SENATE BILL 261

49th legislature - STATE OF NEW MEXICO - second session, 2010

INTRODUCED BY

Timothy Z. Jennings

AN ACT

RELATING TO TAXATION; MODIFYING THE GROSS RECEIPTS TAX EXEMPTION FOR CERTAIN NONPROFIT ENTITIES.

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

     Section 1. Section 7-9-29 NMSA 1978 (being Laws 1970, Chapter 12, Section 3, as amended) is amended to read:

     "7-9-29. EXEMPTION--GROSS RECEIPTS TAX--CERTAIN ORGANIZATIONS.--

          A. Exempted from the gross receipts tax are the receipts of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of [1954] 1986, as amended or renumbered and that demonstrate to the department that the organization's receipts from commercial activity in the prior twelve months did not exceed ten million dollars ($10,000,000). An organization with receipts from commercial activities in excess of ten million dollars ($10,000,000) in the preceding twelve months is liable to the state for the gross receipts tax on all receipts from commercial activity in the preceding twelve-month period.

          B. Exempted from the gross receipts tax are the receipts from carrying on chamber of commerce, visitor bureau and convention bureau functions of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(6) of the United States Internal Revenue Code of [1954] 1986, as amended or renumbered and that demonstrate to the department that the organization's receipts from commercial activity in the prior twelve months did not exceed ten million dollars ($10,000,000). An organization with receipts from commercial activities in excess of ten million dollars ($10,000,000) in the preceding twelve months is liable to the state for the gross receipts tax on all receipts from commercial activity in the subsequent twelve-month period.

          C. This section does not apply to receipts derived from an unrelated trade or business as defined in Section 513 of the United States Internal Revenue Code of [1954] 1986, as amended or renumbered.

          D. As used in this section, "commercial activity" means the sale of property or services for consideration but does not include donations, dues or registration fees.

          E. The department shall promulgate rules to implement the provisions of this section, including rules for related entities for the purpose of determining all entities composing an organization entity."

     Section 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2010.

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