SENATE BILL 15
50th legislature - STATE OF NEW MEXICO - second session, 2012
INTRODUCED BY
Timothy M. Keller and David L. Doyle
AN ACT
RELATING TO TAXATION; ADDING A CREDIT FOR CAPITAL INVESTMENTS TO THE INVESTMENT CREDIT ACT; PROVIDING FOR REPAYMENT OF THE CREDIT AFTER FIVE YEARS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-9A-2 NMSA 1978 (being Laws 1979, Chapter 347, Section 2, as amended) is amended to read:
"7-9A-2. PURPOSE OF ACT.--It is the purpose of the Investment Credit Act to provide a favorable tax climate for [manufacturing] businesses to make capital investments and invest in manufacturing equipment and to promote increased employment in New Mexico."
SECTION 2. Section 7-9A-3 NMSA 1978 (being Laws 1979, Chapter 347, Section 3, as amended) is amended to read:
"7-9A-3. DEFINITIONS.--As used in the Investment Credit Act:
A. "business" means a partnership, limited partnership, limited liability company, S corporation, professional corporation or sole proprietorship that carries on a trade or business in New Mexico;
B. "capital investment" means the purchase of a fixed asset, such as machinery, land or a building, located in New Mexico that is essential to increase the volume of products or services produced by a business with an expectation that revenue be generated as a direct result of the fixed asset;
[A.] C. "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;
[B.] D. "equipment" means an essential machine, mechanism or tool, or a component or fitting thereof, used directly and exclusively in a manufacturing operation and subject to depreciation for purposes of the Internal Revenue Code by the taxpayer carrying on the manufacturing operation. "Equipment" does not include any vehicle that leaves the site of the manufacturing operation for purposes of transporting persons or property or any property for which the taxpayer claims the credit pursuant to Section 7-9-79 NMSA 1978;
[C.] E. "manufacturing" means combining or processing components or materials, including recyclable materials, to increase their value for sale in the ordinary course of business, including genetic testing and production, but not including:
(1) construction;
(2) farming;
(3) power generation, except for electricity generation at a facility other than one for which both location approval and a certificate of convenience and necessity are required prior to commencing construction or operation of the facility, pursuant to the Public Utility Act [and the Electric Utility Industry Restructuring Act of 1999]; or
(4) processing natural resources, including
hydrocarbons;
[D.] F. "manufacturing operation" means a plant, including a genetic testing and production facility, employing personnel to perform production tasks, in conjunction with equipment not previously existing at the site, to produce goods;
[E.] G. "recyclable materials" means materials that would otherwise become solid waste if not recycled and that can be collected, separated or processed and placed in use in the form of raw materials or products; and
[F.] H. "taxpayer" means a person liable for payment of any tax, a person responsible for withholding and payment over or for collection and payment over of any tax or a person to whom an assessment has been made, if the assessment
remains unabated or the amount thereof has not been paid."
SECTION 3. Section 7-9A-5 NMSA 1978 (being Laws 1979, Chapter 347, Section 5, as amended by Laws 1991, Chapter 159, Section 4 and also by Laws 1991, Chapter 162, Section 4) is amended to read:
"7-9A-5. INVESTMENT CREDIT--AMOUNT--CLAIMANT.--The investment credit provided for in the Investment Credit Act is an amount equal to the percent of the compensating tax rate provided for in the Gross Receipts and Compensating Tax Act applied to the value of the capital investment or qualified equipment and may be claimed by the taxpayer carrying on a business or a manufacturing operation in New Mexico."
SECTION 4. Section 7-9A-7.1 NMSA 1978 (being Laws 1983, Chapter 206, Section 6, as amended) is amended to read:
"7-9A-7.1. EMPLOYMENT REQUIREMENTS.--
A. Prior to July 1, 2020, to be eligible to claim a credit pursuant to the Investment Credit Act, the taxpayer shall employ the equivalent of one full-time employee who has not been counted to meet this employment requirement for any prior claim in addition to the number of full-time employees employed on the day one year prior to the day on which the taxpayer applies for the credit for every:
(1) five hundred thousand dollars ($500,000), or portion of that amount, in value of capital investment or qualified equipment claimed by the taxpayer in a taxable year in the same claim, up to a value of thirty million dollars ($30,000,000); and
(2) one million dollars ($1,000,000), or portion of that amount, in value of capital investment or qualified equipment over thirty million dollars ($30,000,000) claimed by the taxpayer in a taxable year in the same claim.
