SENATE FINANCE COMMITTEE SUBSTITUTE FOR
SENATE BILLS 101 & 299
50th legislature - STATE OF NEW MEXICO - second session, 2012
AN ACT
RELATING TO TAXATION; CLARIFYING APPLICATION OF THE HIGH-WAGE JOBS TAX CREDIT; DEFINING "BENEFITS" AND "WAGES"; EXTENDING THE CREDIT FOR THREE YEARS; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-9G-1 NMSA 1978 (being Laws 2004, Chapter 15, Section 1, as amended) is amended to read:
"7-9G-1. HIGH-WAGE JOBS TAX CREDIT--QUALIFYING
HIGH-WAGE JOBS.--
A. A taxpayer who is an eligible employer may apply for, and the taxation and revenue department may allow, a tax credit for each new high-wage economic-based job. The credit provided in this section may be referred to as the "high-wage jobs tax credit".
B. The high-wage jobs tax credit may be claimed and allowed in an amount equal to ten percent of the wages and benefits distributed to an eligible employee in a new high-wage economic-based job, but shall not exceed twelve thousand dollars ($12,000).
C. The high-wage jobs tax credit may be claimed by an eligible employer for each new high-wage economic-based job performed for the year in which the new high-wage economic-based job is created and for the three following qualifying periods. A taxpayer shall apply for approval for the credit within one year following the end of the calendar year in which the qualifying period closes.
D. A new high-wage economic-based job shall not be eligible for a credit pursuant to this section unless the eligible employer's total number of employees with new high-wage economic-based jobs on the last day of the qualifying period at the location at which the job is performed or based is at least one more than the number on the day prior to the date the job was created.
E. A new high-wage economic-based job shall not be eligible for a credit pursuant to this section if:
(1) the new high-wage economic-based job is created due to a business merger or acquisition or other change in business organization;
(2) the eligible employee was terminated from employment in New Mexico by another employer involved in the business merger or acquisition or other change in business organization with the taxpayer;
(3) the new high-wage economic-based job is performed by:
(a) the person who performed the job or its functional equivalent prior to the business merger or acquisition or other change in business organization; or
(b) a person replacing the person who performed the job or its functional equivalent prior to a business merger or acquisition or other change in business organization; and
(4) the new high-wage economic-based job or its functional equivalent previously qualified for the high-wage jobs tax credit but the employer, prior to a business merger or acquisition or other change in business organization, was not approved for the credit.
F. Notwithstanding the provisions of Subsection E of this section, a new high-wage economic-based job that was created by another employer and for which an application for the high-wage jobs tax credit was received and is under review by the taxation and revenue department prior to the time of the business merger or acquisition or other change in business organization shall remain eligible for the high-wage jobs tax credit for the balance of the qualifying periods. The new employer that results from a business merger or acquisition or other change in business organization may only claim the high-wage jobs tax credit for the balance of the qualifying periods for which the qualifying job is otherwise eligible.
G. For all applications for high-wage jobs tax credits received by the taxation and revenue department on or after August 1, 2011, a job shall not be eligible for a credit pursuant to this section if the job is created due to an eligible employer entering into a contract or becoming a subcontractor to a contract with a governmental entity that replaces one or more entities performing functionally equivalent services for the governmental entity unless the job is a new high-wage economic-based job that was not being performed by an employee of the replaced entity.
[E.] H. With respect to each new high-wage economic-based job for which an eligible employer seeks the high-wage jobs tax credit, the employer shall certify:
(1) the amount of wages and benefits paid to each eligible employee in a new high-wage economic-based job during each qualifying period;
(2) the number of weeks the position was occupied during the qualifying period;
(3) [whether the new high-wage economic-based job was in a municipality with a population of forty thousand or more or with a population of less than forty thousand] the population of the municipality, according to the most recent federal decennial census, where the new high-wage economic-based job was located and whether the job was in the unincorporated area of a county; and
(4) the total number of employees employed by the employer at the job location on the day prior to the qualifying period and on the last day of the qualifying period.
[F.] I. To receive a high-wage jobs tax credit with respect to any qualifying period, an eligible employer shall apply to the taxation and revenue department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Subsection [E] H of this section. Applications for the high-wage jobs tax credit shall be considered in the order received by the taxation and revenue department.
J. The taxation and revenue department may allow a maximum aggregate in any fiscal year of twenty-five million dollars ($25,000,000) in high-wage jobs tax credits provided by this section. A taxpayer who submits a claim for a high-wage jobs tax credit who is unable to receive the tax credit because the claims for the fiscal year exceed the aggregate limitation in this subsection shall be placed for the subsequent fiscal year at the front of a queue of high-wage jobs tax credit claimants submitting claims in the subsequent fiscal year in the order of the date on which the department received the application.
