HOUSE BILL 9
49th legislature - STATE OF NEW MEXICO - first special session, 2009
INTRODUCED BY
Ray Begaye
AN ACT
RELATING TO REVENUE; ADDING DEFINITIONS TO THE CORPORATE INCOME AND FRANCHISE TAX ACT; AMENDING CORPORATE INCOME TAX RATES; IMPOSING AN ADDITIONAL FRANCHISE TAX; AMENDING ESTIMATED CORPORATE INCOME TAX PAYMENTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 7-2A-2 NMSA 1978 (being Laws 1986, Chapter 20, Section 33, as amended) is amended to read:
"7-2A-2. DEFINITIONS.--For the purpose of the Corporate Income and Franchise Tax Act and unless the context requires otherwise:
A. "affiliated group" means that term as it is used in the Internal Revenue Code;
B. "bank" means any national bank, national banking association, state bank or bank holding company;
C. "base income" means that part of the taxpayer's income defined as taxable income and upon which the federal income tax is calculated in the Internal Revenue Code for income tax purposes plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and claimed by the taxpayer for that year; "base income" also includes interest received on a state or local bond;
D. "business entity" means a corporation, a partnership not treated as a corporation for federal income tax purposes and a limited liability company not treated as a corporation for federal income tax purposes; "business entity" does not include a sole proprietorship, estate or trust;
E. "corporate income tax" means, for purposes of tax credits allowed pursuant to the Corporate Income and Franchise Tax Act, both corporate income tax and franchise tax;
[D.] F. "corporation" means corporations, joint stock companies, real estate trusts organized and operated under the Real Estate Trust Act, financial corporations and banks, other business associations and, for corporate income tax purposes, partnerships and limited liability companies taxed as corporations under the Internal Revenue Code;
[E.] G. "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;
[F.] H. "fiscal year" means any accounting period of twelve months ending on the last day of any month other than December;
[G.] I. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended;
[H.] J. "net income" means base income adjusted to exclude:
(1) income from obligations of the United States less expenses incurred to earn that income;
(2) other amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States;
(3) for taxable years that began prior to January 1, 1991, an amount equal to the sum of:
(a) net operating loss carryback deductions to that year from taxable years beginning prior to January 1, 1991 claimed and allowed, as provided by the Internal Revenue Code; and
(b) net operating loss carryover deductions to that year claimed and allowed; and
(4) for taxable years beginning on or after January 1, 1991, an amount equal to the sum of any net operating loss carryover deductions to that year claimed and allowed, provided that the amount of any net operating loss carryover from a taxable year beginning on or after January 1, 1991 may be excluded only as follows:
(a) in the case of a timely filed return, in the taxable year immediately following the taxable year for which the return is filed; or
(b) in the case of amended returns or original returns not timely filed, in the first taxable year beginning after the date on which the return or amended return establishing the net operating loss is filed; and
(c) in either case, if the net operating loss carryover exceeds the amount of net income exclusive of the net operating loss carryover for the taxable year to which the exclusion first applies, in the next four succeeding taxable years in turn until the net operating loss carryover is exhausted; in no event may a net operating loss carryover be excluded in any taxable year after the fourth taxable year beginning after the taxable year to which the exclusion first applies;
[I.] K. "net operating loss" means any net operating loss, as defined by Section 172(c) of the Internal Revenue Code, as that section may be amended or renumbered, for a taxable year as further increased by the income, if any, from obligations of the United States for that year less related expenses;
[J.] L. "net operating loss carryover" means the amount, or any portion of the amount, of a net operating loss for any taxable year that, pursuant to Paragraph (3) or (4) of Subsection [H] I of this section, may be excluded from base income;
M. "ownership share" means all interests, direct and indirect, held in a business entity;
N. "partnership" means a combination of persons, including a partnership, joint venture, common trust fund, limited association, pool or working agreement or any other combination of persons that is treated as a partnership for federal income tax purposes;
[K.] O. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, joint venture, syndicate or other association; "person" also means, to the extent permitted by law, any federal, state or other governmental unit or subdivision or agency, department or instrumentality thereof;
P. "related business entity" means a business entity for which a corporation's ownership share exceeds twenty percent; provided that business entities with common ownership, direct plus indirect, of more than twenty percent are related business entities and are each deemed to have the direct plus indirect ownership share of the common owner in each of the other commonly owned business entities;
[L.] Q. "secretary" means the secretary of taxation and revenue or the secretary's delegate;
[M.] R. "state" means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico, any territory or possession of the United States or political subdivision thereof or any political subdivision of a foreign country;
[N.] S. "state or local bond" means a bond issued by a state other than New Mexico or by a local government other than one of New Mexico's political subdivisions, the interest from which is excluded from income for federal income tax purposes under Section 103 of the Internal Revenue Code, as that section may be amended or renumbered;
[O.] T. "taxable year" means the calendar year or fiscal year upon the basis of which the net income is computed under the Corporate Income and Franchise Tax Act and includes, in the case of the return made for a fractional part of a year under the provisions of that act, the period for which the return is made;
[P.] U. "taxpayer" means any corporation subject to the taxes imposed by the Corporate Income and Franchise Tax Act; and
[Q.] V. "unitary corporations" means two or more integrated corporations, other than any foreign corporation incorporated in a foreign country and not engaged in trade or business in the United States during the taxable year, that are owned in the amount of more than fifty percent and controlled by the same person and for which at least one of the following conditions exists:
(1) there is a unity of operations evidenced by central purchasing, advertising, accounting or other centralized services;
(2) there is a centralized management or executive force and centralized system of operation; or
(3) the operations of the corporations are dependent upon or contribute property or services to one another individually or as a group."
