SB0036

SENATE BILL 36

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

INTRODUCED BY

Timothy M. Keller

AN ACT

RELATING TO TAXATION; ENACTING NEW SECTIONS OF THE INCOME TAX ACT AND THE CORPORATE INCOME AND FRANCHISE TAX ACT; CREATING THE STATE GRADUATE EMPLOYMENT INCOME TAX CREDIT AND STATE GRADUATE EMPLOYMENT CORPORATE INCOME TAX CREDIT; AUTHORIZING THE TAXATION AND REVENUE DEPARTMENT TO REVEAL AGGREGATE TAX CREDIT OR DEDUCTION INFORMATION TO FACILITATE A REPORT TO LEGISLATIVE COMMITTEES.

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

SECTION 1. Section 7-1-8.8 NMSA 1978 (being Laws 2009, Chapter 243, Section 10) is amended to read:

"7-1-8.8. INFORMATION THAT MAY BE REVEALED TO OTHER STATE AGENCIES AND LEGISLATIVE COMMITTEES.--An employee of the department may reveal to:

A. a committee of the legislature for a valid legislative purpose, return information concerning any tax or fee imposed pursuant to the Cigarette Tax Act;

B. the revenue stabilization and tax policy committee and the legislative finance committee, return information necessary to facilitate the compilation of a report to those committees on the effectiveness of a tax credit or deduction that is required pursuant to law; provided that the return information shall not include a taxpayer's name, address or government-issued identification number;

[B.] C. the attorney general, return information acquired pursuant to the Cigarette Tax Act for purposes of Section 6-4-13 NMSA 1978 and the master settlement agreement defined in Section 6-4-12 NMSA 1978;

[C.] D. the commissioner of public lands, return information for use in auditing that pertains to rentals, royalties, fees and other payments due the state under land sale, land lease or other land use contracts;

[D.] E. the secretary of human services or the secretary's delegate, under a written agreement with the department, the last known address with date of all names certified to the department as being absent parents of children receiving public financial assistance, but only for the purpose of enforcing the support liability of the absent parents by the child support enforcement division or any successor organizational unit;

[E.] F. the department of information technology, by electronic media, a database updated quarterly that contains the names, addresses, county of address and taxpayer identification numbers of New Mexico personal income tax filers, but only for the purpose of producing the random jury list for the selection of petit or grand jurors for the state courts pursuant to Section 38-5-3 NMSA 1978;

[F.] G. the state courts, the random jury lists produced by the department of information technology under Subsection [E] F of this section;

[G.] H. the director of the New Mexico department of agriculture or the director's authorized representative, upon request of the director or representative, the names and addresses of all gasoline or special fuel distributors, wholesalers and retailers;

[H.] I. the public regulation commission, return information with respect to the Corporate Income and Franchise Tax Act required to enable the commission to carry out its duties;

[I.] J. the state racing commission, return information with respect to the state, municipal and county gross receipts taxes paid by racetracks;

[J.] K. the gaming control board, tax returns of license applicants and their affiliates as provided in Subsection E of Section 60-2E-14 NMSA 1978;

[K.] L. the director of the workers' compensation administration or to the director's representatives authorized for this purpose, return information to facilitate the identification of taxpayers that are delinquent or noncompliant in payment of fees required by Section 52-1-9.1 or 52-5-19 NMSA 1978; and

[L.] M. the secretary of workforce solutions or the secretary's delegate, return information for use in enforcement of unemployment insurance collections pursuant to the terms of a written reciprocal agreement entered into by the department with the secretary of workforce solutions for exchange of information."

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

"[NEW MATERIAL] STATE GRADUATE EMPLOYMENT 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 sole proprietorship, partnership or limited liability company may claim a credit in an amount equal to five thousand dollars ($5,000) of the gross wages paid to each qualified state graduate who is employed full time in New Mexico by the taxpayer for at least seven months during the first taxable year for which the return is filed and for twelve months during the second taxable year for which the return is filed. A taxpayer shall not be eligible for a credit provided in this section if the qualified state graduate upon which the credit is predicated is replacing or performing the job or functional equivalent of a previous qualified state graduate who is no longer employed by the taxpayer. The tax credit provided by this section may be referred to as the "state graduate employment income tax credit".