[G.] K. The credit provided in this section may be deducted from the modified combined tax liability of a taxpayer. If the credit exceeds the modified combined tax liability of the taxpayer, the excess shall be refunded to the taxpayer.
[H.] L. The economic development department shall report to the appropriate interim legislative committee before November 1 of each year the cost of this tax credit to the state and its impact on company recruitment and job creation.
[I.] M. 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;]
(1) "benefits" means all remuneration for work performed that is provided to an employee in whole or in part by the employer, other than wages, including insurance programs, health care, medical, dental and vision plans, life insurance, employer contributions to pensions, such as a 401k, and employer-provided services, such as child care, offered by an employer to the employee;
(2) "eligible employee" means an individual who is employed by an eligible employer and who is a resident of New Mexico; "eligible employee" does not include an individual who:
(a) bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to the employer or, if the employer is a corporation, to an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, to an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interest in the entity;
(b) if the employer is an estate or trust, is a grantor, beneficiary or fiduciary of the estate or trust or is an individual who bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to a grantor, beneficiary or fiduciary of the estate or trust;
(c) is a dependent, as that term is described in 26 U.S.C. Section 152(a)(9), of the employer or, if the taxpayer is a corporation, of an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, of an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interest in the entity or, if the employer is an estate or trust, of a grantor, beneficiary or fiduciary of the estate or trust; or
(d) is working or has worked as an employee or as an independent contractor for an entity that directly or indirectly owns stock in a corporation of the eligible employer or other interest of the eligible employer that represents fifty percent or more of the total voting power of that entity or has a value equal to fifty percent or more of the capital and profits interest in the entity;
(3) "eligible employer" means an employer that:
(a) [made] exported more than fifty percent of its [sales] goods or services produced in New Mexico to persons outside New Mexico during the most recent twelve months of the employer's modified combined tax liability reporting periods ending prior to claiming a high-wage jobs tax credit; or
(b) is eligible for development training program assistance pursuant to Section 21-19-7 NMSA 1978;
(4) "modified combined tax liability" means the total liability for the reporting period for the gross receipts tax imposed by Section 7-9-4 NMSA 1978 together with any tax collected at the same time and in the same manner as the gross receipts tax, such as the compensating tax, the withholding tax, the interstate telecommunications gross receipts tax, the surcharges imposed by Section 63-9D-5 NMSA 1978 and the surcharge imposed by Section 63-9F-11 NMSA 1978, minus the amount of any credit other than the high-wage jobs tax credit applied against any or all of these taxes or surcharges; but "modified combined tax liability" excludes all amounts collected with respect to local option gross receipts taxes;
(5) "new high-wage economic-based job" means a new job created in New Mexico by an eligible employer on or after July 1, 2004 and prior to July 1, [2015] 2018 that is occupied for at least forty-eight weeks of a qualifying period by an eligible employee who:
(a) for a new high-wage economic-based job created prior to January 1, 2012 is paid wages calculated for the qualifying period to be at least: [(a)] 1) forty thousand dollars ($40,000) if the job is performed or based in a municipality with a population of forty thousand or more according to the most recent federal decennial census; and [(b)] 2) twenty-eight thousand dollars ($28,000) if the job is performed or based in a municipality with a population of less than forty thousand according to the most recent federal decennial census or in the unincorporated area of a county; and
(b) for a new high-wage economic-based job created on or after January 1, 2012 is paid wages and benefits calculated for the qualifying period to be at least: 1) sixty-five thousand dollars ($65,000) if the job is performed or based in a municipality with a population of sixty thousand or more according to the most recent federal decennial census; and 2) forty thousand dollars ($40,000) if the job is performed or based in a municipality with a population of less than sixty thousand according to the most recent federal decennial census or in the unincorporated area of a county;
(6) "qualifying period" means the period of twelve months beginning on the day an eligible employee begins working in a new high-wage economic-based job or the period of twelve months beginning on the anniversary of the day an eligible employee began working in a new high-wage economic-based job; and
(7) "wages" means [wages as defined in Paragraphs (1), (2) and (3) of 26 U.S.C. Section 51(c)] all gross wages and other compensation, before any payroll deductions, paid for services rendered by an individual, including commissions, cost-of-living allowances, overtime pay, hazardous-duty pay, incentive pay, on-call pay, shift differentials and bonuses, but "wages" does not include benefits."
SECTION 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2011.
SECTION 3. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
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