SB0141

SENATE BILL 141

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

INTRODUCED BY

Phil A. Griego

AN ACT

RELATING TO TAXATION; CREATING THE AGRICULTURAL TRANSPORTATION INCOME TAX CREDIT AND THE AGRICULTURAL TRANSPORTATION CORPORATE INCOME TAX CREDIT; PROVIDING FOR AN INCOME TAX CREDIT AND A CORPORATE INCOME TAX CREDIT OF TWENTY PERCENT OF OTHERWISE DEDUCTIBLE BUSINESS EXPENSES DIRECTLY RELATED TO THE TRANSPORTATION OF AGRICULTURAL PRODUCTS.

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] AGRICULTURAL TRANSPORTATION INCOME 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 agricultural business may claim a credit in an amount equal to twenty percent of direct eligible transportation expenditures incurred prior to January 1, 2017 to transport an agricultural product out of state to a customer or for processing. The tax credit provided by this section may be referred to as the "agricultural transportation income tax credit".

B. The purpose of the agricultural transportation income tax credit is to reduce the income tax liability of a New Mexico agricultural business and to subsidize the New Mexico agricultural industry in order for it to compete successfully in the world market.

C. A taxpayer who is the owner of a New Mexico agricultural business may only claim the agricultural transportation income tax credit provided in this section for the taxable year in which the eligible transportation expenditures to transport an agricultural product out of state were incurred. A taxpayer shall apply for approval of the credit within one year following the end of the calendar year in which the eligible transportation expenditure was incurred.

D. That portion of the agricultural transportation income tax credit approved by the department that exceeds a taxpayer's income tax liability in the taxable year in which the agricultural transportation income tax credit is claimed shall not be refunded to the taxpayer. The agricultural transportation income 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 agricultural transportation income tax credit that would have been claimed on a joint return.

F. A taxpayer who otherwise qualifies and claims an agricultural transportation income 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 the 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 New Mexico department of agriculture information required by its director to certify the taxpayer as a New Mexico agricultural business for the purpose of obtaining an agricultural transportation income tax credit, including:

(1) that at least fifty-one percent of total acres used by the taxpayer for agricultural operations are located in New Mexico or at least fifty-one percent of the taxpayer's income is derived from agricultural operations located in New Mexico;

(2) a declaration by the taxpayer that the eligible transportation expenditures used to calculate the agricultural transportation income tax credit are:

(a) directly attributable to the transportation of an agricultural product out of New Mexico to a customer or for processing;

(b) subject to applicable taxes and not eligible for any other tax incentive; and

(3) invoices, receipts or other records of the eligible transportation expenditures; and

(4) any other information required by the New Mexico department of agriculture to demonstrate that the taxpayer is eligible to claim the agricultural transportation income tax credit.

H. The New Mexico department of agriculture shall adopt rules establishing procedures to certify a New Mexico agricultural business for the purposes of obtaining an agricultural transportation income tax credit. The rules shall ensure that the eligible transportation expenditures that receive any other tax incentive shall not be used to calculate the agricultural transportation income tax credit and that the credits are not claimed by more than one taxpayer. The New Mexico department of agriculture shall issue a dated certificate of eligibility containing the percentage of the taxpayer's acres used for agricultural operations in New Mexico or income derived from agricultural operations in New Mexico, the total amount of transportation expenditures of the taxpayer and the amount of eligible transportation expenditures that may be used to calculate the agricultural transportation income tax credit. 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 New Mexico department of agriculture. The taxation and revenue department shall audit the records of the agricultural transportation income tax credit maintained by the New Mexico department of agriculture on a periodic basis to ensure effective administration of the agricultural transportation income tax credit and compliance with the Tax Administration Act and this section.

I. The economic development department shall track job creation as a result of the agricultural transportation income tax credit. A New Mexico agricultural business shall submit to the economic development department the total number of employees of the taxpayer and number of employees or contractors associated with eligible transportation expenditures and any other information required by the secretary of economic development to maintain a record of jobs created or lost while the agricultural transportation income tax credit is in effect.

J. To claim an agricultural transportation income tax credit, the taxpayer shall provide to the taxation and revenue department the certificate of eligibility issued by the New Mexico department of agriculture pursuant to this section to the taxpayer for the taxable year for which the agricultural transportation income tax credit is claimed.

