HOUSE BILL 108
52nd legislature - STATE OF NEW MEXICO - second session, 2016
INTRODUCED BY
James R.J. Strickler
FOR THE ECONOMIC AND RURAL DEVELOPMENT COMMITTEE AND
THE JOBS COUNCIL
AN ACT
RELATING TO TAXATION; CREATING THE RURAL INFRASTRUCTURE TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of Chapter 7 NMSA 1978 is enacted to read:
"[NEW MATERIAL] RURAL INFRASTRUCTURE TAX CREDIT.--
A. Prior to January 1, 2022, a taxpayer who makes a qualified investment that is likely to produce quantifiable benefits may claim a tax credit in an amount not to exceed thirty percent of the cost of the qualified investment against the taxpayer's modified combined tax liability or the taxpayer's tax liability pursuant to the provisions of the Income Tax Act and the Corporate Income and Franchise Tax Act; provided that the amount of the credit associated with the purchase of land or fixed assets shall not exceed fifty percent of the amount of the credit associated with the cost of construction of one or more buildings. The tax credit provided by this section may be referred to as the "rural infrastructure tax credit".
B. The purposes of the rural infrastructure tax credit are to:
(1) stimulate economic development by providing gap funding for manufacturers, processors and natural resource extractors to build infrastructure;
(2) encourage private investment in manufacturing facilities;
(3) give rural communities an advantage in attracting investment by private industry; and
(4) promote job creation.
C. A taxpayer may claim a rural infrastructure tax credit in an amount not to exceed one million dollars ($1,000,000) per qualified investment for not more than three qualified investments in a taxable year. A taxpayer shall claim the rural infrastructure tax credit no later than one year following the end of the calendar year in which the taxpayer receives a certificate of eligibility pursuant to Subsection D of this section.
D. A taxpayer may apply for certification of eligibility for the rural infrastructure tax credit from the authority. The authority shall consider for certification completed applications in the order received. If the authority determines that the project is a qualified investment that is likely to produce quantifiable benefits, it shall issue a certificate of eligibility to the taxpayer, subject to the limitation in Subsection E of this section. The certificate shall be dated and shall include a calculation of the amount of the rural infrastructure tax credit for which the taxpayer is eligible. The authority may issue rules governing the procedure for administering the provisions of this subsection.
E. The authority may issue a certificate of eligibility pursuant to Subsection D of this section only if the total amount of rural infrastructure tax credits represented by those certificates in any calendar year does not exceed ten million dollars ($10,000,000). If the applications for certificates for rural infrastructure tax credits represent an aggregate amount exceeding ten million dollars ($10,000,000) for any calendar year, certificates shall be issued in the order that the completed applications were received. The excess applications that would have been certified, but for the limit imposed by this subsection, shall be certified, subject to the same limit, in subsequent calendar years.
F. To claim the rural infrastructure tax credit, a taxpayer shall provide to the department a certificate of eligibility issued by the authority pursuant to Subsection D of this section and any other information that the department may require to determine the amount of the tax credit due the taxpayer. If the requirements of this section have been complied with, the department shall approve the claim for the credit.
G. To receive a rural infrastructure 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 Subsection D of this section. If the requirements of this section have been complied with, the department shall issue to the taxpayer a document granting the tax credit. The document shall be numbered for identification and shall declare its date of issuance and the amount of the tax credit allowed pursuant to this section. The document may be submitted by the applicant with that taxpayer's tax return or may be sold, exchanged or otherwise transferred to another taxpayer. The parties to such a transaction shall notify the department of the sale, exchange or transfer within ten days of the sale, exchange or transfer.
H. That portion of a rural infrastructure tax credit that exceeds a taxpayer's tax liability in the taxable period in which the credit is claimed may be carried forward for a maximum of ten consecutive taxable years.
I. 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 rural infrastructure tax credit that would have been claimed on a joint return.
J. A taxpayer may be allocated the right to claim a rural infrastructure 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.
K. If the department determines that the qualified investment is not substantially complete within twelve months from the date that a certificate of eligibility was issued, the department shall timely notify the taxpayer of that determination. The taxpayer may request an extension of time in which to complete the project, and the department, if it determines that meaningful and measurable progress toward project completion is being made, may grant a six-month extension. A taxpayer may request, and the department may grant, more than one extension. If no request is made or if the department determines that meaningful and measurable progress toward project completion has not been made, the department shall:
(1) if the taxpayer has not claimed the rural infrastructure tax credit, extinguish the credit; and
(2) if the taxpayer has claimed the rural infrastructure tax credit, deem any taxes to which the tax credit was applied as unpaid and extinguish the remainder of the unclaimed tax credit, if any.
L. The authority and the department shall compile an annual report on the rural infrastructure tax credit that shall include the number of certificates of eligibility that the authority issued in the previous year, 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. Before December 1 of each year, 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) "authority" means the New Mexico finance authority;
(2) "department" means the taxation and revenue department;
(3) "modified combined tax liability" means the total liability for the reporting period for the gross receipts tax imposed by Section 7-9-4 NMSA 1978 together with any tax collected at the same time and in the same manner as that gross receipts tax, such as the compensating tax, the withholding tax, the interstate telecommunications gross receipts tax, the surcharges imposed by Section 63-9D-5 NMSA 1978 and the surcharge imposed by Section 63-9F-11 NMSA 1978, minus the amount of any credit other than the rural job tax credit applied against any or all of these taxes or surcharges; but "modified combined tax liability" excludes all amounts collected with respect to local option gross receipts taxes;
(4) "qualified institution" means a state-chartered financial institution or a nationally chartered financial institution;
(5) "qualified investment" means an investment of at least one million dollars ($1,000,000) in a commercial enterprise project:
(a) not located in, or within ten miles of, a municipality with a population that is equal to or greater than fifty-five thousand as of the most recent federal decennial census;
(b) whose purpose is to: 1) manufacture goods for sale; 2) extract natural resources for sale; or 3) process raw materials for sale;
(c) that includes the construction of at least one building or the construction of at least one building and the purchase of land or fixed assets, or both;
(d) that is not functionally related or subordinate to another project that has received or will receive a rural infrastructure tax credit; and
(e) for which a loan from a qualified institution has closed; and
(6) "quantifiable benefits" means economic development as measured by a variety of factors, including increased local hiring, job training, direct and indirect job creation, increased gross receipts tax collection, increased occupancy tax collection, increased property tax collection, increased state corporate and personal income tax collection and increased other fee and revenue collections."
SECTION 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2016.
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