SENATE BILL 414
52nd legislature - STATE OF NEW MEXICO - first session, 2015
INTRODUCED BY
Clemente Sanchez
AN ACT
RELATING TO TAXATION; MODIFYING PROVISIONS OF THE CULTURAL PROPERTY INCOME TAX CREDITS; REPEALING AND REENACTING SECTIONS OF THE NMSA 1978.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-2-18.2 NMSA 1978 (being Laws 1984, Chapter 34, Section 1, as amended) is repealed and a new Section 7-2-18.2 NMSA 1978 is enacted to read:
"7-2-18.2. [NEW MATERIAL] PRESERVATION OF CULTURAL PROPERTY INCOME TAX CREDIT.--
A. A taxpayer who is not a dependent of another taxpayer and who is the owner of a cultural property listed on the official New Mexico register of cultural properties may apply for, and the department may allow, a tax credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act in the amount of:
(1) fifty percent of the cost of a project on a residential or commercial property;
(2) fifty percent of the cost of a project on a residential property if the property is located within an arts and cultural district certified by the state or a municipality pursuant to the Arts and Cultural District Act; is located within an area designated by the economic development department as a frontier community; or is subject to the provisions of the Main Street Act; and
(3) for a project on a commercial property that is located within an arts and cultural district certified by the state or a municipality pursuant to the Arts and Cultural District Act; that is located within an area designated by the economic development department as a frontier community; or that is subject to the provisions of the Main Street Act:
(a) fifty percent of the cost of a project that costs one hundred thousand dollars ($100,000) or less;
(b) fifty thousand dollars ($50,000) plus thirty-five percent of the portion of the project cost that is more than one hundred thousand dollars ($100,000) but not more than two hundred thousand dollars ($200,000); and
(c) eighty-five thousand dollars ($85,000) plus twenty-five percent of the project cost that is more than two hundred thousand dollars ($200,000) but not more than one million dollars ($1,000,000).
B. The tax credit provided by this section may be referred to as the "preservation of cultural property income tax credit". The purpose of the preservation of cultural property income tax credit is to encourage the restoration, rehabilitation and preservation of cultural properties.
C. The preservation of cultural property income tax credit shall not exceed twenty-five thousand dollars ($25,000) per project described in Paragraph (1) of Subsection A of this section or fifty thousand dollars ($50,000) per project described in Paragraph (2) of Subsection A of this section. The department shall allow a preservation of cultural property income tax credit only for a project certified by the committee.
D. The department may allow a maximum annual aggregate of one million five hundred thousand dollars ($1,500,000) in preservation of cultural property income tax credits and preservation of cultural property corporate income tax credits per year. Completed applications for the tax credits shall be considered in the order received by the department. If the applications for allowable preservation of cultural property tax credits represent an aggregate amount exceeding one million five hundred thousand dollars ($1,500,000) for any calendar year, the excess applications that would have been allowed, but for the limit imposed by this subsection, shall be allowed, subject to the same limit, in subsequent calendar years.
E. A taxpayer may claim a preservation of cultural property income tax credit for each taxable year in which:
(1) the taxpayer submitted a plan and specifications for a project to the committee and received approval from the committee for the plan and specifications prior to commencement of the project;
(2) the taxpayer received certification from the committee after completing the project, or committee-approved phase, that the project or phase conformed to the plan and specifications and preserved and maintained those qualities of the property that made the property eligible for inclusion in the official register; and
(3) the project is completed within twenty-four months after the date that the project is approved by the committee in accordance with Paragraph (1) of this subsection.
F. A taxpayer may claim a preservation of cultural property income tax credit for each taxable year in which a project or a phase of a project is carried out. A taxpayer may claim the tax credit for no more than ten consecutive years. To receive a preservation of cultural property income tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Paragraph (2) of Subsection E of this section.
G. That portion of a preservation of cultural property income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the tax credit is claimed shall be refunded to the taxpayer.
H. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the preservation of cultural property income tax credit that would have been claimed on a joint return.
I. A taxpayer may be allocated the right to claim a preservation of cultural property income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership and that business entity has met all of the requirements to be eligible for the tax credit. The total tax credit claimed by all members of the partnership or limited liability company shall not exceed the allowable tax credit pursuant to Subsection C of this section.
J. The historic preservation division shall issue certificates in the order that applications are received. The division shall promulgate rules for the implementation of Subsection C of this section.
K. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the tax credit to the department in a manner required by the department.
L. The department shall compile an annual report on the preservation of cultural property income tax credit that shall include the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits approved and any other information necessary to evaluate the effectiveness of the tax credit. Beginning in 2016 and every year thereafter that the tax credit is in effect, the department shall compile and present the annual report 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.