K. The taxation and revenue department may allow a

maximum annual aggregate of two million dollars ($2,000,000) in

agricultural transportation income tax credits that may be claimed pursuant to the Income Tax Act and agricultural transportation corporate income tax credits that may be claimed pursuant to the Corporate Income and Franchise Tax Act. Applications for the agricultural transportation income tax credit and the agricultural transportation corporate income tax credit shall be considered in the order received by the taxation and revenue department.

L. The economic development department and the taxation and revenue department shall compile an annual report with the number of taxpayers who claim the agricultural transportation income tax credit, the number of jobs created as a result of the credit, the amount of the credit approved, the net revenue to the state as a result of the credit and any other information required by the legislature to aid in evaluating the effectiveness of the credit. A taxpayer who claims the agricultural transportation income tax credit shall provide the economic development department and the taxation and revenue department with the information required to compile the report. The economic development department and the taxation and revenue department shall present the report before the interim revenue stabilization and tax policy committee and the legislative finance committee by November of each year. Notwithstanding any other section of law to the contrary, the

New Mexico department of agriculture, the economic development department and the taxation and revenue department may disclose the number of applicants for the agricultural transportation income tax credit, the amount of the credit approved, the total income tax liability of the taxpayer, the number of employees of the taxpayer and any other information required by the legislature or the taxation and revenue department to aid in evaluating the effectiveness of the credit.

M. An appropriate legislative committee shall review the effectiveness of the agricultural transportation income tax credit every four years beginning in 2015.

N. As used in this section:

(1) "agricultural operation" means the:

(a) plowing, tilling or preparation of soil for the production of crops, livestock, animals or poultry;

(b) planting, growing, fertilizing or harvesting of crops;

(c) application of pesticides, herbicides or other chemicals, compounds or substances to crops, weeds or soil in the connection with production of crops, livestock, animals or poultry;

(d) breeding, hatching, raising, producing, feeding, keeping, slaughtering or processing of livestock, hogs, aquatic animals, equines, chickens, turkeys, poultry or other fowl normally raised for food, mules, cattle, sheep, goats, rabbits or similar farm animals for commercial purposes;

(e) production and keeping of honey bees, production of honey bee products and honey bee processing facilities;

(f) production, processing or packaging of eggs or egg products;

(g) manufacturing of feed for poultry or livestock;

(h) rotation of crops;

(i) production of agricultural goods for sale; or

(j) application of existing, changed or new technology, practices, processes or products to an agricultural operation;

(2) "agricultural product" means an agricultural good for sale;

(3) "eligible transportation expenditure" means ordinary and necessary expenses paid or incurred during the taxable year to transport an agricultural product grown, raised or processed at a New Mexico farm, ranch or processing plant from that farm, ranch or processing plant to a customer or for processing and includes costs paid to common carriers to transport an agricultural product out of New Mexico, costs paid to operate vehicles for the purpose of transporting an agricultural product, including fuel costs, and costs paid to personnel that transport an agricultural product, but "eligible transportation expenditure" does not include costs to prepare an agricultural product for shipment;

(4) "New Mexico agricultural business" means a sole proprietorship or a partnership or limited liability company primarily located in New Mexico and engaged in:

(a) cultivating land to raise crops or feeding, breeding, and raising livestock or poultry;

(b) the production of crops, livestock or poultry; or

(5) "tax incentive" means a credit, deduction, rebate or exemption of any otherwise applicable tax or other tax benefit."

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

"[NEW MATERIAL] AGRICULTURAL TRANSPORTATION CORPORATE INCOME 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 twenty percent of direct eligible transportation expenditures incurred prior to January 1, 2017 to transport an agricultural product out of state to a customer or for processing. The tax credit provided by this section may be referred to as the "agricultural transportation corporate income tax credit".

B. The purpose of the agricultural transportation corporate income tax credit is to reduce the income tax liability of a New Mexico agricultural business and to subsidize the New Mexico agricultural industry in order for it to compete successfully in the world market.

C. A taxpayer may only claim the agricultural transportation corporate income tax credit provided in this section for the taxable year in which the eligible transportation expenditures to transport an agricultural product out of state were incurred. A taxpayer shall apply for approval of the credit within one year following the end of the calendar year in which the eligible transportation expenditure was incurred.