B. After June 30, 2020, for every one hundred thousand dollars ($100,000) in value of capital investment or qualified equipment claimed by a taxpayer in a taxable year, the taxpayer shall employ the equivalent of one full-time employee in addition to the number of full-time employees employed on the day one year prior to the day on which the taxpayer applies for credit.
C. The department may require evidence showing compliance with this section. The department may find that an additional employee meets the requirements of this section, although employed earlier than one year prior to the day on which the taxpayer applies for the credit, if the employee was only being trained prior to that date or the employee's employment was necessitated by the use of the capital investment or qualified equipment."
SECTION 5. Section 7-9A-8 NMSA 1978 (being Laws 1979, Chapter 347, Section 8, as amended) is amended to read:
"7-9A-8. CLAIMING THE CREDIT FOR CERTAIN TAXES.--
A. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the capital investment is purchased or qualified equipment for the manufacturing operation is purchased or introduced into New Mexico.
B. A taxpayer having applied for and been granted approval for a credit by the department pursuant to the Investment Credit Act may claim an amount of available credit against the taxpayer's compensating tax, gross receipts tax or withholding tax due to the state of New Mexico; provided that no taxpayer may claim, except as provided in Subsection C of this section, an amount of available credit for any reporting period that exceeds eighty-five percent of the sum of the taxpayer's gross receipts tax, compensating tax and withholding tax due for that reporting period. Any amount of available credit not claimed against the taxpayer's gross receipts tax, compensating tax or withholding tax due for a reporting period may be claimed in subsequent reporting periods. The credit that is granted approval for a capital investment that is not qualified equipment may be carried forward for up to five years.
C. A taxpayer may apply by September 30 of the current calendar year for a refund of the unclaimed balance of the available credit up to a maximum of two hundred fifty thousand dollars ($250,000) if on January 1 of the current calendar year:
(1) the taxpayer's available credit is less than five hundred thousand dollars ($500,000); and
(2) the sum of the taxpayer's gross receipts tax, compensating tax and withholding tax due for the previous calendar year was less than thirty-five percent of the taxpayer's available credit but more than ten thousand dollars ($10,000)."
SECTION 6. Section 7-9A-9 NMSA 1978 (being Laws 1979, Chapter 347, Section 9, as amended by Laws 1991, Chapter 159, Section 7 and also by Laws 1991, Chapter 162, Section 7) is amended to read:
"7-9A-9. CREDIT CLAIM FORMS--REPORTING REQUIREMENTS.-- A. The department shall provide credit claim forms. A credit claim shall accompany any return to which the taxpayer wishes to apply an approved credit, and the claim shall specify the amount of credit intended to apply to each return.
B. The taxation and revenue department in conjunction with the economic development department shall compile an annual report that includes the number of taxpayers that claim a credit provided for in the Investment Credit Act, the amount of credit for each taxpayer, the value and purchase price of capital investment and qualified equipment, the date of purchase or introduction for capital investment and qualified equipment, the date the debt on the capital investment upon which a credit is predicated is paid in full, the number of jobs created as a result of a credit and the number of taxpayers approved to receive a credit. The taxpayer shall provide the taxation and revenue department and the economic development department with the necessary information to compile the report. Notwithstanding any other section of law to the contrary, the taxation and revenue department and the economic development department may disclose the number of credits claimed and approved, the amount of credit each taxpayer received, the amount or value of capital investment and qualified equipment purchased or introduced into the state by a taxpayer, the number of jobs created by a taxpayer and any other information required by the legislature or the taxation and revenue department to aid in evaluating the effectiveness of the credits provided for in the Investment Credit Act."
SECTION 7. A new section of the Investment Credit Act is enacted to read:
"[NEW MATERIAL] VALUE OF CAPITAL INVESTMENT.--The value of capital investment shall be the purchase price; provided that after June 30, 2020 no taxpayer shall for any taxable year claim a value of capital investment greater than two million dollars ($2,000,000)."
SECTION 8. A new section of the Investment Credit Act is enacted to read:
"[NEW MATERIAL] REPAYMENT--CAPITAL INVESTMENT.--The department shall track the amount of each credit claimed and granted for a capital investment that is not qualified equipment and that is purchased on or after July 1, 2012 by the taxpayer and the date on which the taxpayer shall repay that credit. The department shall inform the taxpayer of the amount the taxpayer shall pay each reporting period in order to repay the credit claimed and granted. The taxpayer shall commence to make equal payments each reporting period in order to repay the full credit amount claimed within five years from the date on which:
A. the total credit amount is applied or refunded; or
B. the debt on the capital investment upon which the credit is predicated is paid in full."
SECTION 9. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2012.
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