Section 2. Section 7-2A-5 NMSA 1978 (being Laws 1981, Chapter 37, Section 38, as amended) is amended to read:
"7-2A-5. CORPORATE INCOME TAX RATES.--The corporate income tax imposed on corporations by Section 7-2A-3 NMSA 1978 shall be at the rates specified in the following [table] tables:
[If the net income is: The tax shall be:
Not over $500,000 4.8% of net income
Over $500,000 but not
over $1,000,000 $24,000 plus
6.4% of excess
over $500,000
Over $1,000,000 $56,000
plus 7.6% of excess
over $1,000,000.]
A. For taxable years beginning in 2010:
If the net income is: The tax shall be:
Not over $250,000 0% of net income
Over $250,000 but not over 4.8% of excess over $500,000 $250,000
Over $500,000 but not over $12,000 plus 6.4% of $1,000,000 excess over $500,000
Over $1,000,000 $44,000 plus 7.6% of excess over $1,000,000.
B. For taxable years beginning in 2011:
If the net income is: The tax shall be:
Not over $500,000 0% of net income
Over $500,000 but not over 6.4% of excess over
$1,000,000 $500,000
Over $1,000,000 $32,000 plus 6.9% of excess over $1,000,000.
C. For taxable years beginning in 2012:
If the net income is: The tax shall be:
Not over $500,000 0% of net income
Over $500,000 5.9 % of excess over $500,000.
D. For taxable years beginning in 2013 and subsequent years:
If the net income is: The tax shall be:
Not over $500,000 0% of net income
Over $500,000 4.9 % of excess over $500,000."
Section 3. Section 7-2A-5.1 NMSA 1978 (being Laws 1986, Chapter 20, Section 37, as amended) is amended to read:
"7-2A-5.1. CORPORATE FRANCHISE TAX AMOUNT.--
A. The corporate franchise tax amount imposed on a corporation by Section 7-2A-3 NMSA 1978 shall be fifty dollars ($50.00) per taxable year or any fraction thereof plus, for corporations subject to the tax imposed by Subsection A of Section 7-2A-3 NMSA 1978, the tax determined pursuant to Subsection B of this section.
B. The tax imposed by this section is the amount determined pursuant to Paragraph (1) of this subsection reduced, but not below zero, by the amount determined pursuant to Paragraph (2) of this subsection:
(1) the rate specified in Subsection G of this section applied to the sum of the following:
(a) the excess above five million dollars ($5,000,000) of the corporation's property in this state calculated pursuant to Subsection C of this section;
(b) the excess above one million two hundred thousand dollars ($1,200,000) of the corporation's payroll in this state calculated pursuant to Subsection D of this section; and
(c) the excess above nine million three hundred thousand dollars ($9,300,000) of the corporation's sales in this state calculated pursuant to Subsection E of this section; and
(2) except as provided in Subsection F of this section, the tax imposed by Subsection A of Section 7-2A-3 NMSA 1978 on the corporation plus the amount of tax imposed by Subsection A of Section 7-2A-3 NMSA 1978 on each related business entity multiplied by the corporation's ownership share in the business entity for the taxable year of the business entity ending with or within the corporation's taxable year.
C. Except as provided in Subsection F of this section, the corporation's property in this state is the amount of property that is the numerator of the corporation's property factor determined under Section 7-4-11 NMSA 1978 for the taxable year plus the sum of the amount of property that is the numerator of the property factor determined under Section 7-4-11 NMSA 1978 for each related business entity multiplied by the corporation's ownership share in the business entity for the taxable year of the business entity ending with or within the corporation's taxable year.
D. Except as provided in Subsection F of this section, the corporation's payroll in this state is the amount of payroll that is the numerator of the corporation's payroll factor determined under Section 7-4-14 NMSA 1978 for the taxable year plus the sum of the amount of payroll that is the numerator of the payroll factor determined under Section 7-4-14 NMSA 1978 for each related business entity multiplied by the corporation's ownership share in the business entity for the taxable year of the business entity ending with or within the corporation's taxable year.
E. Except as provided in Subsection F of this section, the corporation's sales in this state are the amount of sales that is the numerator of the corporation's sales factor determined under Section 7-4-16 NMSA 1978 for the taxable year plus the sum of the amount of sales that is the numerator of the sales factor determined under Section 7-4-16 NMSA 1978 for each related business entity multiplied by the corporation's ownership share in the business entity for the taxable year of the business entity ending with or within the corporation's taxable year.
