HOUSE BILL 34

52nd legislature - STATE OF NEW MEXICO - second session, 2016

INTRODUCED BY

David E. Adkins

AN ACT

RELATING TO TAXATION; PROVIDING A DEDUCTION FROM GROSS RECEIPTS FOR SALES MADE ON THE FIRST SATURDAY AFTER THANKSGIVING BY A BUSINESS OR RESTAURANT IF THE BUSINESS OR RESTAURANT HAS AN AVERAGE BUSINESS INCOME OF LESS THAN TWO MILLION DOLLARS ($2,000,000) PER YEAR.

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--RETAIL SALES BY CERTAIN BUSINESSES.--

          A. Prior to July 1, 2020, receipts from the sale at retail of tangible personal property or from the sale of food at a restaurant may be deducted if:

                (1) the sale occurs during the period beginning at 12:01 a.m. on the first Saturday after thanksgiving day and ending at midnight on the same Saturday; and

                (2) the sale is made by a seller that:

                     (a) has been operating as a business for at least one year; and

                     (b) in the most recent five years, has an average business income from all businesses for which the seller has an equity interest of less than two million dollars ($2,000,000) per year.

          B. The purpose of the deduction provided by this section is to increase sales at small local businesses and restaurants.

          C. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.

          D. The department shall compile an annual report on the deduction provided by this section that shall include the number of taxpayers that claimed the deduction, the aggregate amount of deductions claimed and any other information necessary to evaluate the effectiveness of the deduction. Beginning in 2019 and each year thereafter that the deduction 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 deduction and whether the deduction is performing the purpose for which it was created.

          E. As used in this section:

                (1) "business income" means that part of a taxpayer's income from a business that:

                     (a) is defined as taxable income upon which the federal income tax is calculated in the Internal Revenue Code of 1986 for income tax purposes and claimed by the taxpayer for that year;

                     (b) includes interest received on a state or local bond; and

                     (c) is treated as nonpassive income pursuant to Section 469 of the Internal Revenue Code of 1986, as that section was in effect on January 1, 2016, or net earnings from self-employment as that term is defined in Section 1402 of the Internal Revenue Code of 1986; and

                (2) "restaurant" means an establishment where meals are prepared and may be served for on-premises consumption and that has a kitchen and the employees necessary for preparing, cooking and serving meals."

     SECTION 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2016.

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