M. As used in this section:
(1) "commercial property" means a property in which the majority of square footage is dedicated to a business;
(2) "committee" means the cultural properties review committee;
(3) "historic preservation division" means the historic preservation division of the cultural affairs department; and
(4) "project" means the restoration, rehabilitation or preservation of a cultural property listed on the official New Mexico register of cultural properties."
SECTION 2. Section 7-2A-8.6 NMSA 1978 (being Laws 1984, Chapter 34, Section 2, as amended) is repealed and a new Section 7-2A-8.6 NMSA 1978 is enacted to read:
"7-2A-8.6. [NEW MATERIAL] PRESERVATION OF CULTURAL PROPERTY CORPORATE INCOME TAX CREDIT.--
A. A taxpayer that files a New Mexico corporate income tax return and that is the owner of a cultural property listed on the official New Mexico register of cultural properties may apply for, and the department may allow, a tax credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act in the amount of:
(1) fifty percent of the cost of a project on a residential or commercial property;
(2) fifty percent of the cost of a project on a residential property if the property is located within an arts and cultural district certified by the state or a municipality pursuant to the Arts and Cultural District Act; is located within an area designated by the economic development department as a frontier community; or is subject to the provisions of the Main Street Act; and
(3) for a project on a commercial property that is located within an arts and cultural district certified by the state or a municipality pursuant to the Arts and Cultural District Act; that is located within an area designated by the economic development department as a frontier community; or that is subject to the provisions of the Main Street Act:
(a) fifty percent of the cost of a project that costs one hundred thousand dollars ($100,000) or less;
(b) fifty thousand dollars ($50,000) plus thirty-five percent of the portion of the project cost that is more than one hundred thousand dollars ($100,000) but not more than two hundred thousand dollars ($200,000); and
(c) eighty-five thousand dollars ($85,000) plus twenty-five percent of the project cost that is more than two hundred thousand dollars ($200,000) but not more than one million dollars ($1,000,000).
B. The tax credit provided by this section may be referred to as the "preservation of cultural property corporate income tax credit". The purpose of the preservation of cultural property corporate income tax credit is to encourage the restoration, rehabilitation and preservation of cultural properties.
C. The preservation of cultural property corporate income tax credit shall not exceed twenty-five thousand dollars ($25,000) per project described in Paragraph (1) of Subsection A of this section or fifty thousand dollars ($50,000) per project described in Paragraph (2) of Subsection A of this section. The department shall allow a preservation of cultural property corporate income tax credit only for a project certified by the committee.
D. The department may allow a maximum annual aggregate of one million five hundred thousand dollars ($1,500,000) in preservation of cultural property income tax credits and preservation of cultural property corporate income tax credits per year. If the applications for allowable preservation of cultural property tax credits represent an aggregate amount exceeding one million five hundred thousand dollars ($1,500,000) for any calendar year, the excess applications that would have been allowed, but for the limit imposed by this subsection, shall be allowed, subject to the same limit, in subsequent calendar years.
E. A taxpayer may claim a preservation of cultural property corporate income tax credit for each taxable year in which:
(1) the taxpayer submitted a plan and specifications for a project to the committee and received approval from the committee for the plan and specifications prior to commencement of the project;
(2) the taxpayer received certification from the committee after completing the project, or committee-approved phase, that the project or phase conformed to the plan and specifications and preserved and maintained those qualities of the property that made the property eligible for inclusion in the official register; and
(3) the project is completed within twenty-four months after the date that the project is approved by the committee in accordance with Paragraph (1) of this subsection.
F. A taxpayer may claim a preservation of cultural property corporate income tax credit for each taxable year in which a project or a phase of a project is carried out. A taxpayer may claim the tax credit for no more than ten consecutive years. To receive a preservation of cultural property corporate income tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Paragraph (2) of Subsection E of this section.
G. That portion of the preservation of cultural property corporate income tax credit that exceeds a taxpayer's liability in the taxable year in which the tax credit is claimed shall be refunded to the taxpayer.
H. The historic preservation division shall issue certificates in the order that applications are received. The division shall promulgate rules for the implementation of Subsection C of this section.
I. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the tax credit to the department in a manner required by the department.
J. The department shall compile an annual report on the preservation of cultural property corporate income tax credit that shall include the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits approved and any other information necessary to evaluate the effectiveness of the tax credit. Beginning in 2016 and every year thereafter that the tax credit is in effect, the department shall compile and present the annual report 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.
K. As used in this section:
(1) "commercial property" means a property in which the majority of square footage is dedicated to a business;
(2) "committee" means the cultural properties review committee;
(3) "historic preservation division" means the historic preservation division of the cultural affairs department; and
(4) "project" means the restoration, rehabilitation or preservation of a cultural property listed on the official New Mexico register of cultural properties."
SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2015.
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