SB0222

SENATE BILL 222

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

INTRODUCED BY

George K. Munoz

AN ACT

RELATING TO TAXATION; PROVIDING FOR A CREDIT FOR BUSINESS IMPROVEMENT BENEFIT FEES OF CERTAIN BUSINESS IMPROVEMENT DISTRICTS FROM NET INCOME.

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] BUSINESS IMPROVEMENT BENEFIT TAX CREDIT.--

A. A taxpayer who files an individual New Mexico income tax return and who is not a dependent of another individual may claim a credit in an amount equal to the amount of the qualified business improvement benefit fee less the amount of any other tax incentive or rebate of expenditures to the taxpayer as a result of the qualified business improvement benefit fee paid by the taxpayer. The tax credit provided by this section may be referred to as the "business improvement benefit tax credit".

B. The purpose of the credit provided by this section is to promote revitalization and restore the economic vitality of areas within certain municipalities by encouraging business owners to participate in business improvement districts.

C. A taxpayer may claim the credit provided in this section for each taxable year in which the taxpayer pays the qualified business improvement benefit fee. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the taxpayer paid the qualified business improvement benefit fee.

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

E. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit provided by this section that would have been allowed on the joint return.

F. A taxpayer who otherwise qualifies for the business improvement benefit tax credit that may be claimed by a partnership or limited liability company of which the taxpayer is a member may only claim a credit in the proportion to the taxpayer's interest in the partnership or limited liability company. The total credit 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 municipality in which the business improvement district is located the information required to certify that a taxpayer is located within the business improvement district and subject to the qualified business improvement benefit fee for the purpose of claiming the credit provided by this section.

H. The municipality shall adopt an ordinance establishing procedures to certify that a taxpayer is located within the business improvement district and subject to the qualified business improvement benefit fee and to certify the credit amount for the purposes of claiming the credit provided by this section. The ordinance shall ensure that not more than one taxpayer may claim the business improvement benefit tax credit for the same qualified business improvement benefit fee paid. The municipality shall calculate the credit amount in accordance with the provisions of this section. The municipality shall issue a dated certificate of eligibility containing the amount that the taxpayer paid in qualified business improvement fees, the amount of any other tax incentive or rebate of expenditures due to the taxpayer as a result of the qualified business improvement benefit fee paid by the taxpayer and the total amount of the credit that the taxpayer may claim. 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 municipality. The department shall audit the records of the credit provided by this section and maintained by the municipality on a periodic basis to ensure effective administration of the 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 credit provided by this section. A taxpayer claiming the credit provided by this section shall submit to the economic development department the total number of employees or contractors of the taxpayer and any other information required by the secretary of economic development to maintain a record of jobs created or lost.

J. To claim the credit provided in this section, the taxpayer shall provide to the department the certificate of eligibility issued by the municipality pursuant to this section to the taxpayer for the taxable year for which the credit is claimed.

K. The department may allow a maximum annual aggregate of two million dollars ($2,000,000) in business improvement benefit tax credits provided pursuant to this section and the Corporate Income and Franchise Tax Act. Applications for the business improvement benefit tax credit shall be considered in the order received by the 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 credit provided by this section, the number of jobs created as a result of the credit, the aggregate amount of the credit, 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 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 economic development department and the taxation and revenue department may disclose the number of applicants for the 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 credit provided by this section every four years beginning in 2015.

N. As used in this section:

(1) "business improvement district" means an entity, having a contiguous area of clearly defined boundaries within an incorporated municipality in which at least three-fourths of the area is zoned and used for business or mixed commercial or retail use, that is established pursuant to the Business Improvement District Act, in which the improvements are to be constructed and upon which the business improvement benefit fee for the costs of the improvements is to be imposed;

(2) "qualified business improvement benefit fee" means the business improvement benefit fee assessed pursuant to the Business Improvement District Act by a business improvement district that is within an incorporated municipality with a population, as shown by the most recent federal decennial census, of greater than twenty thousand and less than twenty-five thousand and located in a class B county with a net taxable value used for rate-setting purposes for the 2009 property tax year of greater than three hundred million dollars ($300,000,000) but less than seven hundred fifty million dollars ($750,000,000); and

(3) "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] BUSINESS IMPROVEMENT BENEFIT 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 the amount of the qualified business improvement benefit fee less the amount of any other tax incentive or rebate of expenditures to the taxpayer as a result of the qualified business improvement benefit fee paid by the taxpayer. The tax credit provided by this section may be referred to as the "business improvement benefit tax credit".

B. The purpose of the credit provided by this section is to promote revitalization and restore the economic vitality of areas within certain municipalities by encouraging corporations to participate in business improvement districts.

E. The taxpayer shall submit to the municipality in which the business improvement district is located the information required to certify that a taxpayer is located within the business improvement district and subject to the qualified business improvement benefit fee for the purpose of claiming the deduction provided by this section.

F. The municipality shall adopt an ordinance establishing procedures to certify that a taxpayer is located within the business improvement district and subject to the qualified business improvement benefit fee and to certify the credit amount for the purposes of claiming the credit provided by this section. The ordinance shall ensure that not more than one taxpayer may claim the business improvement benefit tax credit for the same qualified business improvement benefit fee paid. The municipality shall calculate the credit amount in accordance with the provisions of this section. The municipality shall issue a dated certificate of eligibility containing the amount that the taxpayer paid in qualified business improvement fees, the amount of any other tax incentive or rebate of expenditures due to the taxpayer as a result of the qualified business improvement benefit fee paid by the taxpayer and the total amount of the credit that the taxpayer may claim. 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 municipality. The department shall audit the records of the deduction provided by this section and maintained by the municipality on a periodic basis to ensure effective administration of the 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 credit provided by this section. A taxpayer claiming the credit provided by this section shall submit to the economic development department the total number of employees or contractors of the taxpayer and any other information required by the secretary of economic development to maintain a record of jobs created or lost.

H. To claim the credit provided in this section, the taxpayer shall provide to the department the certificate of eligibility issued by the municipality pursuant to this section to the taxpayer for the taxable year for which the credit is claimed.

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

J. The economic development department and the taxation and revenue department shall compile an annual report with the number of taxpayers who claim the credit provided by this section, the number of jobs created as a result of the credit, the aggregate amount of the credit, 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 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 economic development department and the taxation and revenue department may disclose the number of applicants for the 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.

K. An appropriate legislative committee shall

review the effectiveness of the credit provided by this section every four years beginning in 2015.

L. As used in this section:

(1) "business improvement district" means an entity having a contiguous area of clearly defined boundaries within an incorporated municipality in which at least three-fourths of the area is zoned and used for business or mixed commercial or retail use, that is established pursuant to the Business Improvement District Act, in which the improvements are to be constructed and upon which the business improvement benefit fee for the costs of the improvements is to be imposed;

(3) "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, 2013.

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