SENATE BILL 575
50th legislature - STATE OF NEW MEXICO - first session, 2011
INTRODUCED BY
Howie Morales
AN ACT
RELATING TO TAXATION; PROVIDING A CREDIT AGAINST MODIFIED COMBINED TAX LIABILITIES FOR THE COMPENSATING TAX LIABILITY RESULTING FROM INVESTMENT IN CHILE PRODUCTION AND PROCESSING EQUIPMENT IN NEW MEXICO; ENACTING THE CHILE INDUSTRY MODERNIZATION INVESTMENT CREDIT ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. SHORT TITLE.--This act may be cited as the "Chile Industry Modernization Investment Credit Act".
SECTION 2. PURPOSE.--The purpose of the Chile Industry Modernization Investment Credit Act is to provide an incentive for chile producers and chile processors to modernize equipment and facilities used in the production and processing of chile in New Mexico and enable the industry to compete more successfully in the world chile market.
SECTION 3. DEFINITIONS.--As used in the Chile Industry Modernization Investment Credit Act:
A. "chile" means any variety of the pepper capsicum annum;
B. "chile processing ratio" means a percentage calculated by one of the following methods to determine if a facility qualifies as a processing facility for purposes of the chile investment credit:
(1) the number of hours the facility processed chile in the twelve-month period prior to the month in which the chile investment credit was first claimed by the taxpayer divided by the total number of hours the facility was in use for all commodities processed in the facility during that twelve-month period;
(2) the gross receipts from chile processing in the twelve-month period prior to the month in which the chile investment credit was first claimed by the taxpayer divided by the total gross receipts generated in that twelve-month period by all processing activities occurring in the facility; or
(3) the number of square feet dedicated exclusively to processing chile in the twelve-month period prior to the month in which the chile investment credit was first claimed by the taxpayer divided by the total number of square feet in the facility used for processing all commodities processed in the facility;
C. "chile processor" means a person who processes chile in a processing facility in which the chile processing ratio is thirty-three percent and who derived at least thirty-three percent of the person's gross receipts from products derived from producing or processing chile in the twelve-month period preceding the month in which the person first claimed a chile investment credit;
D. "chile producer" means a person who produces chile, who derived at least thirty-three percent of the person's gross receipts from producing chile in the twelve-month period preceding the month in which the person first claimed a chile investment credit and who produces chile on at least fifteen percent of the land controlled by the person for purposes of cultivation and crop production;
E. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to the employee by the secretary;
F. "equipment" means an essential machine, mechanism or tool, or a component or fitting of an essential machine, mechanism or tool, used directly in the production or processing of chile in New Mexico and subject to depreciation for purposes of the Internal Revenue Code of 1986 by the taxpayer carrying on the chile production or processing operation; "equipment" does not include a vehicle that leaves the site of the chile producer or processing facility for the purpose of transporting persons or property, including equipment for which the chile investment credit is being claimed;
G. "investment" means the purchase of equipment;
H. "modified combined tax liability" means the total liability of the taxpayer for the reporting period for the gross receipts tax imposed pursuant to Section 7-9-4 NMSA 1978, the compensating tax imposed pursuant to Section 7-9-7 NMSA 1978 and the withholding tax imposed on wages pursuant to Section 7-3-3 NMSA 1978, notwithstanding any distribution or transfer pursuant to the Tax Administration Act with respect to net receipts from those liabilities. "Modified combined tax liability" excludes any liability resulting from a local option gross receipts tax;
I. "process" means to prepare chile for sale, including to clean, sort or otherwise prepare fresh chile for market or for use by a processor; to combine chile with other ingredients to increase the value of or preserve the chile; to dry, roast, grind, cook, dice, freeze or refrigerate chile; or to package chile or chile products;
J. "processing facility" means a building or other enclosed or open location in which chile is processed and that has a chile processing ratio of at least thirty-three percent;
K. "produce" means to grow a crop, including to prepare for planting, and to plant, grow and harvest a crop; and
L. "taxpayer" means a person liable for payment of gross receipts tax, compensating tax or withholding tax who is a chile producer or a chile processor.
SECTION 4. CHILE INVESTMENT CREDIT--AMOUNT.--The tax credit provided in the Chile Industry Modernization Investment Credit Act may be referred to as the "chile investment credit". The chile investment credit shall be in an amount equal to the amount of gross receipts tax paid or compensating tax paid on the value of equipment purchased by the taxpayer to produce or process chile in New Mexico.
SECTION 5. SUBMITTING A CLAIM--LIMITS.--
A. A taxpayer applying for a chile investment credit shall submit a claim for the credit in the manner and form required by the department.
B. The department may allow the taxpayer's chile investment credit claim if:
(1) the taxpayer is a chile producer or chile processor;
(2) the taxpayer has purchased equipment for production or processing of chile; and
(3) the claim is filed within one year following the end of the calendar year in which the taxpayer makes an investment in production or processing equipment.
C. The maximum chile investment credit in any calendar year that may be approved by the department for a taxpayer shall not exceed one hundred thousand dollars ($100,000).
D. A taxpayer approved by the department to claim a chile investment credit may claim the amount approved by the department against the taxpayer's modified combined tax liability due; provided that a taxpayer shall not claim an amount exceeding eighty-five percent of the taxpayer's modified combined tax liability for the reporting period in which the claim is made.
E. The balance of a chile investment credit remaining that exceeds eighty-five percent of the taxpayer's modified combined tax liability in any reporting period in which the chile investment credit is claimed may be carried forward and claimed against the taxpayer's available modified combined tax liability in subsequent reporting periods until the amount of credit allowed is exhausted.
SECTION 6. ADMINISTRATION.--The Chile Industry Modernization Investment Credit Act shall be administered pursuant to the Tax Administration Act. The department shall develop and publish as necessary any forms or procedures needed to process a chile investment credit.
SECTION 7. LEGISLATIVE OVERSIGHT.--The department shall present a report to the revenue stabilization and tax policy committee annually by October 30 detailing the amount of the chile investment credit approved in the previous fiscal year. The revenue stabilization and tax policy committee shall review the effectiveness of the chile investment credit every four years beginning in 2014.
SECTION 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.
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