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

SPONSOR SCORC

ORIGINAL DATE

LAST UPDATED

2/23/07

2/24/07 HB

SHORT TITLE

ELECTRONIC TAX FILING FOR CERTAIN

EMPLOYEES

SB 344/SCORCS

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

The Senate Corporations Committee (SCORC) substitute for Senate Bill 344 would enact new

reporting requirements for employee payroll tax withholding, with associated penalties:

•

Employers of more than 50 employees would be required to file their quarterly

withholding tax reports using electronic means. A penalty of $200 per quarter would be

due for failure to comply.

•

Employers currently not required to file unemployment insurance returns with the N.M.

Labor Department would be required to file a quarterly withholding tax return with the

Taxation and Revenue Department. Penalty for failure to comply with this requirement

would be $50 per return.

•

The Secretary of Taxation and Revenue would be authorized to allow for submission of

an annual statement of withholding for each employee rather than a quarterly withholding

information return for employers that:

o

Are not required to file an unemployment insurance tax form with the Labor

Department;

o

Have 50 or fewer employees and

o

Are not required to file their withholding information returns electronically.

Senate Bill 344/SCORCS – Page

2

•

Employers that report withholding quarterly with the N.M. Department of Labor or

Taxation and Revenue Department will no longer be required to submit an annual

withholding statement for each employee to the Taxation and Revenue Department.

The provisions of the bill would be effective January 1, 2008.

FISCAL IMPLICATIONS

TRD assumes a positive but not significant impact on revenue collection.

SIGNIFICANT ISSUES

According to TRD, receiving the employee withholding information quarterly and via electronic

media will improve compliance by employers who report and pay withholding tax, and by

employees who claim withholding tax withheld on their personal income tax returns. The

information received on Workers Compensation Fees paid will also help the Workers

Compensation Administration ensure claims are filed on only those employees for whom

compensation fees have been paid, and will help ensure that employers are reporting and paying

workers compensation fees as required.

ADMINISTRATIVE IMPLICATIONS

The provisions should enable faster and more accurate electronic return processing.

POSSIBLE QUESTIONS

Would this be an additional burden on employers or is it tax-payer friendly.

Could employers of 25 or more be required to file their quarterly withholding tax reports using

electronic means.

BE/mt