B. The purpose of the state graduate employment income tax credit is to encourage the full-time employment of qualified state graduates within eighteen months of graduation from one of the state educational institutions enumerated in Article 12, Section 11 of the constitution of New Mexico.

C. A taxpayer who is the owner of a New Mexico sole proprietorship, partnership or limited liability company may claim the state graduate employment income tax credit for each taxable year in which the taxpayer employs one or more qualified state graduates; provided that the taxpayer may not claim the state graduate employment income tax credit for any individual qualified state graduate for more than two taxable years or if the qualified state graduate upon whom the credit is predicated is replacing or performing the job or functional equivalent of a previous qualified state graduate who is no longer employed by the taxpayer. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the taxpayer employs the qualified state graduate upon whom the credit is predicated.

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

F. A taxpayer who otherwise qualifies and claims a state graduate employment 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 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 higher education department with respect to each employee for whom the state graduate employment income tax credit is claimed:

(2) information required by the secretary of higher education establishing that the employee is a qualified state graduate and was not also employed in the same taxable year by another taxpayer claiming a state graduate employment income tax credit for that employee pursuant to this section or the Corporate Income and Franchise Tax Act.

H. The higher education department, with the cooperation of the taxation and revenue department, shall adopt rules establishing procedures to certify qualified state graduates for purposes of obtaining a state graduate employment income tax credit. The rules shall ensure that not more than one state graduate employment income tax credit per qualified state graduate shall be allowed in a taxable year and that the credits allowed per qualified state graduate are limited to a maximum of two years. The higher education department shall issue a dated certificate of eligibility containing a list of the qualified state graduates employed by the taxpayer claiming the state graduate employment income tax credit, including identifying information such as the social security number of the employee, the date of graduation and the name of the state educational institution from which the employee graduated, the date of employment of the employee by the taxpayer and the number of hours worked per week by the employee. 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 higher education department. The taxation and revenue department shall audit the records of the state graduate employment income tax credit maintained by the higher education department on a periodic basis to ensure effective administration of the state graduate employment income tax credit and compliance with the Tax Administration Act and this section.

I. To claim a state graduate employment income tax credit, the taxpayer shall provide to the taxation and revenue department the certificate of eligibility issued by the higher education department pursuant to this section to the taxpayer for the taxable year for which the state graduate employment income tax credit is claimed.

J. A taxpayer who claims and is granted approval for the state graduate employment income tax credit shall not apply for or be granted approval for the rural job tax credit, the high-wage jobs tax credit or the additional credit pursuant to the Technology Jobs Tax Credit Act based on the same job upon which the state graduate employment income tax credit is predicated.

K. The department may allow a maximum annual aggregate of two million dollars ($2,000,000) in state graduate employment income tax credits provided by this section and state graduate employment corporate income tax credits provided by the Corporate Income and Franchise Tax Act. Applications for the state graduate employment income tax credit shall be considered in the order received by the department. A taxpayer who submits a claim for a state graduate employment income tax credit and who is unable to receive the tax credit because the claims exceed the annual aggregate limitation in this subsection shall be placed for the subsequent year ahead of the other state graduate employment income tax credit claimants submitting claims in the subsequent year in the order of the date on which the department received the application.

L. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.

M. The department shall compile an annual report on the state graduate employment income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. Beginning in 2018 and every five years thereafter that the credit is in effect, the department shall compile and present the annual reports to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing the purpose for which it was created.

N. 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; and

(2) "qualified state graduate" means an individual who:

(a) is a New Mexico resident;

(b) files an individual New Mexico income tax return;

(c) is hired prior to June 1, 2019 and within eighteen months of graduation from one of the state educational institutions of higher learning enumerated in Article 12, Section 11 of the constitution of New Mexico;

(d) completed a post-baccalaureate graduate master's or professional degree within three years or, if part-time, within the credit equivalent, or a doctoral degree within six years or, if part-time, within the credit equivalent, in the discipline of physical or life sciences, technology, engineering, mathematics or a health-related field; and

(e) receives benefits and works at least forty hours per week for at least seven months during the first taxable year and for twelve months during the second taxable year for which the state graduate employment income tax credit is claimed."