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

E. The taxpayer shall submit to the New Mexico department of agriculture information required by its director to certify the taxpayer as a New Mexico agricultural business for the purpose of obtaining an agricultural transportation corporate income tax credit, including:

(2) a declaration by the taxpayer that the eligible transportation expenditures used to calculate the agricultural transportation corporate income tax credit are:

(a) directly attributable to the transportation of an agricultural product out of New Mexico to a customer or for processing;

(b) subject to applicable taxes and not eligible for any other tax incentive; and

(3) invoices, receipts or other records for the eligible transportation expenditures; and

(4) any other information required by the New Mexico department of agriculture to demonstrate that the taxpayer is eligible to claim the agricultural transportation corporate income tax credit.

F. The New Mexico department of agriculture shall adopt rules establishing procedures to certify a New Mexico agricultural business for the purposes of obtaining an agricultural transportation corporate income tax credit. The rules shall ensure that the eligible transportation expenditures that receive any other tax incentive shall not be used to calculate the agricultural transportation corporate income tax credit and that the credit is not claimed by more than one taxpayer. The New Mexico department of agriculture shall issue a dated certificate of eligibility containing the percentage of the taxpayer's acres used for agricultural operations in New Mexico or income derived from agricultural operations in New Mexico, the total amount of transportation expenditures of the taxpayer and the amount of eligible transportation expenditures that may be used to calculate the agricultural transportation corporate income tax credit. 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 New Mexico department of agriculture. The taxation and revenue department shall audit the records of the agricultural transportation corporate income tax credit maintained by the New Mexico department of agriculture on a periodic basis to ensure effective administration of the agricultural transportation corporate income tax credit and compliance with the Tax Administration Act and this section.

G. The economic development department shall track job creation as a result of the agricultural transportation corporate income tax credit. A New Mexico agricultural business shall submit to the economic development department the total number of employees of the taxpayer, the number of employees or contractors associated with eligible transportation expenditures and any other information required by the secretary of economic development to maintain a record of jobs created or lost while the agricultural transportation corporate income tax credit is in effect.

H. To claim an agricultural transportation corporate income tax credit, the taxpayer shall provide to the taxation and revenue department the certificate of eligibility issued by the New Mexico department of agriculture pursuant to this section to the taxpayer for the taxable year for which the agricultural transportation corporate income tax credit is claimed.

I. The taxation and revenue department may allow a

maximum annual aggregate of two million dollars ($2,000,000) in

J. The economic development department and the taxation and revenue department shall compile an annual report with the number of taxpayers that claim the agricultural transportation corporate income tax credit, the number of jobs created as a result of the credit, the amount of the credit approved, the net revenue to the state as a result of the credit and any other information required by the legislature to aid in evaluating the effectiveness of the credit. A taxpayer that claims the agricultural transportation corporate income tax credit shall provide the economic development department and the taxation and revenue department with the information required to compile the report. The economic development department and the taxation and revenue department shall present the report before the interim revenue stabilization and tax policy committee and the legislative finance committee by November of each year. Notwithstanding any other section of law to the contrary, the New Mexico department of agriculture, the economic development department and the taxation and revenue department may disclose the number of applicants for the agricultural transportation corporate income tax credit, the amount of the credit approved, the total corporate income tax liability of the taxpayer, the number of employees of the taxpayer and any other information required by the legislature or the taxation and revenue department to aid in evaluating the effectiveness of the credit.

K. An appropriate legislative committee shall review the effectiveness of the agricultural transportation corporate income tax credit every four years beginning in 2015.

L. As used in this section:

(1) "agricultural operation" means the:

(a) plowing, tilling or preparation of soil for the production of crops, livestock, animals or poultry;

(b) planting, growing, fertilizing or harvesting of crops;

(c) application of pesticides, herbicides or other chemicals, compounds or substances to crops, weeds or soil in the connection with production of crops, livestock, animals or poultry;

(e) production and keeping of honey bees, production of honey bee products and honey bee processing facilities;

(f) production, processing or packaging of eggs or egg products;

(g) manufacturing of feed for poultry or livestock;

(h) rotation of crops;

(i) production of agricultural goods for sale; or

(j) application of existing, changed or new technology, practices, processes or products to an agricultural operation;

(2) "agricultural product" means an agricultural good for sale;

(4) "New Mexico agricultural business" means a corporation primarily located in New Mexico and engaged in: (a) cultivating land to raise crops or feeding, breeding, and raising livestock or poultry;

(b) the production of crops, livestock or poultry; or

(5) "tax incentive" means a credit, deduction, rebate or exemption of any otherwise applicable tax or other tax benefit."

SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2012.

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