F. For purposes of Paragraph (2) of Subsection B and Subsections C, D and E of this section:
(1) if the corporation's ownership share in a business entity is eighty percent or more, one hundred percent shall be used in place of the ownership share; and
(2) the amount of tax imposed by Subsection A of Section 7-2A-3 NMSA 1978, property in this state, payroll in this state and sales in this state are only taken into account once.
G. For taxable years beginning in:
(1) 2010 and 2011, the rate shall be sixteen hundredths of one percent;
(2) 2012, the rate shall be twenty-one hundredths of one percent; and
(3) 2013 and subsequent years, the rate shall be twenty-five hundredths of one percent."
Section 4. Section 7-2A-9.1 NMSA 1978 (being Laws 1986, Chapter 5, Section 1, as amended) is amended to read:
"7-2A-9.1. ESTIMATED TAX DUE--PAYMENT OF ESTIMATED TAX--PENALTY--EXEMPTION.--
A. Every taxpayer shall pay estimated corporate income tax and franchise tax to the state of New Mexico during its taxable year if its tax after applicable credits is five thousand dollars ($5,000) or more in the current taxable year. A taxpayer to which this section applies shall calculate estimated tax by one of the following methods:
(1) estimating the amount of [tax] taxes due, net of any credits, for the current taxable year, provided that the estimated amount is at least eighty percent of the amount determined to be due for the taxable year;
(2) using as the estimate an amount equal to one hundred percent of the [tax] taxes due for the previous taxable year, if the previous taxable year was a full twelve-month year;
(3) using as the estimate an amount equal to one hundred ten percent of the [tax] taxes due for the taxable year immediately preceding the previous taxable year, if the taxable year immediately preceding the previous taxable year was a full twelve-month year and the return for the previous taxable year has not been filed and the extended due date for filing that return has not occurred at the time the first installment is due for the taxable year; or
(4) estimating the amount of [tax] taxes due, net of any credits, for each fiscal quarter of the current taxable year, provided that the estimated amount is at least eighty percent of the amount determined to be due for that quarter.
B. If Subsection A of this section applies, the amount of estimated tax shall be paid in installments as provided in this subsection. Twenty-five percent of the estimated tax calculated under Paragraph (1), (2) or (3) of Subsection A of this section or one hundred percent of the estimated tax calculated under Paragraph (4) of Subsection A of this section is due on or before the following dates: the fifteenth day of the fourth month of the taxable year, the fifteenth day of the sixth month of the taxable year, the fifteenth day of the ninth month of the taxable year and the fifteenth day of the twelfth month of the taxable year. Application of this subsection to a taxable year that is a fractional part of a year shall be determined by regulation of the secretary.
C. Every taxpayer to which Subsection A of this section applies that fails to pay the estimated tax when due or that makes estimated tax payments during the taxable year that are less than the lesser of eighty percent of the [income tax] taxes imposed on the taxpayer under the Corporate Income and Franchise Tax Act or the amount required by Paragraph (2), (3) or (4) of Subsection A of this section shall be subject to the interest and penalty provisions of Sections 7-1-67 and 7-1-69 NMSA 1978 on the underpayment.
D. For purposes of this section, the amount of underpayment shall be the excess of the amount of the installment that would be required to be paid if the estimated tax were equal to eighty percent of the tax shown on the return for the taxable year or the amount required by Paragraph (2), (3) or (4) of Subsection A of this section or, if no return was filed, eighty percent of the tax for the taxable year for which the estimated tax is due less the amount, if any, of the installment paid on or before the last date prescribed for payment.
E. For purposes of this section, the period of
underpayment shall run from the date the installment was required to be paid to whichever of the following dates is earlier:
(1) the fifteenth day of the third month following the end of the taxable year; or
(2) with respect to any portion of the underpayment, the date on which such portion is paid. For the purposes of this paragraph, a payment of estimated tax on any installment date shall be applied as a payment of any previous underpayment only to the extent such payment exceeds the amount of the installment determined under Subsection D of this section due on such installment date.
F. For the purposes of this section, the amount of tax deducted and withheld with respect to a taxpayer under the Withholding Tax Act or the Oil and Gas Proceeds Withholding Tax Act shall be deemed a payment of estimated tax. An equal amount of the amount of withheld tax shall be deemed paid on each due date for the applicable taxable year unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts withheld shall be deemed payments of estimated tax on the dates on which the amounts were actually withheld. The taxpayer may apply the provisions of this subsection separately to amounts withheld under the Withholding Tax Act or the Oil and Gas Proceeds Withholding Tax Act."
Section 5. A new section of the Corporate Income and Franchise Tax Act is enacted to read:
"[NEW MATERIAL] APPLICATION OF TAX CREDITS.--Notwithstanding any provision of the Corporate Income and Franchise Tax Act to the contrary, a credit that may be applied against a taxpayer's corporate income tax liability pursuant to Sections 7-2A-8.6, 7-2A-8.8, 7-2A-8.9, 7-2A-14, 7-2A-15, 7-2A-16, 7-2A-17.1, 7-2A-18, 7-2A-19, 7-2A-21, 7-2A-22, 7-2A-23 and 7-2A-24 NMSA 1978 may also be applied against the taxpayer's franchise tax liability."
Section 6. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2010.
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