SECTION 3. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] STATE GRADUATE EMPLOYMENT 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 five thousand dollars ($5,000) of the gross wages paid to each qualified state graduate who is employed full time in New Mexico by the taxpayer for at least seven months during the first taxable year for which the return is filed and for twelve months during the second taxable year for which the return is filed. A taxpayer shall not be eligible for a credit provided in this section if the qualified state graduate upon which the credit is predicated is replacing or performing the job or functional equivalent of a previous qualified state graduate who is no longer employed by the taxpayer. The tax credit provided by this section may be referred to as the "state graduate employment corporate income tax credit".

B. The purpose of the state graduate employment corporate income tax credit is to encourage the full-time employment of qualified state graduates within eighteen months of graduation from one of the state educational institutions enumerated in Article 12, Section 11 of the constitution of New Mexico.

C. A taxpayer may claim the state graduate employment corporate income tax credit for each taxable year in which the taxpayer employs one or more qualified state graduates; provided that the taxpayer may not claim the state graduate employment corporate income tax credit for any individual qualified state graduate for more than two calendar years from the date of hire or if the qualified state graduate upon whom the credit is predicated is replacing or performing the job or functional equivalent of a previous qualified state graduate who is no longer employed by the taxpayer. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the taxpayer employs the qualified state graduate upon whom the credit is predicated.

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

E. The taxpayer shall submit to the higher education department with respect to each employee for whom the state graduate employment corporate income tax credit is claimed:

(1) information required by the secretary of higher education with respect to the employee's employment by the taxpayer during the taxable year for which the state graduate employment corporate income tax credit is claimed; and (2) information required by the secretary of higher education establishing that the employee is a qualified state graduate and was not also employed in the same taxable year by another taxpayer claiming a state graduate employment corporate income tax credit for that employee pursuant to this section or the Income Tax Act.

F. The higher education department, with the cooperation of the taxation and revenue department, shall adopt rules establishing procedures to certify qualified state graduates for purposes of obtaining a state graduate employment corporate income tax credit. The rules shall ensure that not more than one state graduate employment corporate income tax credit per qualified state graduate shall be allowed in a taxable year and that the credits allowed per qualified state graduate are limited to a maximum of two years. The higher education department shall issue a dated certificate of eligibility containing a list of the qualified state graduates employed by the taxpayer claiming the state graduate employment corporate income tax credit, including identifying information such as the social security number of the employee, the date of graduation and the name of the state educational institution from which the employee graduated, the date of employment of the employee by the taxpayer and the number of hours worked per week by the employee. 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 higher education department. The taxation and revenue department shall audit the records of the state graduate employment corporate income tax credit maintained by the higher education department on a periodic basis to ensure effective administration of the state graduate employment corporate income tax credit and compliance with the Tax Administration Act and this section.

G. To claim a state graduate employment corporate income tax credit, the taxpayer shall provide to the taxation and revenue department the certificate of eligibility issued by the higher education department pursuant to this section to the taxpayer for the taxable year for which the state graduate employment corporate income tax credit is claimed.

H. A taxpayer that claims and is granted approval for the state graduate employment corporate income tax credit shall not apply for or be granted approval for the rural job tax credit, the high-wage jobs tax credit or the additional credit pursuant to the Technology Jobs Tax Credit Act based on the same job upon which the state graduate employment corporate income tax credit is predicated.

I. The department may allow a maximum annual aggregate of two million dollars ($2,000,000) in state graduate employment corporate income tax credits provided by this section and state graduate employment income tax credits provided by the Income Tax Act. Applications for the state graduate employment corporate income tax credit shall be considered in the order received by the department. A taxpayer that submits a claim for a state graduate employment corporate income tax credit and that is unable to receive the tax credit because the claims exceed the annual aggregate limitation in this subsection shall be placed for the subsequent year ahead of state graduate employment corporate income tax credit claimants submitting claims in the subsequent year in the order of the date on which the department received the application.

J. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.

K. The department shall compile an annual report on the state graduate employment corporate income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. Beginning in 2018 and every five years thereafter that the credit is in effect, the department shall compile and present the annual reports to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing the purpose for which it was created.

L. 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; and

(2) "qualified state graduate" means an individual who:

(a) is a New Mexico resident;

(b) files an individual New Mexico income tax return;

(e) receives benefits and works at least forty hours per week for at least seven months during the first taxable year and twelve months during the second taxable year for which the state graduate employment corporate income tax credit is claimed."

SECTION 4. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2014.

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