SENATE BILL 549

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

Peter Wirth

AN ACT

RELATING TO TAXATION; AMENDING THE UNIFORM DIVISION OF INCOME FOR TAX PURPOSES ACT TO DETERMINE IN-STATE SALES OF INTANGIBLES AND SERVICES BASED ON MARKET SOURCING RATHER THAN COST OF PERFORMANCE.

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

     SECTION 1. Section 7-4-18 NMSA 1978 (being Laws 1965, Chapter 203, Section 18) is amended to read:

     "7-4-18. DETERMINATION OF SALES IN THIS STATE OF OTHER [THAN TANGIBLE PERSONAL] PROPERTY FOR INCLUSION IN SALES FACTOR.--

          A.  Sales, other than sales [of tangible personal property] described in Section 7-4-17 NMSA 1978, are in this state if

          [A. the income-producing activity is performed in this state; or

          B. the income-producing activity is performed both in and outside this state and a greater proportion of the income-producing activity is performed in this state than in any other state based on costs of performance] and to the extent that:

                (1) in the case of sale, rental, lease or license of real property, the property is located in this state;

                (2) in the case of rental, lease or license of tangible personal property, the property is located in this state;

                (3) in the case of sale of a service, the service is delivered to a location in this state; and

                (4) in the case of intangible property that is:

                     (a) rented, leased or licensed, the property is used in this state, including intangible property that is utilized in marketing a good or service to a consumer if that good or service is purchased by a consumer who is in this state; or

                     (b) sold, the property is used in this state, including a contract right, government license or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area that includes all or part of this state.

          B. Receipts from intangible property sales that are contingent on the productivity, use or disposition of the intangible property shall be treated as receipts from the rental, lease or licensing of that intangible property pursuant to Subparagraph (a) of Paragraph (4) of Subsection A of this section. All other receipts from a sale of intangible property shall be excluded from the numerator and denominator of the sales factor.

          C. If the state or states of assignment under Subsection A of this section cannot be determined, the state or states of assignment shall be reasonably approximated.

          D. If the taxpayer is not taxable in a state to which a sale is assigned pursuant to Subsection A, B or C of this section, or if the state of assignment cannot be determined pursuant to Subsection A or B of this section or reasonably approximated pursuant to Subsection C of this section, that sale shall be excluded from the denominator of the sales factor.

          E. The department may promulgate rules as necessary or appropriate to carry out the purposes of this section."

     SECTION 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2014.

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