HB0075

HOUSE BILL 75

50th legislature - STATE OF NEW MEXICO - first session, 2011

INTRODUCED BY

Roberto "Bobby" J. Gonzales

AN ACT

RELATING TO TAXATION; AMENDING THE GEOTHERMAL GROUND-COUPLED HEAT PUMP TAX CREDITS TO PROVIDE FOR REFUNDABILITY OF THE TAX CREDITS; REQUIRING REPORTS.

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

SECTION 1. Section 7-2-18.24 NMSA 1978 (being Laws 2009, Chapter 271, Section 1) is amended to read:

"7-2-18.24. GEOTHERMAL GROUND-COUPLED HEAT PUMP TAX CREDIT.--

A. A [taxpayer] person who files an individual New Mexico income tax return for a taxable year beginning on or after January 1, [2010 and who] 2011, who is not a dependent of another taxpayer and who purchases and installs, after January 1, [2010] 2011 but before December 31, [2020] 2021, a geothermal ground-coupled heat pump in a residence, business or agricultural enterprise in New Mexico owned by that [taxpayer] person may apply for, and the department may allow, a tax credit of up to thirty percent of the purchase and installation costs of the system. The credit provided in this section may be referred to as the "geothermal ground-coupled heat pump tax credit". The total geothermal ground-coupled heat pump tax credit allowed to a [taxpayer] person for each building in which a geothermal ground-coupled heat pump is installed and functioning shall not exceed nine thousand dollars ($9,000). The department shall allow a geothermal ground-coupled heat pump tax credit only for geothermal ground-coupled heat pumps certified by the energy, minerals and natural resources department.

B. The purposes of the geothermal ground-coupled heat pump tax credit are to encourage the manufacture, sale, purchase, installation and use of geothermal ground-coupled heat pumps for residential, business or agricultural enterprise uses and to increase the number of people employed to install and maintain geothermal ground-coupled heat pump systems.

[B. A] C. The portion of the geothermal ground-coupled heat pump tax credit that is approved by the department and that [remains unused in a taxable year may be carried forward for a maximum of ten consecutive taxable years following the taxable year in which the credit originates until the credit is fully expended] exceeds the tax liability in the taxable year of the person claiming the credit shall be refunded to the person claiming the credit.

[C. Prior to July 1, 2010] D. The energy, minerals and natural resources department shall adopt rules establishing procedures to provide certification of geothermal ground-coupled heat pumps for purposes of obtaining a geothermal ground-coupled heat pump tax credit. The rules shall address technical specifications and requirements relating to safety, building code and standards compliance, minimum system sizes, system applications and lists of eligible components. The energy, minerals and natural resources department may modify the specifications and requirements as necessary to maintain a high level of system quality and performance. A person seeking certification of a geothermal ground-coupled heat pump for purposes of receiving a tax credit shall submit with the application for a certificate from the energy, minerals and natural resources department all receipts showing the purchase price and installation price paid by the person for the geothermal ground-coupled heat pump installed in a residence, business or agricultural enterprise owned by that person. Upon determining that the person's claim is qualified to receive a geothermal ground-coupled heat pump tax credit, the energy, minerals and natural resources department shall issue a dated certificate of eligibility containing the cost of the purchase and installation of each geothermal ground-coupled heat pump authorized to the person. All certificates of eligibility issued pursuant to this subsection shall be sequentially numbered, and an account of all certificates issued or destroyed shall be maintained by the energy, minerals and natural resources department. The taxation and revenue department shall audit the records pertaining to the geothermal ground-coupled heat pump tax credit on a periodic basis to ensure effective administration of the geothermal ground-coupled heat pump tax credit and compliance with the Tax Administration Act and this section.

E. To claim the geothermal ground-coupled heat pump tax credit, a person shall provide to the department a certificate of eligibility issued to the person for each geothermal ground-coupled heat pump for which a geothermal ground-coupled heat pump tax credit is claimed.

[D.] F. The department may allow pursuant to the Income Tax Act and the Corporate Income and Franchise Tax Act, a maximum annual aggregate of two million dollars ($2,000,000) in geothermal ground-coupled heat pump tax credits. Applications for the credit shall be considered in the order received by the department. The geothermal ground-coupled heat pump tax credit shall be applied against the person's income tax liability for the taxable year before any other tax credit is applied.

[E.] G. A [taxpayer] person who otherwise qualifies and claims a geothermal ground-coupled heat pump tax credit with respect to [property] a residence, business or agricultural enterprise owned by a partnership or other business association of which the [taxpayer] person is a member may claim a credit only in proportion to that [taxpayer's] person's interest in the partnership or association. The total credit claimed in the aggregate by all members of the partnership or association with respect to the property shall not exceed the amount of the credit that could have been claimed by a sole owner of the [property] residence, business or agricultural enterprise.

[F.] H. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed on a joint return.

I. No later than October 30 of each year, the department and the energy, minerals and natural resources department shall compile a joint report in regard to the geothermal ground-coupled heat pump tax credits provided pursuant to the Income Tax Act and the Corporate Income and Franchise Tax Act for the revenue stabilization and tax policy committee that includes:

(1) the number of people applying for geothermal ground-coupled heat pump tax credits;

(2) the number and amount of geothermal ground-coupled heat pump tax credits allowed;

(3) the amount of the geothermal ground-coupled heat pump tax credits that was refunded to applicants;

(4) the number of new jobs created in New Mexico in the taxable year to install and maintain geothermal ground-coupled heat pump systems; and

(5) any other data or information deemed necessary by the taxation and revenue department to aid the committee in determining the effectiveness of the geothermal ground-coupled heat pump tax credits.

