SENATE BILL 184

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

INTRODUCED BY

George K. Munoz

AN ACT

RELATING TO TAXATION; PROVIDING A DEDUCTION FROM THE GROSS RECEIPTS TAX FOR CERTAIN RECEIPTS DERIVED FROM THE SALE OF GOODS AND SERVICES TO THE UNITED STATES DEPARTMENT OF DEFENSE RELATED TO DIRECTED ENERGY OR SATELLITES; REQUIRING REPORTS AND REVIEW.

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] DEDUCTION--GROSS RECEIPTS TAX--GOODS AND SERVICES FOR THE DEPARTMENT OF DEFENSE RELATED TO DIRECTED ENERGY AND SATELLITES--TEN-YEAR PERIOD--REPORTING.--

          A. A taxpayer's receipts from the sale of research and development services related to directed energy or satellites and receipts from the sale of directed energy and satellite-related inputs when sold pursuant to a contract with the United States department of defense, that are not otherwise exempt from gross receipts taxation and that are not deductible pursuant to another provision of the Gross Receipts and Compensating Tax Act, may be deducted from gross receipts in an amount equal to the aggregate total of New Mexico income and property taxes paid by the taxpayer's employees, whose work is related to directed energy or satellites, during a tax reporting period in which the taxpayer:

                (1) expands its directed energy and satellite business in New Mexico by hiring new employees in New Mexico; or

                (2) begins a directed energy and satellite business in New Mexico, including the hiring of employees in New Mexico.

          B. After an initial deduction, the taxpayer may continue to take the deduction during subsequent tax reporting periods as calculated in those reporting periods unless during a tax reporting period the taxpayer reduces the number of employees below the number of employees included for purposes of calculating the initial deduction.

          C. For the purposes of claiming and calculating the deduction provided by this section, a taxpayer shall certify in a manner acceptable to the secretary the identity of employees it employed during a tax reporting period. The secretary shall calculate and report to the taxpayer the amount of deduction allowable for that tax reporting period in a manner that keeps individual employee tax information confidential, unless otherwise provided by law.

          D. The purpose of the deductions allowed in this section is to promote new and sophisticated technology, enhance the viability of existing directed energy and satellite projects, attract new projects and employers to New Mexico and increase high-technology employment opportunities.

          E. In a tax reporting period in which a taxpayer deducts gross receipts pursuant to this section, the taxpayer shall file a report with the economic development department, in a manner required by that department, stating the number of jobs created that qualify the taxpayer for the deduction and other information that facilitates the evaluation by the interim revenue stabilization and tax policy committee and legislative finance committee of the benefit to the state resulting from the deduction. The economic development department shall annually report this information to those committees. In fiscal year 2021, but no later than December 1, 2021, the economic development department shall review the efficacy of the deduction and shall recommend to the interim revenue stabilization and tax policy committee and the legislative finance committee whether or not the deduction should continue.

          F. As used in this section:

                (1) "directed energy" means a system, including related services, that enables the use of the frequency spectrum, including radio waves, light and x-rays;

                (2) "directed energy and satellite-related inputs" means systems, subsystems, components, prototypes and demonstrators or products and services involving optics, photonics, electronics, advanced materials, nanoelectromechanical and microelectromechanical systems, fabrication materials, test evaluation and computer control

systems related to directed energy or satellites; and

                (3) "satellite" means composite systems assembled and packaged for use in space, including launch vehicles and related products and services."

- 4 -