HOUSE BILL 188
52nd legislature - STATE OF NEW MEXICO - second session, 2016
INTRODUCED BY
Nate Gentry
AN ACT
RELATING TO TAXATION; ESTABLISHING A CREDIT AGAINST PERSONAL INCOME TAX LIABILITY AND CORPORATE INCOME TAX LIABILITY FOR HOTEL AND RESTAURANT RENOVATION PROJECTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] HOTEL AND RESTAURANT RENOVATION INCOME TAX CREDIT.--
A. For taxable years beginning after December 31, 2015 and before January 1, 2026, a taxpayer who is not a dependent of another taxpayer may receive a nontransferable credit against the taxpayer's tax liability imposed by the Income Tax Act:
(1) if, after December 31, 2015 and before January 1, 2026, the taxpayer incurs qualifying costs of a renovation project to a hotel or restaurant owned by the taxpayer and located in New Mexico;
(2) for the taxable year in which the taxpayer incurred those costs; and
(3) in an amount not to exceed twenty percent of those costs that:
(a) for a hotel, were incurred during a period of no more than thirty-six months after the renovation project's beginning date as identified in the taxpayer's certificate of eligibility issued in accordance with Subsection E of this section; and
(b) for a restaurant, were incurred during a period of no more than twelve months after the renovation project's beginning date as identified in the taxpayer's certificate of eligibility issued in accordance with Subsection E of this section.
B. The tax credit provided by this section may be referred to as the "hotel and restaurant renovation income tax credit". The purpose of the hotel and restaurant renovation income tax credit is to drive economic growth, create jobs and spur neighborhood revitalization.
C. To receive the hotel and restaurant renovation income tax credit, a taxpayer shall:
(1) before beginning a renovation project, apply to the economic development department on a form and in the manner prescribed by that department for a determination of project eligibility and include in the application the following information:
(a) a detailed description of the proposed project, including the projected beginning and end dates;
(b) the project plan, including phases, if any; and
(c) the project's estimated qualifying costs; and
(2) after completing an eligible renovation project:
(a) apply to the economic development department on forms and in the manner prescribed by that department for a certificate of eligibility for the credit and include in the application: 1) a statement by a third-party certified public accountant retained by the taxpayer that outlines the project's qualifying costs; and 2) the project's actual beginning and end dates;
(b) receive a certificate of eligibility from the economic development department; and
(c) apply for the credit to the taxation and revenue department on forms and in the manner prescribed by that department and include in the application the certificate of eligibility for the credit.
D. Within sixty days after receiving a taxpayer's complete application for project eligibility for a hotel and restaurant renovation income tax credit, the economic development department shall:
(1) determine whether the taxpayer's renovation project as planned would qualify for the credit; and
(2) advise the taxpayer of that determination.
E. Within thirty days after receiving a taxpayer's complete application for a hotel or restaurant renovation project certification, the economic development department shall provide the taxpayer with a certificate of eligibility for the hotel and restaurant renovation income tax credit if the department finds that the taxpayer is eligible for the credit. The certificate shall include:
(1) the date of issuance;
(2) information identifying the taxpayer; and
(3) the amount of credit for which the taxpayer is eligible.
F. That portion of a hotel and restaurant renovation income tax credit that exceeds the taxpayer's tax liability in the taxable year in which the credit is claimed shall be refunded to the taxpayer.
G. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim no more than one-half of the hotel and restaurant renovation income tax credit that could have been claimed on a joint return.
H. A taxpayer who owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or a limited liability company and that has met all of the requirements to be eligible for the hotel and restaurant renovation income tax credit may claim the credit in proportion to the taxpayer's ownership interest in the business entity. The total credit claimed by all members of the partnership or limited liability company shall not exceed the amount allowed by this section.
I. Before July 1, 2016, the economic development department shall adopt rules establishing procedures to provide certificates of eligibility for hotel and restaurant renovation income tax credits.
J. Beginning in 2017, the taxation and revenue department shall compile an annual report on the hotel and restaurant renovation income tax credit that includes the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the credit and whether the credit is performing the purpose for which it was created.
K. As used in this section:
(1) "hotel" means an establishment or complex:
(a) where, in consideration of payment, lodging is regularly furnished to the general public; and
(b) that maintains for guest use at least twenty-five sleeping rooms or suites;
(2) "qualifying costs" means the costs of construction, new tangible personal property and design and architectural planning that:
(a) the economic development department approves; and
(b) have been verified by a third-party certified public accountant retained by the taxpayer;
(3) "renovation" includes restoration, redecoration, modernization, refurbishment, rehabilitation and remodeling but excludes new construction;
(4) "renovation project" means:
(a) for a hotel, the renovation of the hotel's guest rooms, suites, common areas or exterior properties, including its signs, facade and landscaping, at a cost of at least two million dollars ($2,000,000) and at a per-room or per-suite cost of at least ten thousand dollars ($10,000); and
(b) for a restaurant, the renovation of the restaurant's dining area, restrooms, kitchen or common areas at a cost of at least seventy-five thousand dollars ($75,000); and
(5) "restaurant" means an establishment that:
(a) is held out to the general public as a place where, in consideration of payment, meals are prepared and served; and
(b) has a common area, a kitchen and the employees necessary for preparing and serving meals."
SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:
"[NEW MATERIAL] HOTEL AND RESTAURANT RENOVATION CORPORATE INCOME TAX CREDIT.--
A. For taxable years beginning after December 31, 2015 and before January 1, 2026, a taxpayer that files a New Mexico corporate income tax return may receive a nontransferable credit against the taxpayer's tax liability imposed by the Corporate Income and Franchise Tax Act:
(1) if, after December 31, 2015 and before January 1, 2026, the taxpayer incurs qualifying costs of a renovation project to a hotel or restaurant owned by the taxpayer and located in New Mexico;
(2) for the taxable year in which the taxpayer incurred those costs; and
(3) in an amount not to exceed twenty percent of those costs that:
(a) for a hotel, were incurred during a period of no more than thirty-six months after the renovation project's beginning date as identified in the taxpayer's certificate of eligibility issued in accordance with Subsection E of this section; and
(b) for a restaurant, were incurred during a period of no more than twelve months after the renovation project's beginning date as identified in the taxpayer's certificate of eligibility issued in accordance with Subsection E of this section.
B. The tax credit provided by this section may be referred to as the "hotel and restaurant renovation corporate income tax credit". The purpose of the hotel and restaurant renovation corporate income tax credit is to drive economic growth, create jobs and spur neighborhood revitalization.
C. To receive the hotel and restaurant renovation corporate income tax credit, a taxpayer shall:
(1) before beginning a renovation project, apply to the economic development department on a form and in the manner prescribed by that department for a determination of project eligibility and include in the application the following information:
(a) a detailed description of the proposed project, including the projected beginning and end dates;
(b) the project plan, including phases, if any; and
(c) the project's estimated qualifying costs; and
(2) after completing an eligible renovation project:
(a) apply to the economic development department on forms and in the manner prescribed by that department for a certificate of eligibility for the credit and include in the application: 1) a statement by a third-party certified public accountant retained by the taxpayer that outlines the project's qualifying costs; and 2) the project's actual beginning and end dates;
(b) receive a certificate of eligibility from the economic development department; and
(c) apply for the credit to the taxation and revenue department on forms and in the manner prescribed by that department and include in the application the certificate of eligibility for the credit.
D. Within sixty days after receiving a taxpayer's complete application for project eligibility for a hotel and restaurant renovation corporate income tax credit, the economic development department shall:
(1) determine whether the taxpayer's renovation project as planned would qualify for the credit; and
(2) advise the taxpayer of that determination.
E. Within thirty days after receiving a taxpayer's complete application for a hotel or restaurant renovation project certification, the economic development department shall provide the taxpayer with a certificate of eligibility for the hotel and restaurant renovation corporate income tax credit if the department finds that the taxpayer is eligible for the credit. The certificate shall include:
(1) the date of issuance;
(2) information identifying the taxpayer; and
(3) the amount of credit for which the taxpayer is eligible.
F. That portion of a hotel and restaurant renovation income tax credit that exceeds the taxpayer's tax liability in the taxable year in which the credit is claimed shall be refunded to the taxpayer.
G. Before July 1, 2016, the economic development department shall adopt rules establishing procedures to provide certificates of eligibility for hotel and restaurant renovation income tax credits.
H. Beginning in 2017, the taxation and revenue department shall compile an annual report on the hotel and restaurant renovation corporate income tax credit that includes the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the credit and whether the credit is performing the purpose for which it was created.
I. As used in this section:
(1) "hotel" means an establishment or complex:
(a) where, in consideration of payment, lodging is regularly furnished to the general public; and
(b) that maintains for guest use at least twenty-five sleeping rooms or suites;
(2) "qualifying costs" means the costs of construction, new tangible personal property and design and architectural planning that:
(a) the economic development department approves; and
(b) have been verified by a third-party certified public accountant retained by the taxpayer;
(3) "renovation" includes restoration, redecoration, modernization, refurbishment, rehabilitation and remodeling but excludes new construction;
(4) "renovation project" means:
(a) for a hotel, the renovation of the hotel's guest rooms, suites, common areas or exterior properties, including its signs, facade and landscaping, at a cost of at least two million dollars ($2,000,000) and at a per-room or per-suite cost of at least ten thousand dollars ($10,000); and
(b) for a restaurant, the renovation of the restaurant's dining area, restrooms, kitchen or common areas at a cost of at least seventy-five thousand dollars ($75,000); and
(5) "restaurant" means an establishment that:
(a) is held out to the general public as a place where, in consideration of payment, meals are prepared and served; and
(b) has a common area, a kitchen and the employees necessary for preparing and serving meals."
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