SENATE BILL 199
52nd legislature - STATE OF NEW MEXICO - second session, 2016
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 Section 7-2-18.2 NMSA 1978 (being Laws 1984, Chapter 34, Section 1, as amended) is repealed and a new Section 7-2-18.2 NMSA 1978 is enacted to read: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. For taxable years beginning on or after January 1, 2016, 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 claim a nontransferable credit against the taxpayer's tax liability imposed by the Income Tax Act in the amount of:
(1) fifty percent of the cost of a project on the taxpayer's residential or commercial property;
(2) fifty percent of the cost of a project on the taxpayer's residential property if the property is located within an arts and cultural district certified by the state or a municipality in accordance with 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 the taxpayer's commercial property that is located within an arts and cultural district certified by the state or a municipality in accordance with 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 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 the 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. The department shall consider completed applications for the credits in the order it receives them. 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 before starting 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 the committee approved the project 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, but for no more than ten consecutive taxable years. To receive the credit, a taxpayer shall report the amount of the credit to the department and apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made in accordance with 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 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 no more than one-half of the preservation of cultural property income tax credit that could have been claimed on a joint return.
I. 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 the requirements to be eligible for the preservation of cultural property 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 business entity shall not exceed the amount allowed by Subsection C of this section.
J. The historic preservation division shall issue certificates in the order that applications for the preservation of cultural property income tax credit are received. The division shall promulgate rules for certifying that a project meets the credit's eligibility requirements.
K. The department shall compile an annual report on the preservation of cultural property income tax credit that includes the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits taken 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.
L. 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. For taxable years beginning on or after January 1, 2016, 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 claim a nontransferable credit against the taxpayer's tax liability imposed by the Corporate Income and Franchise Tax Act in the amount of:
(1) fifty percent of the cost of a project on the taxpayer's residential or commercial property;
(2) fifty percent of the cost of a project on the taxpayer's residential property if the property is located within an arts and cultural district certified by the state or a municipality in accordance with 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 the taxpayer's commercial property that is located within an arts and cultural district certified by the state or a municipality in accordance with 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 credit provided by this section may be referred to as the "preservation of cultural property corporate income tax credit". The purpose of the 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 the 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. The department shall consider completed applications for the credits in the order it receives them. 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 before starting 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 the committee approved the project 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, but for no more than ten consecutive taxable years. To receive the credit, a taxpayer shall report the amount of the credit to the department and apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made in accordance with 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 credit is claimed shall be refunded to the taxpayer.
H. The historic preservation division shall issue certificates in the order that applications for the preservation of cultural property corporate income tax credit are received. The division shall promulgate rules for certifying that a project meets the credit's eligibility requirements.
I. The department shall compile an annual report on the preservation of cultural property corporate income tax credit that includes the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits taken 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.
J. 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."
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