HB0306

HOUSE BILL 306

50th legislature - STATE OF NEW MEXICO - second session, 2012

INTRODUCED BY

Antonio "Moe" Maestas

AN ACT

RELATING TO TAXATION; ENACTING NEW SECTIONS OF THE INCOME TAX ACT AND THE CORPORATE INCOME AND FRANCHISE TAX ACT; CREATING THE FAMILY REUNIFICATION EMPLOYMENT TAX CREDIT.

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

SECTION 1. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] FAMILY REUNIFICATION EMPLOYMENT TAX CREDIT.--

A. A taxpayer who files an individual New Mexico income tax return, who is not a dependent of another individual and who is the owner of a New Mexico sole proprietorship, partnership or limited liability company may claim a credit in an amount equal to five thousand dollars ($5,000) of the gross wages paid to each qualified New Mexican who is employed full time in New Mexico by the taxpayer for at least twelve months during the taxable year for which the return is filed. The tax credit provided by this section may be referred to as the "family reunification employment tax credit".

B. The purpose of the family reunification employment tax credit is to encourage the full-time employment of qualified New Mexicans and to foster a climate of economic development and prosperity in New Mexico that allows individuals born in New Mexico, who left New Mexico or remained out of state due to the lack of employment opportunities in New Mexico, to return to New Mexico and their families.

C. A taxpayer who is the owner of a New Mexico sole proprietorship, partnership or limited liability company may claim the family reunification employment tax credit provided in this section for each taxable year in which the taxpayer employs one or more qualified New Mexicans; provided that the taxpayer may not claim the family reunification employment tax credit for any individual qualified New Mexican for more than two taxable years. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the taxpayer employs the qualified New Mexican upon which the credit is predicated.

D. That portion of a family reunification employment tax credit approved by the taxation and revenue department that exceeds a taxpayer's income tax liability in the taxable year in which the family reunification employment tax credit is claimed shall not be refunded to the taxpayer. The family reunification employment tax credit shall not be carried forward or transferred to another taxpayer.

E. A husband and wife filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the credit that would have been claimed on a joint return.

F. A taxpayer who otherwise qualifies and claims a family reunification employment tax credit in New Mexico that may be claimed by a partnership or limited liability company of which the taxpayer is a member may claim a credit only in proportion to the taxpayer's interest in the partnership or limited liability company. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to Subsection A of this section.

G. The taxpayer shall submit to the economic development department with respect to each employee for whom the family reunification employment tax credit is claimed:

(1) information required by the secretary of economic development with respect to the employee's employment by the taxpayer during the taxable year for which the family reunification employment tax credit is claimed; and

(2) information required by the secretary of economic development establishing that the employee is a qualified New Mexican and was not also employed in the same taxable year by another taxpayer claiming a family reunification employment tax credit for that employee pursuant to this section or the Corporate Income and Franchise Tax Act.

H. The economic development department shall adopt rules establishing procedures to certify qualified New Mexicans for purposes of obtaining a family reunification employment tax credit. The rules shall ensure that not more than one family reunification employment tax credit per qualified New Mexican shall be allowed in a taxable year and that the credits allowed per qualified New Mexican are limited to a maximum of two years. The economic development department shall issue a dated certificate of eligibility containing a list of the qualified New Mexicans employed by the taxpayer claiming the family reunification employment tax credit, including identifying information such as the social security number of the employee, the previous residence of the employee for the past four years, the date of employment of the employee by the taxpayer and the number of hours worked per week by the employee. 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 economic development department. The taxation and revenue department shall audit the records of the family reunification employment tax credit maintained by the economic development department on a periodic basis to ensure effective administration of the family reunification employment tax credit and compliance with the Tax Administration Act and this section.

I. To claim a family reunification employment tax credit, the taxpayer shall provide to the taxation and revenue department the certificate of eligibility issued by the economic development department pursuant to this section to the taxpayer for the taxable year for which the family reunification employment tax credit is claimed.

J. A taxpayer who claims and is granted approval for the family reunification employment tax credit shall not apply for or be granted approval for the rural job tax credit, the high-wage jobs tax credit or the additional credit pursuant to the Technology Jobs Tax Credit Act.

K. The taxation and revenue department may allow a maximum annual aggregate of two million dollars ($2,000,000) in family reunification employment tax credits provided by this section and the Corporate Income and Franchise Tax Act. Applications for the family reunification employment tax credit shall be considered in the order received by the taxation and revenue department.

L. The economic development department shall track state expenditures, quantify the state's return on investment and track job creation as a result of the family reunification employment tax credit.

