does not include
the following activities:
(1) observation of tests conducted by the
performer of services;
(2) participation in progress reviews,
briefings, consultations and conferences conducted by the
performer of services;
(3) review of preliminary drafts, drawings
and other materials prepared by the performer of the services;
(4) inspection of preliminary prototypes
developed by the performer of services; or
(5) similar activities;
E. "leasing" means an arrangement whereby, for a
consideration, property is employed for or by any person other
than the owner of the property, except that the granting of a
license to use property is not a lease;
F. "local option gross receipts tax" means a tax
authorized to be imposed by a county or municipality upon the
taxpayer's gross receipts and required to be collected by the
department at the same time and in the same manner as the
gross receipts tax; "local option gross receipts tax" includes
the taxes imposed pursuant to the Municipal Local Option Gross
Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax
Act, County Local Option Gross Receipts Taxes Act, Local
Hospital Gross Receipts Tax Act, County Correctional Facility
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Gross Receipts Tax Act and such other acts as may be enacted
authorizing counties or municipalities to impose taxes on
gross receipts, which taxes are to be collected by the
department;
G. "manufactured home" means a movable or portable
housing structure for human occupancy that exceeds either a
width of eight feet or a length of forty feet constructed to
be towed on its own chassis and designed to be installed with
or without a permanent foundation;
H. "manufacturing" means combining or processing
components or materials to increase their value for sale in
the ordinary course of business, but does not include
construction;
I. "person" means:
(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) a national, federal, state, Indian or
other governmental unit or subdivision, or an agency,
department or instrumentality of any of the foregoing;
J. "property" means real property, tangible
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personal property, licenses and franchises. Tangible personal
property includes electricity and manufactured homes;
K. "research and development services" means an
activity engaged in for other persons for consideration, for
one or more of the following purposes:
(1) advancing basic knowledge in a
recognized field of natural science;
(2) advancing technology in a field of
technical endeavor;
(3) developing a new or improved product,
process or system with new or improved function, performance,
reliability or quality, whether or not the new or improved
product, process or system is offered for sale, lease or other
transfer;
(4) developing new uses or applications for
an existing product, process or system, whether or not the new
use or application is offered as the rationale for purchase,
lease or other transfer of the product, process or system;
(5) developing analytical or survey
activities incorporating technology review, application,
trade-off study, modeling, simulation, conceptual design or
similar activities, whether or not offered for sale, lease or
other transfer; or
(6) designing and developing prototypes or
integrating systems incorporating the advances, developments
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or improvements included in Paragraphs (1) through (5) of this
subsection;
L. "secretary" means the secretary of taxation and
revenue or the secretary's delegate;
M. "service" means all activities engaged in for
other persons for a consideration, which activities involve
predominantly the performance of a service as distinguished
from selling or leasing property. "Service" includes
activities performed by a person for its members or
shareholders. In determining what is a service, the intended
use, principal objective or ultimate objective of the
contracting parties shall not be controlling. "Service"
includes construction activities and all tangible personal
property that will become an ingredient or component part of a
construction project. That tangible personal property retains
its character as tangible personal property until it is
installed as an ingredient or component part of a construction
project in New Mexico. Sales of tangible personal property
that will become an ingredient or component part of a
construction project to persons engaged in the construction
business are sales of tangible personal property; and
N. "use" or "using" includes use, consumption or
storage other than storage for subsequent sale in the ordinary
course of business or for use solely outside this state."
Section 2. Section 7-9-3.5 NMSA 1978 (being Laws 2003,
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Chapter 272, Section 3) is amended to read:
"7-9-3.5. DEFINITION--GROSS RECEIPTS.--
A. As used in the Gross Receipts and Compensating
Tax Act:
(1) "gross receipts" means the total amount
of money or the value of other consideration received from
selling property located in New Mexico, from leasing or
licensing property employed in New Mexico, from selling
services performed outside New Mexico, the product of which is
initially used in New Mexico, or from performing services in
New Mexico. In an exchange in which the money or other
consideration received does not represent the value of the
property or service exchanged, "gross receipts" means the
reasonable value of the property or service exchanged;
(2) "gross receipts" includes:
(a) any receipts from sales of tangible
personal property handled on consignment;
(b) the total commissions or fees
derived from the business of buying, selling or promoting the
purchase, sale or lease, as an agent or broker on a commission
or fee basis, of any property, service, stock, bond or
security;
(c) amounts paid by members of any
cooperative association or similar organization for sales or
leases of personal property or performance of services by such
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organization;
(d) amounts received from transmitting
messages or conversations by persons providing telephone or
telegraph services;
(e) amounts received by a New Mexico
florist from the sale of flowers, plants or other products
that are customarily sold by florists where the sale is made
pursuant to orders placed with the New Mexico florist that are
filled and delivered outside New Mexico by an out-of-state
florist; and
(f) the receipts of a home service
provider from providing mobile telecommunications services to
customers whose place of primary use is in New Mexico if: 1)
the mobile telecommunications services originate and terminate
in the same state, regardless of where the services originate,
terminate or pass through; and 2) the charges for mobile
telecommunications services are billed by or for a customer's
home service provider and are deemed provided by the home
service provider. For the purposes of this section, "home
service provider", "mobile telecommunications services",
"customer" and "place of primary use" have the meanings given
in the federal Mobile Telecommunications Sourcing Act; and
(3) "gross receipts" excludes:
(a) cash discounts allowed and taken;
(b) New Mexico gross receipts tax,
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governmental gross receipts tax and leased vehicle gross
receipts tax payable on transactions for the reporting period;
(c) taxes imposed pursuant to the
provisions of any local option gross receipts tax that is
payable on transactions for the reporting period;
(d) any gross receipts or sales taxes
imposed by an Indian nation, tribe or pueblo; provided that
the tax is approved, if approval is required by federal law or
regulation, by the secretary of the interior of the United
States; and provided further that the gross receipts or sales
tax imposed by the Indian nation, tribe or pueblo provides a
reciprocal exclusion for gross receipts, sales or gross
receipts-based excise taxes imposed by the state or its
political subdivisions;
(e) any type of time-price
differential;
(f) amounts received solely on behalf
of another in a disclosed agency capacity; and
(g) amounts received by a New Mexico
florist from the sale of flowers, plants or other products
that are customarily sold by florists where the sale is made
pursuant to orders placed with an out-of-state florist for
filling and delivery in New Mexico by a New Mexico florist.
B. When the sale of property or service is made
under any type of charge, conditional or time-sales contract
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or the leasing of property is made under a leasing contract,
the seller or lessor may elect to treat all receipts,
excluding any type of time-price differential, under such
contracts as gross receipts as and when the payments are
actually received. If the seller or lessor transfers the
seller's or lessor's interest in any such contract to a third
person, the seller or lessor shall pay the gross receipts tax
upon the full sale or leasing contract amount, excluding any
type of time-price differential."
Section 3. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2006. HB 583
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