SENATE BILL 59

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

INTRODUCED BY

Timothy M. Keller and James E. Smith

AN ACT

RELATING TO TAXATION; PROVIDING FOR A CREDIT OF GROSS RECEIPTS

TAX DUE EQUAL TO FIFTY PERCENT OF DISTRIBUTIONS MADE TO FUNDING TECHNOLOGY COMMERCIALIZATION AND SCIENTIFIC RESEARCH.

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

     SECTION 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] CREDIT--GROSS RECEIPTS TAX--TECHNOLOGY TRANSFER AND COMMERCIALIZATION AND SCIENTIFIC RESEARCH FUNDING.--

          A. A taxpayer may claim a credit against gross receipts tax due in an amount equal to fifty percent of a distribution made to:

                (1) a New Mexico four-year public post- secondary educational institution or a designated nonprofit entity of a New Mexico four-year public post-secondary educational institution specifically for technology transfer and commercialization or collaborative scientific research purposes; or

                (2) an eligible endowment fund or an organization that promotes the commercialization of licensed technology conceived in a:

                     (a) New Mexico four-year public post- secondary educational institution; or

                     (b) federal scientific and engineering laboratory or test facility located in New Mexico.

          B. The purpose of the tax credit provided by this section is to provide an incentive for the technology transfer and commercialization industry to locate and expand in New Mexico.

          C. A taxpayer eligible for the tax credit pursuant to this section may claim the amount of each tax credit by crediting that amount against gross receipts taxes otherwise due pursuant to the Gross Receipts and Compensating Tax Act. The total amount of the tax credit shall be divided by twelve and taken on each monthly gross receipts tax return filed by the taxpayer against gross receipts taxes due the state for twelve consecutive months after the date of contribution. In no event shall the tax credits taken by an individual taxpayer exceed five hundred thousand dollars ($500,000) in a given calendar year. The department may allow a maximum annual aggregate of two million dollars ($2,000,000) in tax credits provided pursuant to this section. Claims for the tax credit shall be considered in the order received by the department. A taxpayer who submits a claim for a 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 taxpayers submitting claims in the subsequent year in the order of the date on which the department received the claim.

          D. An entity that receives a distribution from a taxpayer who claims a credit pursuant to this section shall certify to the department the use of money, the amount of distribution to the entity and the taxpayer who made the contribution. The department shall administer the credit provided pursuant to this section.

          E. 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. The department shall compile an annual report on the tax credit created pursuant to this section, which report shall include the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the tax credit. Beginning in 2019 and every year thereafter that the tax 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.

          F. On an annual basis starting in fiscal year 2019, a New Mexico four-year public post-secondary educational institution or an entity that receives a distribution from a taxpayer who claims a credit pursuant to this section shall report to the revenue stabilization and tax policy committee and the legislative finance committee, which shall evaluate the uses of and expenditures of the distribution received, including:

                (1) the number of faculty recruited and retained;

                (2) a description of any collaboration among the universities and between the universities funded by the taxpayer distribution and other institutions, agencies, entities or persons;

                (3) a description of current and projected technology research, development and commercialization and patent applications and their economic impact;

                (4) an analysis of current and projected job creation and industry incubation and growth; and

                (5) any other information that the legislative finance committee deems appropriate or as requested by the appropriate legislative interim committee.

          G. As used in this section:

                (1) "eligible endowment fund" means an endowment fund of a New Mexico four-year public post-secondary educational institution for which money in the fund is primarily used to:

                     (a) develop and maintain collaboration agreements with universities or federal laboratories or research, development, testing and evaluating facilities to facilitate the transfer and commercialization of technology licensed or conceived in a New Mexico four-year public post- secondary educational institution or federal scientific and engineering laboratory or test facility located in New Mexico;

                     (b) promote and market federal and state technology transfer and commercialization programs;

                     (c) advise, assist, promote and develop business relating to technology commercialization or technology-based new business; or

                     (d) develop early market demand that will advance the commercialization and widespread application of technology licensed or conceived in a New Mexico four-year public post-secondary educational institution or federal scientific and engineering laboratory or test facility located in New Mexico;

                (2) "scientific research" means the application of the scientific method to:

                     (a) examine questions posed by theories and hypotheses that enable scientists to carry out a thorough study and create an understanding of the world and nature as it truly is;

                     (b) investigate relationships among natural phenomena; or

                     (c) solve a technical problem as the basis for the research portion of research and development; and

                (3) "technology transfer and commercialization" means a wide variety of procedures, mechanisms or processes by which technology or knowledge developed in one place or for one purpose is applied and used in another for commercial use typically resulting in license agreements, spinouts, start-ups, new products and services or manufacturing improvements and enhanced economic development, jobs creation or economic competitiveness."

     SECTION 2. APPLICABILITY.--The provisions of this act apply to distributions made on or after July 1, 2014 and apply to gross receipts tax returns filed on or after August 1, 2014.

     SECTION 3. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2014.

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