J. Notwithstanding any other section of law to the contrary, the department may reveal to the revenue stabilization and tax policy committee the number of applicants seeking geothermal ground-coupled heat pump tax credits pursuant to this section and the amount of each credit approved.

K. The revenue stabilization and tax policy committee shall review the effectiveness of the geothermal ground-coupled heat pump tax credit every five years beginning in 2014.

L. Acceptance by a person of a geothermal ground-coupled heat pump tax credit pursuant to this section is authorization by the person receiving the credit for the department to reveal information to the legislature necessary to analyze the effectiveness of the geothermal ground-coupled heat pump tax credit.

[G.] M. As used in this section:

(1) "geothermal ground-coupled heat pump" means a system that uses energy from the ground, water or, ultimately, the sun for distribution of heating, cooling or domestic hot water; that has either a minimum coefficient of performance of three and four-tenths or an efficiency ratio of sixteen or greater; and that is installed by an accredited installer certified by the international ground source heat pump association; and

(2) "person" includes a federally recognized Indian nation, tribe or pueblo located wholly or partially in New Mexico and an organization identified in Section 501(c) of the Internal Revenue Code that is exempt from state income tax pursuant to Section 7-2-4 NMSA 1978."

SECTION 2. Section 7-2A-24 NMSA 1978 (being Laws 2009, Chapter 271, Section 2) is amended to read:

"7-2A-24. GEOTHERMAL GROUND-COUPLED HEAT PUMP TAX CREDIT.--

A. A [taxpayer] person that files a New Mexico corporate income tax return for a taxable year beginning on or after January 1, [2010 and that] 2011 and that purchases and installs, after January 1, [2010] 2011 but before December 31, [2020] 2021, a geothermal ground-coupled heat pump in a property owned by the [taxpayer] person may claim against the [taxpayer's] person's corporate income tax liability, and the department may allow, a tax credit of up to thirty percent of the purchase and installation costs of the system. The credit provided in this section may be referred to as the "geothermal ground-coupled heat pump tax credit". The total geothermal ground-coupled heat pump tax credit allowed to a [taxpayer] person shall not exceed nine thousand dollars ($9,000) for each building in which a geothermal ground-coupled heat pump is installed and functioning. The department shall allow a geothermal ground-coupled heat pump tax credit only for geothermal ground-coupled heat pumps certified by the energy, minerals and natural resources department.

[B. A] C. The portion of the geothermal ground-coupled heat pump tax credit that [remains unused in a taxable year may be carried forward for a maximum of ten consecutive taxable years following the taxable year in which the credit originates until the credit is fully expended] exceeds the tax liability in the taxable year of the person claiming the credit shall be refunded to the person claiming the credit.

[D.] F. The department may allow, pursuant to the Income Tax Act and the Corporate Income and Franchise Tax Act, a maximum annual aggregate of two million dollars ($2,000,000) in geothermal ground-coupled heat pump tax credits. Applications for the credit shall be considered in the order received by the department. The geothermal ground-coupled heat pump tax credit shall be applied against the person's corporate income and franchise tax liabilities for the taxable year before any other tax credit is applied.

G. No later than October 30 of each year, the department and the energy, minerals and natural resources department shall compile a joint report in regard to the geothermal ground-coupled heat pump tax credits provided pursuant to the Income Tax Act and the Corporate Income and Franchise Tax Act for the revenue stabilization and tax policy committee that includes:

(1) the number of people applying for geothermal ground-coupled heat pump tax credits;

(2) the number and amount of geothermal ground-coupled heat pump tax credits allowed;

(3) the amount of the geothermal ground-coupled heat pump tax credits that was refunded to applicants;

(4) the number of new jobs created in New Mexico in the taxable year to install and maintain geothermal ground-coupled heat pump systems; and

(5) any other data or information deemed necessary by the taxation and revenue department to aid the committee in determining the effectiveness of the geothermal ground-coupled heat pump tax credits.

H. Notwithstanding any other section of law to the contrary, the department may reveal to the revenue stabilizaton and tax policy committee the number of applicants for the geothermal ground-coupled heat pump tax credit, the amount of each credit approved, the number of credits transferred and the amount of a transferred credit claimed pursuant to this section.

I. The revenue stabilization and tax policy committee shall review the effectiveness of the geothermal ground-coupled heat pump tax credit every five years beginning in 2014.

J. Acceptance by a person of a geothermal ground-coupled heat pump tax credit pursuant to this section is authorization by the person receiving the credit for the department to reveal information to the legislature necessary for analyzing the effectiveness of the geothermal ground-coupled heat pump tax credit.

[E.] K. As used in this section, "geothermal ground-coupled heat pump" means a reversible refrigerator device that provides space heating, space cooling, domestic hot water, processed hot water, processed chilled water or any other application where hot air, cool air, hot water or chilled water is required and that utilizes ground water or water circulating through pipes buried in the ground as a condenser in the cooling mode and an evaporator in the heating mode."

SECTION 3. APPLICABILITY.--The provisions of this act are applicable to taxable years beginning on or after January 1, 2011.

- 12 -