SENATE CORPORATIONS AND TRANSPORTATION COMMITTEE SUBSTITUTE FOR

SENATE BILL 29

51st legislature - STATE OF NEW MEXICO - second session, 2014

AN ACT

RELATING TO TAXATION; REQUIRING A PERSON THAT WAS EXEMPT FROM OR CLAIMED A DEDUCTION AGAINST THE GROSS RECEIPTS AND COMPENSATING TAX ACT IN THE PREVIOUS YEAR TO SUBMIT AN ANNUAL RECONCILIATION REPORT TO THE TAXATION AND REVENUE DEPARTMENT; PROVIDING A PENALTY; MAKING AN APPROPRIATION.

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

     SECTION 1. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] ANNUAL RECONCILIATION REPORT--EXEMPTIONS AND DEDUCTIONS PURSUANT TO THE GROSS RECEIPTS AND COMPENSATING TAX ACT--CIVIL PENALTY.--

          A. On or before July 1 of each year, a person that, in the previous calendar year, was exempt from or that claimed a deduction against the tax liability imposed pursuant to the Gross Receipts and Compensating Tax Act shall submit an annual reconciliation report to the department for all exemptions and deductions taken by the person in the previous calendar year. Except as provided in Subsections B and C of this section, the annual reconciliation report shall include a description of each exemption or deduction sufficient to enable the department to identify the section of law that provides for the exemption or deduction, the aggregate amount of each exemption and deduction, the taxpayer's North American industry classification system code, if any, and any other information required by the department to evaluate the effectiveness, cost and benefit to the state of the exemption or deduction.              B. Receipts that may be deducted pursuant to the following provisions of the Gross Receipts and Compensating Tax Act shall not be required to be included in an annual reconciliation report:

                (1) Sections 7-9-47, 7-9-48 and 7-9-49 NMSA 1978;

                (2) Sections 7-9-50, 7-9-51, 7-9-52, 7-9-52.1, 7-9-53, 7-9-54, 7-9-54.1, 7-9-55, 7-9-56, 7-9-56.1, 7-9-56.2, 7-9-57, 7-9-57.1, 7-9-58 and 7-9-59 NMSA 1978;

                (3) Sections 7-9-60, 7-9-61.1, 7-9-62, 7-9-62.1, 7-9-63, 7-9-64, 7-9-65, 7-9-66, 7-9-66.1, 7-9-67, 7-9-68 and 7-9-69 NMSA 1978;

                (4) Sections 7-9-70, 7-9-71, 7-9-74, 7-9-75, 7-9-76, 7-9-76.1, 7-9-76.2, 7-9-77, 7-9-78 and 7-9-78.1 NMSA 1978; and

                (5) Sections 7-9-85, 7-9-87, 7-9-89, 7-9-91, 7-9-108 and 7-9-109 NMSA 1978.

          C. Receipts that are exempt pursuant to the following provisions of the Gross Receipts and Compensating Tax Act shall not be required to be included in an annual reconciliation report:

                (1) Sections 7-9-3.3 and 7-9-3.5 NMSA 1978;

                (2) Sections 7-9-13, 7-9-13.1, 7-9-13.2, 7-9-14, 7-9-15, 7-9-16, 7-9-17, 7-9-18, 7-9-18.1 and 7-9-19 NMSA 1978;

                (3) Sections 7-9-22, 7-9-22.1, 7-9-23, 7-9-23.1, 7-9-24, 7-9-25, 7-9-26, 7-9-27, 7-9-28 and 7-9-29 NMSA 1978;

                (4) Sections 7-9-31, 7-9-32, 7-9-33, 7-9-34, 7-9-35, 7-9-36, 7-9-37, 7-9-38, 7-9-38.1, 7-9-38.2 and 7-9-39 NMSA 1978; and

                (5) Sections 7-9-41, 7-9-41.3 and 7-9-41.4 NMSA 1978.

          D. A person engaged solely in transactions specifically exempt under the provisions of the Gross Receipts and Compensating Tax Act described in Subsection C of this section shall not be required to submit an annual reconciliation report.

          E. A person that fails to submit a reconciliation report in accordance with the provisions of this section shall pay a penalty in the amount of the exemption or deduction not reported, in addition to other penalties provided by law.

          F. The department shall compile an annual report on the annual reconciliation reports provided by this section that shall include, for each exemption or deduction reported, the number of persons that claimed an exemption or deduction, the aggregate amount of exemptions and deductions claimed and any other information necessary to evaluate the effectiveness of the exemptions and deductions. Beginning in 2015, the department shall present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee on or before December 1 of each year with an analysis of the effectiveness of the exemptions and deductions, the cost and benefit to the state of the exemptions and deductions and whether the exemptions and deductions are performing the purposes for which they were created.

          G. The secretary shall promulgate rules to implement the provisions of this section."

     SECTION 2. APPROPRIATION.--Five hundred thousand dollars ($500,000) is appropriated from the general fund to the taxation and revenue department for expenditure in fiscal year 2015 to purchase equipment and contract for services necessary to create and process a reconciliation report form for reporting exemptions and deductions pursuant to Section 1 of this act and to provide public outreach to taxpayers regarding the report requirements. Any unexpended or unencumbered balance remaining at the end of fiscal year 2015 shall revert to the general fund.

     SECTION 3. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2015.

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