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

SPONSOR HBIC

ORIGINAL DATE

LAST UPDATED

2/10/06

HB 387/HBICS

SHORT TITLE Disclosure of Personal Income Tax Info

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

NONE

NONE

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of HBIC Substitute

The House Business and Industry Committee substitute to House Bill 387 would amend Section

7-1-8 NMSA 1978 – "Confidentiality of Returns and Other Information" – to allow the Taxation

and Revenue Department to provide personal income tax (PIT) information to law enforcement

and other agencies conducting joint investigations with the Taxation and Revenue Department

pursuant to a memorandum of understanding (MOU). The bill further allows TRD to release re-

cords of refunds or credits where that release is authorized under section 7-1-29 NMSA 1978.

FISCAL IMPLICATIONS

No fiscal impact

SIGNIFICANT ISSUES

The HBIC substitute to HB 387 would allow TRD to share PIT information with any law en-

forcement agency with which the department is conducting a joint investigation. This includes

federal and other state law enforcement agencies, pursuant to a MOU. TRD notes that the clause

“… any other agency that investigates criminal violations” would include the Securities Division

of Regulation and Licensing Department.

House Bill 387/HBICS – Page 2

The exception allowing TRD to disclose records of refunds or credits already required for public

inspection under Section 7-1-29 provides clarification by bringing disclosure requirements to-

gether in the same statute, and prevents a possible conflict in trying to read those two sections of

statute together.

According to TRD, the new recipients of taxpayer information authorized by this bill will not be

subject to penalties for releasing confidential information.

Penalties for violating the confidentiality of taxpayer information (section 7-1-8) are specified in

section 7-1-76. Violating the confidentiality statute is a misdemeanor and is punishable by a fine

of $1,000 and one year of imprisonment, as well as prohibition from state employment for five

years following conviction. If the intent is to apply the same penalties to persons receiving in-

formation as proposed the statute should be amended accordingly.

ADMINISTRATIVE IMPLICATIONS

Depending on the number of requests for taxpayer information, there could be substantial admin-

istrative impact on the Taxation and Revenue Department.

BE/mt:nt