M. The taxation and revenue department shall compile an annual report that includes the number of taxpayers approved by the department to receive a family reunification employment tax credit. Notwithstanding any other section of law to the contrary, the taxation and revenue department and the economic development department may disclose the number of applicants for the family reunification employment tax credit, the amount of each credit approved, the number of qualified New Mexicans hired, the length of time that the qualified New Mexican is employed while the taxpayer received the family reunification employment tax credit and any other information required by the legislature or the taxation and revenue department to aid in evaluating the effectiveness of the family reunification employment tax credit. The report shall be presented to the interim revenue stabilization and tax policy committee and to the legislative finance committee.

N. An appropriate legislative committee shall review the effectiveness of the family reunification employment tax credit every four years beginning in 2015.

O. As used in this section:

(1) "benefits" means any employee benefit plan as defined in Title 1, Section 3 of the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. 1002; and

(2) "qualified New Mexican" means an individual who:

(a) is a New Mexico resident;

(b) files an individual New Mexico income tax return;

(c) receives benefits and works at least forty hours per week for at least twelve months during the taxable year for which the family reunification employment tax credit is claimed;

(d) was born in New Mexico;

(e) was not a resident of New Mexico prior to being employed by the taxpayer claiming the family reunification employment tax credit for at least two years; and (f) was gainfully employed out of New Mexico for at least two years."

SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] FAMILY REUNIFICATION EMPLOYMENT TAX CREDIT.--

A. A taxpayer that is a New Mexico corporation and that files a corporate income tax return may claim a credit in an amount equal to five thousand dollars ($5,000) of the gross wages paid to each qualified New Mexican who is employed full time in New Mexico by the taxpayer for at least twelve months during the taxable year for which the return is filed. The tax credit provided by this section may be referred to as the "family reunification employment tax credit".

C. A taxpayer may claim the family reunification employment tax credit provided in this section for each taxable year in which the taxpayer employs one or more qualified New Mexicans; provided that the taxpayer may not claim the family reunification employment tax credit for any individual qualified New Mexican for more than two calendar years from the date of hire. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the taxpayer employs the qualified New Mexican upon which the credit is predicated.

D. That portion of a family reunification employment tax credit approved by the taxation and revenue department that exceeds a taxpayer's corporate income tax liability in the taxable year in which the credit is claimed shall not be refunded to the taxpayer. The family reunification employment tax credit shall not be carried forward or transferred to another taxpayer.

E. The taxpayer shall submit to the economic development department with respect to each employee for whom the family reunification employment tax credit is claimed:

F. The economic development department shall adopt rules establishing procedures to certify qualified New Mexicans for purposes of obtaining a family reunification employment tax credit. The rules shall ensure that not more than one family reunification employment tax credit per qualified New Mexican shall be allowed in a taxable year and that the credits allowed per qualified New Mexican are limited to a maximum of two years. The economic development department shall issue a dated certificate of eligibility containing a list of the qualified New Mexicans employed by the taxpayer claiming the family reunification employment tax credit, including identifying information such as the social security number of the employee, the previous residence of the employee for the past four years, the date of employment of the employee by the taxpayer and the number of hours worked per week by the employee. 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 economic development department. The taxation and revenue department shall audit the records of the family reunification employment tax credit maintained by the economic development department on a periodic basis to ensure effective administration of the family reunification employment tax credit and compliance with the Tax Administration Act and this section.

G. To claim a family reunification employment tax credit, the taxpayer shall provide to the taxation and revenue department the certificate of eligibility issued by the economic development department pursuant to this section to the taxpayer for the taxable year for which the family reunification employment tax credit is claimed.

H. A taxpayer who claims and is granted approval for the family reunification employment tax credit shall not apply for or be granted approval for the rural job tax credit, the high-wage jobs tax credit or the additional credit pursuant to the Technology Jobs Tax Credit Act.

I. The taxation and revenue department may allow a maximum annual aggregate of two million dollars ($2,000,000) in family reunification employment tax credits provided by this section and the Income Tax Act. Applications for the family reunification employment tax credit shall be considered in the order received by the taxation and revenue department.

J. The economic development department shall track state expenditures, quantify the state's return on investment and track job creation as a result of the family reunification employment tax credit.

K. The taxation and revenue department shall compile an annual report that includes the number of taxpayers approved by the department to receive a family reunification employment tax credit. Notwithstanding any other section of law to the contrary, the taxation and revenue department and the economic development department may disclose the number of applicants for the family reunification employment tax credit, the amount of each credit approved, the number of qualified New Mexicans hired, the length of time that the qualified New Mexican is employed while the taxpayer received the tax credit and any other information required by the legislature or the taxation and revenue department to aid in evaluating the effectiveness of the family reunification employment tax credit. The report shall be presented to the interim revenue stabilization and tax policy committee and to the legislative finance committee.

L. An appropriate legislative committee shall review the effectiveness of the family reunification employment tax credit every four years beginning in 2015.

M. As used in this section: