HB0198

HOUSE BILL 198

53rd legislature - STATE OF NEW MEXICO - second session, 2018

INTRODUCED BY

Roberto "Bobby" J. Gonzales

AN ACT

RELATING TO TAXATION; MAKING TECHNICAL CLEANUP CHANGES TO MULTIPLE TAX ACTS; REVISING PROCEDURES TO ADJUST DISTRIBUTIONS OR TRANSFERS TO LOCAL GOVERNMENTS; REVISING ALLOCATION AND APPORTIONMENT PROVISIONS ON SERVICES FOR INCOME TAXES; REQUIRING INCOME RECEIVED FROM PASS-THROUGH ENTITIES TO BE ALLOCATED AND APPORTIONED BASED ON COMMERCIAL DOMICILE AND FACTORS OF THE ENTITIES; REQUIRING THE DETERMINATION OF IN-STATE SALES OF INTANGIBLES AND SERVICES TO BE BASED ON MARKET SOURCING RATHER THAN COST OF PERFORMANCE; APPLYING THE GROSS RECEIPTS TAX TO SALES BY OUT-OF-STATE VENDORS TO NEW MEXICO BUYERS; REDUCING THE GROSS RECEIPTS TAX RATE; LIMITING THE NONPROFIT GROSS RECEIPTS TAX EXEMPTION TO CERTAIN NONPROFIT ORGANIZATIONS AND CREATING A DEDUCTION FROM GROSS RECEIPTS AND COMPENSATING TAX FOR OTHER NONPROFIT ORGANIZATIONS; CONVERTING THE FOOD AND HEALTH CARE PRACTITIONER DEDUCTIONS FROM GROSS RECEIPTS TO CREDITS AGAINST THE STATE GROSS RECEIPTS TAX AND REPEALING THE HOLD HARMLESS DISTRIBUTIONS; ALIGNING THE COMPENSATING TAX RATE WITH THE GROSS RECEIPTS TAX RATE; IMPOSING THE COMPENSATING TAX ON LICENSES, FRANCHISES AND SERVICES USED IN NEW MEXICO; IMPOSING MUNICIPAL AND COUNTY COMPENSATING TAXES; CONVERTING A MUNICIPAL DISTRIBUTION TO A REDUCED MUNICIPAL GROSS RECEIPTS TAX RATE; REPEALING CERTAIN DISTRIBUTIONS AND TAX CREDITS, DEDUCTIONS AND EXEMPTIONS; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 4-61-2 NMSA 1978 (being Laws 1982, Chapter 44, Section 2, as amended) is amended to read:

"4-61-2. DEFINITIONS.--As used in the Small Counties Assistance Act:

A. "adjustment factor" means a fraction, the numerator of which is the net taxable value of the state for the property tax year prior to the year in which the amount of small counties assistance is being determined and the denominator of which is the net taxable value for property tax year 2002; the adjustment factor shall be calculated without reference to assessed value determined pursuant to the Oil and Gas Ad Valorem Production Tax Act, assessed value determined pursuant to the Oil and Gas Production Equipment Ad Valorem Tax Act or taxable value determined pursuant to the Copper Production Ad Valorem Tax Act;

B. "ceiling valuation" means:

(1) for the 2002 property tax year, one billion four hundred million dollars ($1,400,000,000); and

(2) for each subsequent property tax year, an amount equal to the product obtained by multiplying one billion four hundred million dollars ($1,400,000,000) by the adjustment factor for the year;

C. "demographer" means the bureau of business and economic research at the university of New Mexico;

D. "inflation factor" means a fraction whose numerator is the annual implicit price deflator index for state and local government purchases of goods and services, as published in the United States department of commerce monthly publication entitled "Survey of Current Business" or any successor publication prepared by an agency of the United States and adopted by the department of finance and administration, for the calendar year one year prior to the year in which the distribution is to be made and whose denominator is the annual index for calendar year 2004; provided that, if the inflation factor is calculated to have a value less than one, it shall be deemed to have a value of one;

E. "population" means the official population shown by the most recent federal decennial census, or if there is a change in boundaries after the date of the census, "population" for each affected unit shall be the most current estimated population for that unit provided in writing by the demographer; provided that after five years from the first day of the calendar year of the most recent federal decennial census, that census shall not be used, and "population" for the period from that date until the date when the next following official final decennial census population data are available shall be the most current estimated population provided in writing by the demographer;

F. "qualifying county" means a county that has:

(1) for the property tax year in which any distribution under the Small Counties Assistance Act is made to the county, imposed a property tax rate for general county purposes pursuant to Paragraph (1) of Subsection B of Section 7-37-7 NMSA 1978 as limited by Section 7-37-7.1 NMSA 1978 of at least eight dollars eighty-five cents ($8.85) per one thousand dollars ($1,000) of net taxable value;

(2) by July 1 of the property tax year in which any distribution under the Small Counties Assistance Act is made to the county, received a written certification from the director of the property tax division of the taxation and revenue department that the county assessor of that county has implemented an acceptable program of maintaining current and correct property values for property taxation purposes as required by Section 7-36-16 NMSA 1978 or has submitted to the director an acceptable plan for the implementation of such a program;

(3) on July 1 of the year in which any distribution under the Small Counties Assistance Act is made to the county, a population of not more than forty-eight thousand;

(4) imposed county gross receipts tax increments authorized pursuant to Section 7-20E-9 NMSA 1978 totaling at least three-eighths percent and has those increments in effect on July 1 of the year in which a distribution is made; provided that this paragraph does not apply to a county if the county's valuation for property taxation purposes does not exceed the product of two hundred thirty million dollars ($230,000,000) multiplied by the adjustment factor for the year; and

(5) a total valuation for the property tax year preceding the year in which a distribution pursuant to the Small Counties Assistance Act for that county is to be made that is no greater than the ceiling valuation for that property tax year;

G. "tax rate factor" means [a fraction, the numerator of which is the average rate imposed in Section 7-9-7 NMSA 1978 for the fiscal year one year prior to the fiscal year in which the distribution is to be made and the denominator of which is five] one and twenty-five hundredths percent; and

H. "total valuation" means the sum for a jurisdiction for a property tax year of the net taxable value determined pursuant to the Property Tax Code, the assessed value determined pursuant to the Oil and Gas Ad Valorem Production Tax Act, the assessed value determined pursuant to the Oil and Gas Production Equipment Ad Valorem Tax Act and the taxable value determined pursuant to the Copper Production Ad Valorem Tax Act."

SECTION 2. Section 7-1-2 NMSA 1978 (being Laws 1965, Chapter 248, Section 2, as amended) is amended to read:

"7-1-2. APPLICABILITY.--The Tax Administration Act applies to and governs:

A. the administration and enforcement of the following taxes or tax acts as they now exist or may hereafter be amended:

(1) Income Tax Act;

(2) Withholding Tax Act;

(3) [Venture Capital Investment Act] Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act;

(4) Gross Receipts and Compensating Tax Act and any state gross receipts tax;

(5) Liquor Excise Tax Act;

(6) Local Liquor Excise Tax Act;

(7) any municipal local option gross receipts or compensating tax;

(8) any county local option gross receipts or compensating tax;

(9) Special Fuels Supplier Tax Act;

(10) Gasoline Tax Act;

(11) petroleum products loading fee, which fee shall be considered a tax for the purpose of the Tax Administration Act;

(12) Alternative Fuel Tax Act;

(13) Cigarette Tax Act;

(14) Estate Tax Act;

(15) Railroad Car Company Tax Act;

(16) Investment Credit Act, rural job tax credit, Laboratory Partnership with Small Business Tax Credit Act, Technology Jobs and Research and Development Tax Credit Act, Film Production Tax Credit Act, Affordable Housing Tax Credit Act and high-wage jobs tax credit;

(17) Corporate Income and Franchise Tax Act;

(18) Uniform Division of Income for Tax Purposes Act;

(19) Multistate Tax Compact;

(20) Tobacco Products Tax Act; and

(21) the telecommunications relay service surcharge imposed by Section 63-9F-11 NMSA 1978, which surcharge shall be considered a tax for the purposes of the Tax Administration Act;

B. the administration and enforcement of the following taxes, surtaxes, advanced payments or tax acts as they now exist or may hereafter be amended:

(1) Resources Excise Tax Act;

(2) Severance Tax Act;

(3) any severance surtax;

(4) Oil and Gas Severance Tax Act;

(5) Oil and Gas Conservation Tax Act;

(6) Oil and Gas Emergency School Tax Act;

(7) Oil and Gas Ad Valorem Production Tax Act;

(8) Natural Gas Processors Tax Act;

(9) Oil and Gas Production Equipment Ad Valorem Tax Act;

(10) Copper Production Ad Valorem Tax Act;

(11) any advance payment required to be made by any act specified in this subsection, which advance payment shall be considered a tax for the purposes of the Tax Administration Act;

(12) Enhanced Oil Recovery Act;

(13) Natural Gas and Crude Oil Production Incentive Act; and

(14) intergovernmental production tax credit and intergovernmental production equipment tax credit;

C. the administration and enforcement of the following taxes, surcharges, fees or acts as they now exist or may hereafter be amended:

(1) Weight Distance Tax Act;

(2) the workers' compensation fee authorized by Section 52-5-19 NMSA 1978, which fee shall be considered a tax for purposes of the Tax Administration Act;

(3) Uniform Unclaimed Property Act (1995);

(4) 911 emergency surcharge and the network and database surcharge, which surcharges shall be considered taxes for purposes of the Tax Administration Act;

(5) the solid waste assessment fee authorized by the Solid Waste Act, which fee shall be considered a tax for purposes of the Tax Administration Act;

(6) the water conservation fee imposed by Section 74-1-13 NMSA 1978, which fee shall be considered a tax for the purposes of the Tax Administration Act; and

(7) the gaming tax imposed pursuant to the Gaming Control Act; and

D. the administration and enforcement of all other laws, with respect to which the department is charged with responsibilities pursuant to the Tax Administration Act, but only to the extent that the other laws do not conflict with the Tax Administration Act."

SECTION 3. Section 7-1-3 NMSA 1978 (being Laws 1965, Chapter 248, Section 3, as amended) is amended to read:

"7-1-3. DEFINITIONS.--Unless the context clearly indicates a different meaning, the definitions of words and phrases as they are stated in this section are to be used, and whenever in the Tax Administration Act these words and phrases appear, the singular includes the plural and the plural includes the singular:

A. "automated clearinghouse transaction" means an electronic credit or debit transmitted through an automated clearinghouse payable to the state treasurer and deposited with the fiscal agent of New Mexico;

B. "department" means the taxation and revenue department, the secretary or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

C. "electronic payment" means a payment made by automated clearinghouse deposit, any funds wire transfer system or a credit card, debit card or electronic cash transaction through the internet;

D. "employee of the department" means any employee of the department, including the secretary, or any person acting as agent or authorized to represent or perform services for the department in any capacity with respect to any law made subject to administration and enforcement under the provisions of the Tax Administration Act;

E. "financial institution" means any state or federally chartered, federally insured depository institution;

F. "hearing officer" means a person who has been designated by the chief hearing officer to serve as a hearing officer and who is:

(1) the chief hearing officer;

(2) an employee of the administrative hearings office; or

(3) a contractor of the administrative hearings office;

G. "Internal Revenue Code" means the Internal Revenue Code of 1986, as that code may be amended or its sections renumbered;

H. "levy" means the lawful power, hereby invested in the secretary, to take into possession or to require the present or future surrender to the secretary or the secretary's delegate of any property or rights to property belonging to a delinquent taxpayer;

I. "local option compensating tax" means the municipal compensating tax or the county compensating tax;

[I.] J. "local option gross receipts tax" means a tax authorized to be imposed by a county or municipality upon the taxpayer's gross receipts, as that term is defined in the Gross Receipts and Compensating Tax Act, and required to be collected by the department at the same time and in the same manner as the gross receipts tax; "local option gross receipts tax" includes the gross receipts taxes imposed pursuant to the Municipal Local Option Gross Receipts [Taxes] and Compensating Tax Act, Supplemental Municipal Gross Receipts Tax Act, County Local Option Gross Receipts [Taxes] and Compensating Tax Act, Local Hospital Gross Receipts Tax Act and County Correctional Facility Gross Receipts Tax Act and such other acts as may be enacted authorizing counties or municipalities to impose taxes on gross receipts, which taxes are to be collected by the department in the same time and in the same manner as it collects the gross receipts tax;

[J.] K. "managed audit" means a review and analysis conducted by a taxpayer under an agreement with the department to determine the taxpayer's compliance with a tax administered pursuant to the Tax Administration Act and the presentation of the results to the department for assessment of tax found to be due;

[K.] L. "net receipts" means the total amount of money paid by taxpayers to the department in a month pursuant to a tax or tax act less any refunds disbursed in that month with respect to that tax or tax act;

[L.] M. "overpayment" means an amount paid, pursuant to any law subject to administration and enforcement under the provisions of the Tax Administration Act, by a person to the department or withheld from the person in excess of tax due from the person to the state at the time of the payment or at the time the amount withheld is credited against tax due;

[M.] N. "paid" includes the term "paid over";

[N.] O. "pay" includes the term "pay over";

[O.] P. "payment" includes the term "payment over";

[P.] Q. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, limited liability partnership, joint venture, syndicate, other association or gas, water or electric utility owned or operated by a county or municipality; "person" also means, to the extent permitted by law, a federal, state or other governmental unit or subdivision, or an agency, department or instrumentality thereof; and "person", as used in Sections 7-1-72 through 7-1-74 NMSA 1978, also includes an officer or employee of a corporation, a member or employee of a partnership or any individual who, as such, is under a duty to perform any act in respect of which a violation occurs;

[Q. "property" means property or rights to property;]

R. "property" or "rights to property" means any tangible property, real or personal, or any intangible property of a taxpayer;

S. "return" means any tax or information return, application or form, declaration of estimated tax or claim for refund, including any amendments or supplements to the return, required or permitted pursuant to a law subject to administration and enforcement pursuant to the Tax Administration Act and filed with the secretary or the secretary's delegate by or on behalf of any person;

T. "return information" means a taxpayer's name, address, government-issued identification number and other identifying information; any information contained in or derived from a taxpayer's return; any information with respect to any actual or possible administrative or legal action by an employee of the department concerning a taxpayer's return, such as audits, managed audits, denial of credits or refunds, assessments of tax, penalty or interest, protests of assessments or denial of refunds or credits, levies or liens; or any other information with respect to a taxpayer's return or tax liability that was not obtained from public sources or that was created by an employee of the department; but "return information" does not include statistical data or other information that cannot be associated with or directly or indirectly identify a particular taxpayer;

U. "secretary" means the secretary of taxation and revenue and, except for purposes of Subsection B of Section 7-1-4 NMSA 1978, also includes the deputy secretary or a division director or deputy division director delegated by the secretary;

V. "secretary or the secretary's delegate" means the secretary or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

W. "security" means money, property or rights to property or a surety bond;

X. "state" means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico and any territory or possession of the United States;

Y. "tax" means the total amount of each tax imposed and required to be paid, withheld and paid or collected and paid under provision of any law made subject to administration and enforcement according to the provisions of the Tax Administration Act, including the amount of any interest or civil penalty relating thereto; "tax" also means any amount of any abatement of tax made or any credit, rebate or refund paid or credited by the department under any law subject to administration and enforcement under the provisions of the Tax Administration Act to any person contrary to law, including the amount of any interest or civil penalty relating thereto;

Z. "tax return preparer" means a person who prepares for others for compensation or who employs one or more persons to prepare for others for compensation any return of income tax, a substantial portion of any return of income tax, any claim for refund with respect to income tax or a substantial portion of any claim for refund with respect to income tax; provided that a person shall not be a "tax return preparer" merely because such person:

(1) furnishes typing, reproducing or other mechanical assistance;

(2) is an employee who prepares an income tax return or claim for refund with respect to an income tax return of the employer, or of an officer or employee of the employer, by whom the person is regularly and continuously employed; or

(3) prepares as a trustee or other fiduciary an income tax return or claim for refund with respect to income tax for any person; and

AA. "taxpayer" means a person liable for payment of any tax; a person responsible for withholding and payment or for collection and payment of any tax; a person to whom an assessment has been made, if the assessment remains unabated or the amount thereof has not been paid; or a person who entered into a special agreement pursuant to Section 7-1-21.1 NMSA 1978 to assume the liability of gross receipts tax or governmental gross receipts tax of another person and the special agreement was approved by the secretary pursuant to the Tax Administration Act."

SECTION 4. Section 7-1-6.1 NMSA 1978 (being Laws 1983, Chapter 211, Section 6, as amended) is amended to read:

"7-1-6.1. IDENTIFICATION OF MONEY IN TAX ADMINISTRATION SUSPENSE FUND--DISTRIBUTION.--

A. After the necessary disbursements have been made from the tax administration suspense fund, the money remaining, except for [remittances received within the previous sixty days that are unidentified as to source or disposition] amounts described in Subsection B of this section, in the suspense fund as of the last day of the month shall be identified by tax source and distributed or transferred in accordance with the applicable provisions of the Tax Administration Act. After the necessary distributions and transfers, any balance shall be distributed to the general fund.

B. The following amounts are to be retained in the tax administration suspense fund at the end of each month:

(1) remittances received within the previous two months that are unidentified as to source or disposition; and

(2) distribution amounts withheld pursuant to Section 7-1-6.15 NMSA 1978."

SECTION 5. Section 7-1-6.4 NMSA 1978 (being Laws 1983, Chapter 211, Section 9, as amended) is amended to read:

"7-1-6.4. DISTRIBUTION--MUNICIPALITY FROM GROSS RECEIPTS TAX.--

A. Except as provided in Subsection B of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the product of the quotient of one and two hundred twenty-five thousandths percent divided by the tax rate imposed by Section 7-9-4 NMSA 1978 multiplied by the net receipts for the month attributable to the gross receipts tax from business locations:

[(1) within that municipality;

(2)] (1) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of that municipality;

[(3)] (2) outside the boundaries of any municipality on land owned by that municipality; and

[(4)] (3) on an Indian reservation or pueblo grant in an area that is contiguous to that municipality and in which the municipality performs services pursuant to a contract between the municipality and the Indian tribe or Indian pueblo if:

(a) the contract describes an area in which the municipality is required to perform services and requires the municipality to perform services that are substantially the same as the services the municipality performs for itself; and

(b) the governing body of the municipality has submitted a copy of the contract to the secretary.

B. If the reduction made by Laws 1991, Chapter 9, Section 9 to the distribution under this section impairs the ability of a municipality to meet its principal or interest payment obligations for revenue bonds outstanding prior to July 1, 1991 that are secured by the pledge of all or part of the municipality's revenue from the distribution made under this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet any required payment, provided that the distribution amount does not exceed the amount that would have been due that municipality under this section as it was in effect on June 30, 1992.

C. A distribution pursuant to this section may be adjusted for a distribution made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a municipality pursuant to the Tax Increment for Development Act."

SECTION 6. Section 7-1-6.12 NMSA 1978 (being Laws 1983, Chapter 211, Section 17, as amended) is amended to read:

"7-1-6.12. TRANSFER--REVENUES FROM MUNICIPAL LOCAL OPTION GROSS RECEIPTS TAXES.--

A. A transfer pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality for which the department is collecting a local option gross receipts tax or local option compensating tax imposed by that municipality in an amount [subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978] equal to the net receipts attributable to [the] that local option gross receipts or compensating tax [imposed by that municipality, less any deduction for administrative cost determined and made by the department pursuant to the provisions of the act authorizing imposition by that municipality of the local option gross receipts tax and any additional administrative fee withheld pursuant to Subsection C of Section 7-1-6.41 NMSA 1978]:

(1) plus any increase made pursuant to Section 7-1-6.15 NMSA 1978 and any other increase specified by law; and

(2) less any decrease made pursuant to Section 7-1-6.15 NMSA 1978, any applicable deduction for administrative costs pursuant to Section 7-1-6.41 NMSA 1978 and any other decreases specified by law.

B. A transfer pursuant to this section may be adjusted for a distribution made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a municipality pursuant to the Tax Increment for Development Act."

SECTION 7. Section 7-1-6.13 NMSA 1978 (being Laws 1983, Chapter 211, Section 18, as amended) is amended to read:

"7-1-6.13. TRANSFER--REVENUES FROM COUNTY LOCAL OPTION GROSS RECEIPTS TAXES.--

A. [Except as provided in Subsection B of this section] A transfer pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county for which the department is collecting a local option gross receipts tax or local option compensating tax imposed by that county in an amount [subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978] equal to the net receipts attributable to [the] that local option gross receipts or compensating tax [imposed by that county, less any deduction for administrative cost determined and made by the department pursuant to the provisions of the act authorizing imposition by that county of the local option gross receipts tax and any additional administrative fee withheld pursuant to Subsection C of Section 7-1-6.41 NMSA 1978]:

(1) plus any increase made pursuant to Section 7-1-6.15 NMSA 1978 and any other increase specified by law; and

(2) less any decrease made pursuant to Section 7-1-6.15 NMSA 1978, any applicable deduction for administrative costs pursuant to Section 7-1-6.41 NMSA 1978 and any other decreases specified by law.

B. A transfer pursuant to this section may be adjusted for a [distribution] transfer made to a tax increment development district with respect to a portion of a gross receipts tax increment dedicated by a county pursuant to the Tax Increment for Development Act."

SECTION 8. Section 7-1-6.15 NMSA 1978 (being Laws 1983, Chapter 211, Section 20, as amended by Laws 2015, Chapter 89, Section 1 and by Laws 2015, Chapter 100, Section 1) is amended to read:

"7-1-6.15. ADJUSTMENTS OF DISTRIBUTIONS OR TRANSFERS TO MUNICIPALITIES OR COUNTIES.--

A. The department is authorized to include within current distributions or transfers to local governments amounts, whether positive or negative, not reported on returns as pertaining to the current period, whether the amount reflects the granting of a refund claim, an amendment of one or more returns filed in prior periods, filing of late-filed returns, a change in reporting location, an audit of a taxpayer by the department or any other process connected with information on returns submitted for prior periods and on which distributions and transfers for those prior periods to local governments were determined. The provisions of this section apply to:

(1) any distribution to a municipality pursuant to Section 7-1-6.4, 7-1-6.36 or 7-1-6.46 NMSA 1978;

(2) any transfer to a municipality with respect to any local option gross receipts tax or local option compensating tax imposed by that municipality;

(3) any transfer to a county with respect to any local option gross receipts tax or local option compensating tax imposed by that county;

(4) any distribution to a county pursuant to Section 7-1-6.16 or 7-1-6.47 NMSA 1978;

[(5) any distribution to a municipality or a county of gasoline taxes pursuant to Section 7-1-6.9 NMSA 1978;

(6)] (5) any transfer to a county with respect to any tax imposed in accordance with the Local Liquor Excise Tax Act;

[(7) any distribution to a county from the county government road fund pursuant to Section 7-1-6.26 NMSA 1978;

(8) any distribution to a municipality of gasoline taxes pursuant to Section 7-1-6.27 NMSA 1978; and

(9) any distribution to a municipality of compensating taxes pursuant to Section 7-1-6.55 NMSA 1978]

(6) any transfer to a tax increment development district pursuant to Section 7-1-6.54 NMSA 1978;

(7) any distribution to a municipality or a county of gasoline taxes pursuant to Section 7-1-6.9 NMSA 1978;

(8) any distribution to a county from the county government road fund pursuant to Section 7-1-6.26 NMSA 1978; and

(9) any distribution to a municipality of gasoline taxes pursuant to Section 7-1-6.27 NMSA 1978.

B. Before making a distribution or transfer specified in Paragraphs (1) through (6) of Subsection A of this section to a [municipality or county] local government for the month, amounts comprising the net receipts shall be segregated into two mutually exclusive categories. One category shall be for amounts relating to the current month, and the other category shall be for amounts relating to prior periods. The total of each category for a [municipality or county] local government shall be reported each month to that [municipality or county] local government. If the total of the amounts relating to prior periods is less than zero and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that [municipality or county] local government, then the following procedures shall be carried out:

(1) all negative amounts relating to any period prior to the [three] calendar [years] year preceding the year of the current month, net of any positive amounts in that same time period for the same taxpayers to which the negative amounts pertain, shall be excluded from the total relating to prior periods. Except as provided in Paragraph (2) of this subsection, the net receipts to be distributed or transferred to the [municipality or county] local government shall be adjusted to equal the amount for the current month plus the revised total for prior periods; and

(2) if the revised total for prior periods determined pursuant to Paragraph (1) of this subsection is negative and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that [municipality or county] local government, the revised total for prior periods shall be excluded from the distribution or transfers and the net receipts to be distributed or transferred to the [municipality or county] local government shall be equal to the amount for the current month.

C. Except as otherwise provided in this section, the department shall recover from a [municipality or county] local government the amount excluded by Paragraph (2) of Subsection B of this section. This amount may be referred to as the "recoverable amount".

D. Prior to or concurrently with the distribution or transfer to the [municipality or county] local government of the adjusted net receipts, the department shall notify the [municipality or county] local government whose distribution or transfer has been adjusted pursuant to Paragraph (2) of Subsection B of this section:

(1) that the department has made such an adjustment, that the department has determined that a specified amount is recoverable from the [municipality or county] local government and that the department intends to recover that amount from future distributions or transfers to the [municipality or county] local government;

(2) that the [municipality or county] local government has ninety days from the date notice is made to enter into a mutually agreeable repayment agreement with the department;

(3) that if the [municipality or county] local government takes no action within the ninety-day period, the department will recover the amount from the next six distributions or transfers following the expiration of the ninety days; and

(4) that the [municipality or county] local government may inspect, pursuant to Section 7-1-8.9 NMSA 1978, an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application.

E. No earlier than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall begin recovering the recoverable amount from a [municipality or county] local government as follows:

(1) the department may collect the recoverable amount by:

(a) decreasing distributions or transfers to the [municipality or county] local government in accordance with a repayment agreement entered into with the [municipality or county] local government; or

(b) except as provided in Paragraphs (2) and (3) of this subsection, if the [municipality or county] local government fails to act within the ninety days, decreasing the amount of the next six distributions or transfers to the [municipality or county] local government following expiration of the ninety-day period in increments as nearly equal as practicable and sufficient to recover the amount;

(2) if, pursuant to Subsection B of this section, the secretary determines that the recoverable amount is more than fifty percent of the average distribution or transfer of net receipts for that [municipality or county] local government, the secretary:

(a) shall recover only up to fifty percent of the average distribution or transfer of net receipts for that [municipality or county] local government; and

(b) may, in the secretary's discretion, waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance; and

(3) if, after application of a refund claim, audit adjustment, correction of a mistake by the department or other adjustment of a prior period, but prior to any recovery of the department pursuant to this section, the total net receipts of a [municipality or county] local government for the twelve-month period beginning with the current month are reduced or are projected to be reduced to less than fifty percent of the average distribution or transfer of net receipts, the secretary may waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance.

F. No later than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall provide the [municipality or county] local government adequate opportunity to review an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application, pursuant to Section 7-1-8.9 NMSA 1978.

G. On or before September 1 of each year beginning in 2016, the secretary shall report to the state board of finance and the legislative finance committee the total recoverable amount waived pursuant to Subparagraph (b) of Paragraph (2) and Paragraph (3) of Subsection E of this section for each [municipality and county] local government in the prior fiscal year.

H. The secretary is authorized to decrease a distribution or transfer to a [municipality or county] local government upon being directed to do so by the secretary of finance and administration pursuant to the State Aid Intercept Act or to redirect a distribution or transfer to the New Mexico finance authority pursuant to an ordinance or a resolution passed by the [county or municipality] local government and a written agreement of the [municipality or county] local government and the New Mexico finance authority. Upon direction to decrease a distribution or transfer or notice to redirect a distribution or transfer to a [municipality or county] local government, the secretary shall decrease or redirect the next designated distribution or transfer, and succeeding distributions or transfers as necessary, by the amount of the state distributions intercept authorized by the secretary of finance and administration pursuant to the State Aid Intercept Act or by the amount of the state distribution intercept authorized pursuant to an ordinance or a resolution passed by the [county or municipality] local government and a written agreement with the New Mexico finance authority. The secretary shall transfer the state distributions intercept amount to the [municipal or county] local government's treasurer or other person designated by the secretary of finance and administration or to the New Mexico finance authority pursuant to written agreement to pay the debt service to avoid default on qualified local revenue bonds or meet other local revenue bond, loan or other debt obligations of the [municipality or county] local government to the New Mexico finance authority. A decrease to or redirection of a distribution or transfer pursuant to this subsection that arose:

(1) prior to an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department takes precedence over any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, which may be made only from the net amount of the distribution or transfer remaining after application of the decrease or redirection pursuant to this subsection; and

(2) after an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department shall be subordinate to any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section.

I. Upon the direction of the secretary of finance and administration pursuant to Section 9-6-5.2 NMSA 1978, the secretary shall temporarily withhold the balance of a distribution to a [municipality or county] local government, net of any decrease or redirected amount pursuant to Subsection H of this section and any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, that has failed to submit an audit report required by the Audit Act or a financial report required by Subsection F of Section 6-6-2 NMSA 1978. The amount to be withheld, the source of the withheld distribution and the number of months that the distribution is to be withheld shall be as directed by the secretary of finance and administration. A distribution withheld pursuant to this subsection shall remain in the tax administration suspense fund until distributed to the [municipality or county] local government and shall not be distributed to the general fund. An amount withheld pursuant to this subsection shall be distributed to the [municipality or county] local government upon direction of the secretary of finance and administration.

J. In August of each year, the department shall recompute the distributions pursuant to Sections 7-1-6.9, 7-1-6.26 and 7-1-6.27 NMSA 1978 made during the twelve-month period ending with the previous July if any taxpayer reported corrections to the number of gasoline gallons initially reported for any location on a gasoline tax return filed for any month during the fiscal year ending immediately prior to the August in which the recomputation is required. If the recomputation results in changes to the amounts that would have been distributed to local governments had the corrected gallonage been reported initially, then the department shall prepare a report showing the difference for each local government for the twelve-month period and increase or decrease the next monthly distribution amount for each local government by the amount shown in the table. If a decrease for a local government would result in its next monthly distribution amount being reduced to, or below, fifty percent of what it otherwise would be:

(1) the next distribution amount shall be reduced to fifty percent of what it otherwise would be; and

(2) the department shall notify the local government no later than the date of the distribution:

(a) of the amount of the fifty percent reduction and the amount of the decrease;

(b) of the department's intent to recover the difference between the amount of the decrease and the amount of the fifty percent reduction in equal installments over the following six distributions to that local government; and

(c) that the local government has sixty days to request any available additional information and to negotiate a different recovery period.

[J.] K. As used in this section:

(1) "amounts relating to the current month" means any amounts included in the net receipts of the current month that represent payment of tax due for the current month, correction of amounts processed in the current month that relate to the current month or that otherwise relate to obligations due for the current month;

(2) "amounts relating to prior periods" means any amounts processed during the current month that adjust amounts processed in a period or periods prior to the current month regardless of whether the adjustment is a correction of a department error or due to the filing of amended returns, payment of department-issued assessments, filing or approval of claims for refund, audit adjustments or other cause;

(3) "average distribution or transfer amount" means the following amounts; provided that a distribution or transfer that is negative shall not be used in calculating the amounts:

(a) the [annual] monthly average of the total amount distributed or transferred to a [municipality or county] local government in [each of the three twelve-month periods] the thirty-six-month period preceding the current month;

(b) if a distribution or transfer to a [municipality or county] local government has been made for less than [three years] thirty-six months, the total amount distributed or transferred in the [year] twelve-month period preceding the current month; or

(c) if a [municipality or county] local government has [not] received distributions or transfers of net receipts for fewer than twelve [or more] months, the monthly average of net receipts distributed or transferred to the [municipality or county] local government preceding the current month [multiplied by twelve];

(4) "current month" means the month for which the distribution or transfer is being prepared;

(5) "local government" means a municipality, county or tax increment development district formed by a municipality or county to which a gross receipts tax increment has been dedicated; and

[(5)] (6) "repayment agreement" means an agreement between the department and a [municipality or county] local government under which the [municipality or county] local government agrees to allow the department to recover an amount determined pursuant to Paragraph (2) of Subsection B of this section by decreasing distributions or transfers to the [municipality or county] local government for one or more months beginning with the distribution or transfer to be made with respect to a designated month. No interest shall be charged."

SECTION 9. Section 7-1-6.16 NMSA 1978 (being Laws 1983, Chapter 213, Section 27, as amended) is amended to read:

"7-1-6.16. COUNTY EQUALIZATION DISTRIBUTION.--

A. Beginning on September 15, [1989] 2019 and on September 15 of each year thereafter, the department shall distribute to any county that has imposed or continued in effect during the state's preceding fiscal year a county gross receipts tax pursuant to Section 7-20E-9 NMSA 1978 an amount equal to:

(1) the product of a fraction, the numerator of which is the county's population and the denominator of which is the state's population, multiplied by the annual sum for the county; less

(2) the net receipts received by the department during the report year, including any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, attributable to the county gross receipts tax at a rate of one-eighth percent; provided that for any month in the report year, if no county gross receipts tax was in effect in the county in the previous month, the net receipts, for the purposes of this section, for that county for that month shall be zero.

B. If the amount determined by the calculation in Subsection A of this section is zero or a negative number for a county, no distribution shall be made to that county.

C. As used in this section:

(1) "annual sum" means for each county the sum of the monthly amounts for those months in the report year that follow a month in which the county had in effect a county gross receipts tax;

(2) "monthly amount" means an amount equal to the product of:

(a) the net receipts received by the department in the month attributable to the state gross receipts tax [plus five percent of the total amount of deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month plus five percent of the total amount of deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month]; and

(b) a fraction, the numerator of which is one-eighth percent and the denominator of which is the tax rate imposed by Section 7-9-4 NMSA 1978 in effect on the last day of the previous month;

(3) "population" means the most recent official census or estimate determined by the United States census bureau for the unit or, if neither is available, the most current estimated population for the unit provided in writing by the bureau of business and economic research at the university of New Mexico; and

(4) "report year" means the twelve-month period ending on the July 31 immediately preceding the date upon which a distribution pursuant to this section is required to be made."

SECTION 10. Section 7-1-6.32 NMSA 1978 (being Laws 1990, Chapter 99, Section 44, as amended) is amended to read:

"7-1-6.32. DISTRIBUTION--SOLID WASTE ASSESSMENT FEE.--A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the solid waste facility grant fund of the net receipts attributable to the solid waste assessment fee authorized under the Solid Waste Act [less any administrative fee withheld pursuant to Section 7-1-6.41 NMSA 1978]."

SECTION 11. Section 7-1-6.41 NMSA 1978 (being Laws 1997, Chapter 125, Section 1) is amended to read:

"7-1-6.41. ADMINISTRATIVE FEE IMPOSED--APPROPRIATION.--

[A. The taxation and revenue department is directed to withhold an administrative fee of three percent of the net amount to be distributed under the provisions of:

(1) Section 7-1-6.32 NMSA 1978;

(2) Section 66-12-20 NMSA 1978; and

(3) Section 74-1-13 NMSA 1978.

B. The administrative fee to be withheld pursuant to Subsection A of this section shall be withheld on distributions made on or after July 1, 1997 and shall continue until the earlier of December 31, 2006 or the date on which the New Mexico finance authority certifies to the taxation and revenue department that all obligations for bonds issued

pursuant to Section 12 of this 1997 act have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section.

C. The taxation and revenue department is directed to withhold an additional administrative fee at the following percentage of the net amount to be distributed pursuant to the following provisions of law:

(1) two percent of the net amount to be distributed pursuant to Section 7-1-6.12 NMSA 1978; and

(2) six-tenths of one percent of the net amount to be distributed pursuant to Section 7-1-6.13 NMSA 1978.

D. The administrative fee to be withheld under Subsection C of this section shall be withheld on distributions made on or after July 1, 1997 and shall continue until the earlier of July 1, 2000 or the date on which the New Mexico finance authority certifies to the taxation and revenue department that all obligations for bonds issued pursuant to Section 12 of this 1997 act have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section.

E.] The administrative fee to be withheld by the [taxation and revenue] department [under] from the net receipts of any municipal or county local option gross receipts tax, municipal compensating tax or county compensating tax that is to be transferred pursuant to Section 7-1-6.12 [and] or 7-1-6.13 NMSA 1978 shall be set at three percent of the [net] amount to be [distributed] transferred prior to withholding of the fee pursuant to the provisions of those sections.

[F. The administrative fee to be withheld under Subsection E of this section shall be withheld on distributions made on or after July 1, 2000 and shall continue until the earlier of December 31, 2006 or the date on which the New Mexico finance authority certifies to the taxation and revenue department that all obligations for bonds issued pursuant to Section 12 of this 1997 act have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section. After the department has been directed by the authority to cease distributing money to the authority pursuant to this section, the administrative fee shall be remitted to the state treasurer for deposit in the state general fund each month.

G. The administrative fee shall be distributed monthly to the New Mexico finance authority to be pledged irrevocably for the payment of principal, interest and any expenses or obligations related to the bonds issued by the authority to finance the taxation and revenue information management systems project.]"

SECTION 12. Section 7-1-6.54 NMSA 1978 (being Laws 2006, Chapter 75, Section 29) is amended to read:

"7-1-6.54. [DISTRIBUTIONS] TRANSFER--TAX INCREMENT DEVELOPMENT DISTRICTS.--A [distribution] transfer to a tax increment development district shall be made by the department, in accordance with a notice that is filed pursuant to the Tax Increment for Development Act with respect to a taxing entity's dedication of a portion of a gross receipts tax increment to the tax increment development district."

SECTION 13. A new section of the Tax Administration Act is enacted to read:

"[NEW MATERIAL] TRANSFER--LOCAL LIQUOR EXCISE TAX.--A transfer pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county for which the department is collecting a local liquor excise tax imposed by that county in an amount equal to the net receipts attributable to the local liquor excise tax imposed by that county."

SECTION 14. Section 7-1-8.9 NMSA 1978 (being Laws 2009, Chapter 243, Section 11, as amended by Laws 2015, Chapter 89, Section 2 and by Laws 2015, Chapter 100, Section 2) is amended to read:

"7-1-8.9. INFORMATION THAT MAY BE REVEALED TO LOCAL GOVERNMENTS AND THEIR AGENCIES.--

A. An employee of the department may reveal to:

(1) the officials or employees of a municipality of this state authorized in a written request by the municipality for a period specified in the request [within the twelve months preceding the request] but no greater than the maximum period; provided that the municipality receiving the information has entered into a written agreement with the department that the information shall be used for tax purposes only and specifying that the municipality is subject to the confidentiality provisions of Section 7-1-8 NMSA 1978 and the penalty provisions of Section 7-1-76 NMSA 1978:

(a) the names, taxpayer identification numbers and addresses of registered gross receipts taxpayers reporting gross receipts for that municipality under the Gross Receipts and Compensating Tax Act or a local option gross receipts tax imposed by that municipality. The department may also reveal the information described in this subparagraph quarterly or upon such other periodic basis as the secretary and the municipality may agree in writing;

(b) a range of taxable gross receipts of registered gross receipts paid by taxpayers from business locations attributable to that municipality under the Gross Receipts and Compensating Tax Act or a local option gross receipts tax imposed by that municipality [provided that authorization from the federal internal revenue service to reveal such information has been received]. The department may also reveal the information described in this subparagraph quarterly or upon such other periodic basis as the secretary and the municipality may agree in writing; and

(c) information indicating whether persons shown on a list of businesses located within that municipality furnished by the municipality have reported gross receipts to the department but have not reported gross receipts for that municipality under the Gross Receipts and Compensating Tax Act or a local option gross receipts tax imposed by that municipality;

(2) the officials or employees of a county of this state authorized in a written request by the county for a period specified in the request [within the twelve months preceding the request] but no greater than the maximum period; provided that the county receiving the information has entered into a written agreement with the department that the information shall be used for tax purposes only and specifying that the county is subject to the confidentiality provisions of Section 7-1-8 NMSA 1978 and the penalty provisions of Section 7-1-76 NMSA 1978:

(a) the names, taxpayer identification numbers and addresses of registered gross receipts taxpayers reporting gross receipts either for that county in the case of a local option gross receipts tax imposed on a countywide basis or only for the areas of that county outside of any incorporated municipalities within that county in the case of a county local option gross receipts tax imposed only in areas of the county outside of any incorporated municipalities. The department may also reveal the information described in this subparagraph quarterly or upon such other periodic basis as the secretary and the county may agree in writing;

(b) a range of taxable gross receipts of registered gross receipts paid by taxpayers from business locations attributable either to that county in the case of a local option gross receipts tax imposed on a countywide basis or only to the areas of that county outside of any incorporated municipalities within that county in the case of a county local option gross receipts tax imposed only in areas of the county outside of any incorporated municipalities [provided that authorization from the federal internal revenue service to reveal such information has been received]. The department may also reveal the information described in this subparagraph quarterly or upon such other periodic basis as the secretary and the county may agree in writing;

(c) in the case of a local option gross receipts tax imposed by a county on a countywide basis, information indicating whether persons shown on a list of businesses located within the county furnished by the county have reported gross receipts to the department but have not reported gross receipts for that county under the Gross Receipts and Compensating Tax Act or a local option gross receipts tax imposed by that county on a countywide basis; and

(d) in the case of a local option gross receipts tax imposed by a county only on persons engaging in business in that area of the county outside of incorporated municipalities, information indicating whether persons on a list of businesses located in that county outside of the incorporated municipalities but within that county furnished by the county have reported gross receipts to the department but have not reported gross receipts for that county outside of the incorporated municipalities within that county under the Gross Receipts and Compensating Tax Act or a local option gross receipts tax imposed by the county only on persons engaging in business in that county outside of the incorporated municipalities; and

(3) officials or employees of a municipality or county of this state, authorized in a written request of the municipality or county, for purposes of inspection, the records of the department pertaining to an increase or decrease to a distribution or transfer made pursuant to Section 7-1-6.15 NMSA 1978 for the purpose of reviewing the basis for the increase or decrease; provided that the municipality or county receiving the information has entered into a written agreement with the department that the information shall be used for tax purposes only and specifying that the municipality or county is subject to the confidentiality provisions of Section 7-1-8 NMSA 1978 and the penalty provisions of Section 7-1-76 NMSA 1978. The authorized officials or employees may only reveal the information provided in this paragraph to another authorized official or employee, to an employee of the department, or a district court, an appellate court or a federal court in a proceeding relating to a disputed distribution and in which both the state and the municipality or county are parties.

B. The department may require that a municipal or county official or employee satisfactorily complete appropriate training on protecting confidential information prior to receiving the information pursuant to Subsection A of this section.

C. As used in this section, "maximum period" means a period of months beginning with the January of the seventh year prior to the year in which the request is made and ending with the month prior to the month in which the request is made."

SECTION 15. Section 7-1-14 NMSA 1978 (being Laws 1969, Chapter 145, Section 1, as amended) is amended to read:

"7-1-14. SECRETARY MAY DETERMINE WHERE CERTAIN GROSS RECEIPTS ARE TO BE REPORTED--PLACE OF BUSINESS FOR CONSTRUCTION PROJECTS, [AND] CERTAIN REAL PROPERTY SALES AND OUT-OF-STATE VENDORS WITH RESPECT TO THEIR INSTATE SALES AND TRANSPORTATION SERVICES.--

A. [By regulation, the secretary may require any] A person maintaining one or more places of business [to] in New Mexico or selling property or a product of a service into New Mexico shall report the person's [taxable] gross receipts and deductions for each municipality, [or] county or area within an Indian reservation or pueblo grant in which the person maintains a place of business or the property or product of a service is delivered.

B. For persons engaged in the construction business, the place where the construction project is performed is a "place of business", and all gross receipts from and deductions related to that project are to be reported from that place of business.

C. [The secretary may, by regulation, also require] Any person maintaining a place of business outside the boundaries of a municipality on land owned by that municipality [to] shall report the person's [taxable] gross receipts [for that municipality] and deductions with respect to that place of business from that place of business.

D. For a person engaged in the business of selling real estate, the location of the real property sold is the "place of business", and all gross receipts from and deductions related to that sale [are to] shall be reported from that place of business.

E. For a person engaging in business but that is without physical presence in this state, "place of business" is, except as provided in Subsection F of this section, the location where the property or the product of a service being sold by the person is delivered.

F. For a person engaged in the business of transporting persons or property, the place where the transportation of a person or property originates is a place of business and the gross receipts and deductions from the transportation service provided to the person or property are to be reported from that place of business."

SECTION 16. Section 7-1-26 NMSA 1978 (being Laws 1965, Chapter 248, Section 28, as amended) is amended to read:

"7-1-26. DISPUTING LIABILITIES--CLAIM FOR CREDIT, REBATE OR REFUND.--

A. A person who believes that an amount of tax has been paid by or withheld from that person in excess of that for which the person was liable, who has been denied any credit or rebate claimed or who claims a prior right to property in the possession of the department pursuant to a levy made under authority of Sections 7-1-31 through 7-1-34 NMSA 1978 may claim a refund by directing to the secretary, within the time limited by the provisions of Subsections F and G of this section, a written claim for refund. At the time the written claim is submitted, except as provided in Subsection K of this section, a refund claim shall include:

(1) the [taxpayer's] person's name, address and identification number;

(2) the type of tax for which a refund is being claimed, the credit or rebate denied or the property levied upon;

(3) the sum of money or other property being claimed;

(4) with respect to refund, the period for which overpayment was made;

(5) a brief statement of the facts and the law on which the claim is based, which may be referred to as the "basis for the refund", which [shall] may include documentation that substantiates the written claim and supports the taxpayer's basis for the refund; and

(6) a copy of an amended return for each tax period for which the refund is claimed.

B. A claim for refund that meets the requirements of Subsection A of this section shall be deemed to be properly before the department for consideration, regardless of whether the department requests additional documentation after receipt of the claim for refund; provided that the claim for refund is filed within the time limitations provided in Subsections F and G of this section.

C. [If] The department [requests] may request additional relevant documentation from a taxpayer who has submitted a claim for refund [the claim for refund will not be considered complete until the taxpayer provides the requested documentation. The provisions of Paragraph (2) of Subsection D of this section and of Section 7-1-68 NMSA 1978 do not apply until a refund claim is complete].

D. The secretary or the secretary's delegate may allow the claim in whole or in part or may deny the claim. If the:

(1) claim is denied in whole or in part in writing, no claim [may] shall be refiled with respect to that which was denied, but the person, within ninety days after either the mailing or delivery of the denial of all or any part of the claim, may elect to pursue one, but not more than one, of the remedies in Subsection E of this section; and

(2) department has neither granted nor denied any portion of a complete claim for refund within one hundred eighty days of the date the claim was mailed or otherwise delivered to the department, the person may elect to treat the claim as denied and elect to pursue one, but not more than one, of the remedies provided in Subsection [D] E of this section.

E. A person may elect to pursue no more than one of the remedies in Paragraphs (1) and (2) of this subsection. A person who timely pursues more than one remedy shall be deemed to have elected the first remedy invoked. The person may:

(1) direct to the secretary, pursuant to the provisions of Section 7-1-24 NMSA 1978, a written protest that shall set forth:

(a) the circumstances of: 1) an alleged overpayment; 2) a denied credit; 3) a denied rebate; or 4) a denial of a prior right to property levied upon by the department;

(b) an allegation that, because of that overpayment or denial, the state is indebted to the taxpayer for a specified amount, including any allowed interest, or for the property;

(d) reciting the facts of the claim for refund; or

(2) commence a civil action in the district court for Santa Fe county by filing a complaint setting forth the circumstance of the claimed overpayment, denied credit or rebate or denial of a prior right to property levied upon by the department alleging that on account thereof the state is indebted to the plaintiff in the amount or property stated, together with any interest allowable, demanding the refund to the plaintiff of that amount or property and reciting the facts of the claim for refund. The plaintiff or the secretary may appeal from any final decision or order of the district court to the court of appeals.

F. Except as otherwise provided in Subsection G of this section, no credit or refund of any amount [may] shall be allowed or made to any person unless as the result of a claim made by that person as provided in this section:

(1) within three years of the end of the calendar year in which:

(a) the payment was originally due or the overpayment resulted from an assessment by the department pursuant to Section 7-1-17 NMSA 1978, whichever is later;

(b) the final determination of value occurs with respect to any overpayment that resulted from a disapproval by any agency of the United States or the state of New Mexico or any court of increase in value of a product subject to taxation under the Oil and Gas Severance Tax Act, the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act or the Natural Gas Processors Tax Act;

(d) an overpayment of New Mexico tax resulted from: 1) an internal revenue service audit adjustment or a federal refund paid due to an adjustment of an audit by the internal revenue service or an amended federal return; or 2) making a change to a federal return for which federal approval is required by the Internal Revenue Code;

(2) when an amount of a claim for credit under the provisions of the Investment Credit Act, Laboratory Partnership with Small Business Tax Credit Act or Technology Jobs and Research and Development Tax Credit Act or for the rural job tax credit pursuant to Section 7-2E-1.1 NMSA 1978 or similar credit has been denied, the taxpayer may claim a refund of the credit no later than one year after the date of the denial;

(3) when a taxpayer under audit by the department has signed a waiver of the limitation on assessments on or after July 1, 1993 pursuant to Subsection F of Section 7-1-18 NMSA 1978, the taxpayer may file a claim for refund of the same tax paid for the same period for which the waiver was given, until a date one year after the later of the date of the mailing of an assessment issued pursuant to the audit, the date of the mailing of final audit findings to the taxpayer or the date a proceeding is begun in court by the department with respect to the same tax and the same period;

(4) if the payment of an amount of tax was not made within three years of the end of the calendar year in which the original due date of the tax or date of the assessment of the department occurred, a claim for refund of that amount of tax can be made within one year of the date on which the tax was paid; or

(5) when a taxpayer has been assessed a tax on or after July 1, 1993 under Subsection B, C or D of Section 7-1-18 NMSA 1978 and when the assessment applies to a period ending at least three years prior to the beginning of the year in which the assessment was made, the taxpayer may claim a refund for the same tax for the period of the assessment or for any period following that period within one year of the date of the assessment unless a longer period for claiming a refund is provided in this section.

G. No credit or refund shall be allowed or made to any person claiming a refund of gasoline tax under Section 7-13-11 NMSA 1978 unless notice of the destruction of the gasoline was given to the department within thirty days of the actual destruction and the claim for refund is made within six months of the date of destruction. No credit or refund shall be allowed or made to any person claiming a refund of gasoline tax under Section 7-13-17 NMSA 1978 unless the refund is claimed within six months of the date of purchase of the gasoline and the gasoline has been used at the time the claim for refund is made.

H. If as a result of an audit by the department or a managed audit covering multiple periods an overpayment of tax is found in any period under the audit, that overpayment may be credited against an underpayment of the same tax found in another period under audit pursuant to Section 7-1-29 NMSA 1978, provided that the taxpayer files a claim for refund for the overpayments identified in the audit.

I. Any refund of tax paid under any tax or tax act administered under Subsection B of Section 7-1-2 NMSA 1978 may be made, at the discretion of the department, in the form of credit against future tax payments if future tax liabilities in an amount at least equal to the credit amount reasonably may be expected to become due.

J. For the purposes of this section, "oil and gas tax return" means a return reporting tax due with respect to oil, natural gas, liquid hydrocarbons, carbon dioxide, helium or nonhydrocarbon gas pursuant to the Oil and Gas Severance Tax Act, the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act, the Natural Gas Processors Tax Act or the Oil and Gas Production Equipment Ad Valorem Tax Act.

K. The filing of a fully completed original income tax return, corporate income tax return, corporate income and franchise tax return, estate tax return or special fuel excise tax return that shows a balance due the taxpayer or a fully completed amended income tax return, an amended corporate income tax return, an amended corporate income and franchise tax return, an amended estate tax return, an amended special fuel excise tax return or an amended oil and gas tax return that shows a lesser tax liability than the original return constitutes the filing of a claim for refund for the difference in tax due shown on the original and amended returns."

SECTION 17. Section 7-2-31.1 NMSA 1978 (being Laws 1999, Chapter 47, Section 5) is amended to read:

"7-2-31.1. OPTIONAL REFUND CONTRIBUTION PROVISIONS--CONDITIONAL REPEAL.--

A. By August [31, 2000, and by August 31] of [every succeeding] each year, the secretary shall determine the total amount contributed through the preceding July 31 on returns filed for taxable years ending in the preceding calendar year pursuant to each provision of the Income Tax Act that allows a taxpayer the option of directing the department to contribute all or any part of an income tax refund due the taxpayer to a specified account, fund or entity and the department shall post on its website the total amount determined to have been contributed pursuant to each provision.

B. If the secretary's determination pursuant to Subsection A of this section regarding an optional refund contribution provision is that the total amount contributed is less than five thousand dollars ($5,000), exclusive of directions for contributions disregarded under Subsection C of this section, the secretary shall certify that fact to the secretary of state. Any optional refund contribution provision for which a certification is made for three consecutive years is repealed, effective on the January 1 following the third certification.

C. The department shall disregard a direction on a return to make an optional refund contribution if the amount of refund due on the return is determined by the department to be less than the sum of the amounts directed to be contributed.

D. Notwithstanding the provisions of Section

7-1-26 NMSA 1978, a taxpayer may not claim and the department may not allow a refund with respect to any optional refund contribution that was made by the department at the direction of the taxpayer."

SECTION 18. Section 7-2A-2 NMSA 1978 (being Laws 1986, Chapter 20, Section 33, as amended) is amended to read:

"7-2A-2. DEFINITIONS.--For the purpose of the Corporate Income and Franchise Tax Act and unless the context requires otherwise:

A. "affiliated group" means that term as it is used in the Internal Revenue Code;

B. "bank" means any national bank, national banking association, state bank or bank holding company;

C. "base income" means that part of the taxpayer's income defined as taxable income and upon which the federal income tax is calculated in the Internal Revenue Code for income tax purposes plus:

(1) for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and claimed by the taxpayer for that year;

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

(3) the amount of any deduction claimed in calculating taxable income for all expenses and costs directly or indirectly paid, accrued or incurred to a captive real estate investment trust;

D. "captive real estate investment trust" means a corporation, trust or association taxed as a real estate investment trust pursuant to Section 857 of the Internal Revenue Code, the shares or beneficial interests of which are not regularly traded on an established securities market; provided that more than fifty percent of any class of beneficial interests or shares of the real estate investment trust are owned directly, indirectly or constructively by the taxpayer during all or a part of the taxpayer's taxable year;

E. "corporation" means corporations, joint stock companies, real estate trusts organized and operated under the Real Estate Trust Act, financial corporations and banks, other business associations and, for corporate income tax purposes, partnerships and limited liability companies taxed as corporations under the Internal Revenue Code;

F. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

G. "fiscal year" means any accounting period of twelve months ending on the last day of any month other than December;

H. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended;

I. "net income" means base income adjusted to exclude:

(1) income from obligations of the United States less expenses incurred to earn that income;

(2) other amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States;

[(3) for taxable years that began prior to January 1, 1991, an amount equal to the sum of:

(a) net operating loss carryback deductions to that year from taxable years beginning prior to January 1, 1991 claimed and allowed, as provided by the Internal Revenue Code; and

(b) net operating loss carryover deductions to that year claimed and allowed;

(4)] (3) for taxable years beginning on or after January 1, 1991 and prior to January 1, 2013, an amount equal to the sum of any net operating loss carryover deductions to that year claimed and allowed; provided that the amount of any net operating loss carryover from a taxable year beginning on or after January 1, 1991 and prior to January 1, 2013 may be excluded only as follows:

(a) in the case of a timely filed return, in the taxable year immediately following the taxable year for which the return is filed; or

(b) in the case of amended returns or original returns not timely filed, in the first taxable year beginning after the date on which the return or amended return establishing the net operating loss is filed; and

(c) in either case, if the net operating loss carryover exceeds the amount of net income exclusive of the net operating loss carryover for the taxable year to which the exclusion first applies, in the next four succeeding taxable years in turn until the net operating loss carryover is exhausted for any net operating loss carryover from a taxable year prior to January 1, 2013; in no event may a net operating loss carryover from a taxable year beginning prior to January 1, 2013 be excluded in any taxable year after the fourth taxable year beginning after the taxable year to which the exclusion first applies; and

[(5)] (4) for taxable years beginning on or after January 1, 2013, an amount equal to the sum of any net operating loss carryover deductions to that year claimed and allowed; provided that the amount of any net operating loss carryover may be excluded only as follows:

(a) in the case of a timely filed return, in the taxable year immediately following the taxable year for which the return is filed; or

(c) in either case, if the net operating loss carryover exceeds the amount of net income exclusive of the net operating loss carryover for the taxable year to which the exclusion first applies, in the next nineteen succeeding taxable years in turn until the net operating loss carryover is exhausted for any net operating loss carryover from a taxable year beginning on or after January 1, 2013; in no event shall a net operating loss carryover from a taxable year beginning: 1) prior to January 1, 2013 be excluded in any taxable year after the fourth taxable year beginning after the taxable year to which the exclusion first applies; and 2) on or after January 1, 2013 be excluded in any taxable year after the nineteenth taxable year beginning after the taxable year to which the exclusion first applies;

J. "net operating loss" means any net operating loss, as defined by Section 172(c) of the Internal Revenue Code, as that section may be amended or renumbered, for a taxable year as further increased by the income, if any, from obligations of the United States for that year less related expenses;

K. "net operating loss carryover" means the amount, or any portion of the amount, of a net operating loss for any taxable year that, pursuant to Paragraph (3) or (4) [or (5)] of Subsection I of this section, may be excluded from base income;

L. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, joint venture, syndicate or other association; "person" also means, to the extent permitted by law, any federal, state or other governmental unit or subdivision or agency, department or instrumentality thereof;

M. "real estate investment trust" has the meaning ascribed to the term in Section 856 of the Internal Revenue Code, as that section may be amended or renumbered;

N. "secretary" means the secretary of taxation and revenue or the secretary's delegate;

O. "state" means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico, any territory or possession of the United States or political subdivision thereof or any political subdivision of a foreign country;

P. "state or local bond" means a bond issued by a state other than New Mexico or by a local government other than one of New Mexico's political subdivisions, the interest from which is excluded from income for federal income tax purposes under Section 103 of the Internal Revenue Code, as that section may be amended or renumbered;

Q. "taxable year" means the calendar year or fiscal year upon the basis of which the net income is computed under the Corporate Income and Franchise Tax Act and includes, in the case of the return made for a fractional part of a year under the provisions of that act, the period for which the return is made;

R. "taxpayer" means any corporation subject to the taxes imposed by the Corporate Income and Franchise Tax Act; for corporations filing pursuant to Section 7-2A-8.3 or 7-2A-8.4 NMSA 1978, "taxpayer" also means the corporation in whose name the return is filed, which corporation shall serve as agent for all the other corporations included in the return with respect to all matters concerning the filing of the return and its administration and the claiming of refunds; and

S. "unitary corporations" means two or more integrated corporations, other than any foreign corporation incorporated in a foreign country and not engaged in trade or business in the United States during the taxable year, that are owned in the amount of more than fifty percent and controlled by the same person and for which at least one of the following conditions exists:

(1) there is a unity of operations evidenced by central purchasing, advertising, accounting or other centralized services;

(2) there is a centralized management or executive force and centralized system of operation; or

(3) the operations of the corporations are dependent upon or contribute property or services to one another individually or as a group."

SECTION 19. Section 7-2A-8 NMSA 1978 (being Laws 1981, Chapter 37, Section 41, as amended) is amended to read:

"7-2A-8. CREDIT--INCOME ALLOCATION AND APPORTIONMENT.--

A. Except for income received from pass-through entities included in the taxpayer's income, net income of any taxpayer having income that is taxable both within and without this state shall be apportioned and allocated as follows:

(1) except as otherwise provided in Paragraphs (2) through (4) of this subsection, income shall be allocated and apportioned as provided in the Uniform Division of Income for Tax Purposes Act;

(2) except for gambling winnings, nonbusiness income as defined in the Uniform Division of Income for Tax Purposes Act not otherwise allocated or apportioned under the Uniform Division of Income for Tax Purposes Act shall be equitably allocated or apportioned in accordance with instructions, rulings or regulations of the secretary;

(3) other deductions and exemptions allowable in computing federal taxable income and not specifically allocated in the Uniform Division of Income for Tax Purposes Act shall be equitably allocated or apportioned in accordance with instructions, rulings or regulations of the secretary; and

(4) gambling winnings that are nonbusiness income and arise from sources within this state shall be allocated to this state.

B. Income received from pass-through entities included in a taxpayer's income shall be allocated and apportioned pursuant to the Uniform Division of Income for Tax Purposes Act separately from all other income of the taxpayer, using the commercial domiciles and apportionment factors of the pass-through entities.

[B.] C. For the purposes of this section, "non-New Mexico percentage" means the percentage determined by dividing the difference between the taxpayer's net income and the sum of the amounts allocated or apportioned to New Mexico by that net income.

[C.] D. A taxpayer may claim a credit in an amount equal to the amount of tax determined to be due under Section 7-2A-5 NMSA 1978 multiplied by the non-New Mexico percentage."

SECTION 20. Section 7-4-18 NMSA 1978 (being Laws 1965, Chapter 203, Section 18) is amended to read:

"7-4-18. DETERMINATION OF SALES IN THIS STATE OF SERVICES AND OTHER THAN [TANGIBLE PERSONAL] PROPERTY FOR INCLUSION IN SALES FACTOR.--

A. Sales other than sales [of tangible personal property] described in Section 7-4-17 NMSA 1978 are in this state [if:

A. the income-producing activity is performed in this state; or

B. the income-producing activity is performed both in and outside this state and a greater proportion of the income-producing activity is performed in this state than in any other state based on costs of performance]:

(1) in the case of sale, rental, lease or license of real property, if and to the extent the real property is located in this state;

(2) in the case of rental, lease or license of tangible personal property, if and to the extent the tangible personal property is located in this state;

(3) in the case of sale of a service, if and to the extent the service is delivered to a location in this state; and

(4) in the case of sale, rental, lease or license of intangible property, if and to the extent the intangible property is used in this state.

B. If the state or states of assignment under Subsection A of this section cannot be determined, the state or states of assignment shall be reasonably approximated.

C. If the taxpayer is not taxable in a state to which a sale is assigned pursuant to Subsection A of this section or if the state of assignment cannot be determined or reasonably approximated pursuant to Subsection B of this section, that sale shall be excluded from the numerator and denominator of the sales factor."

SECTION 21. Section 7-9-3 NMSA 1978 (being Laws 1978, Chapter 46, Section 1, as amended) is amended to read:

"7-9-3. DEFINITIONS.--As used in the Gross Receipts and Compensating Tax Act:

A. "affiliate" means a person that directly or indirectly, through one or more intermediaries controls, is controlled by or is under common control with another person where, for the purposes of this subsection, "control" means equity ownership in a business entity that represents at least fifty percent of the total voting power of that business entity or has a value equal to at least fifty percent of the total equity of that business entity;

[A.] B. "buying" or "selling" means a transfer of property for consideration or the performance of service for consideration;

[B.] C. "department" means the taxation and revenue department, the secretary of taxation and revenue or an employee of the department exercising authority lawfully delegated to that employee by the secretary;

[C. "financial corporation" means a savings and loan association or an incorporated savings and loan company, trust company, mortgage banking company, consumer finance company or other financial corporation;]

D. "initial use" or "initially used" means the first employment for the intended purpose and does not include the following activities:

(1) observation of tests conducted by the performer of services;

(2) participation in progress reviews, briefings, consultations and conferences conducted by the performer of services;

(3) review of preliminary drafts, drawings and other materials prepared by the performer of the services;

(4) inspection of preliminary prototypes developed by the performer of services; or

(5) similar activities;

E. "leasing" means an arrangement whereby, for a consideration, property is employed for or by any person other than the owner of the property, except that the granting of a license to use property is licensing and is not a lease;

F. "local option gross receipts tax" means a tax authorized to be imposed by a county or municipality upon the taxpayer's gross receipts and required to be collected by the department at the same time and in the same manner as the gross receipts tax; "local option gross receipts tax" includes the taxes imposed pursuant to the Municipal Local Option Gross Receipts [Taxes] and Compensating Tax Act, Supplemental Municipal Gross Receipts Tax Act, County Local Option Gross Receipts [Taxes] and Compensating Tax Act, Local Hospital Gross Receipts Tax Act and County Correctional Facility Gross Receipts Tax Act and such other acts as may be enacted authorizing counties or municipalities to impose taxes on gross receipts, which taxes are to be collected by the department;

G. "manufactured home" means a movable or portable housing structure for human occupancy that exceeds either a width of eight feet or a length of forty feet constructed to be towed on its own chassis and designed to be installed with or without a permanent foundation;

H. "manufacturing" means combining or processing components or materials to increase their value for sale in the ordinary course of business, but does not include construction;

I. "person" means:

(1) an individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, limited liability partnership, joint venture, syndicate or other entity, including any gas, water or electric utility owned or operated by a county, municipality or other political subdivision of the state; or

(2) a national, federal, state, Indian or other governmental unit or subdivision, or an agency, department or instrumentality of any of the foregoing;

J. "property" means real property, tangible personal property, licenses other than the licenses of copyrights, trademarks or patents and franchises. Tangible personal property includes electricity and manufactured homes;

K. "research and development services" means an activity engaged in for other persons for consideration, for one or more of the following purposes:

(1) advancing basic knowledge in a recognized field of natural science;

(2) advancing technology in a field of technical endeavor;

(3) developing a new or improved product, process or system with new or improved function, performance, reliability or quality, whether or not the new or improved product, process or system is offered for sale, lease or other transfer;

(4) developing new uses or applications for an existing product, process or system, whether or not the new use or application is offered as the rationale for purchase, lease or other transfer of the product, process or system;

(5) developing analytical or survey activities incorporating technology review, application, trade-off study, modeling, simulation, conceptual design or similar activities, whether or not offered for sale, lease or other transfer; or

(6) designing and developing prototypes or integrating systems incorporating the advances, developments or improvements included in Paragraphs (1) through (5) of this subsection;

L. "secretary" means the secretary of taxation and revenue or the secretary's delegate;

M. "service" means all activities engaged in for other persons for a consideration, which activities involve predominantly the performance of a service as distinguished from selling or leasing property. "Service" includes activities performed by a person for its members or shareholders. In determining what is a service, the intended use, principal objective or ultimate objective of the contracting parties shall not be controlling. "Service" includes construction activities and all tangible personal property that will become an ingredient or component part of a construction project. That tangible personal property retains its character as tangible personal property until it is installed as an ingredient or component part of a construction project in New Mexico. Sales of tangible personal property that will become an ingredient or component part of a construction project to persons engaged in the construction business are sales of tangible personal property; and

N. "use" or "using" includes use, consumption or storage other than storage for subsequent sale in the ordinary course of business or for use solely outside this state."

SECTION 22. Section 7-9-3.2 NMSA 1978 (being Laws 1991, Chapter 8, Section 1, as amended) is amended to read:

"7-9-3.2. ADDITIONAL DEFINITION.--

A. As used in the Gross Receipts and Compensating Tax Act, "governmental gross receipts" means receipts of the state or an agency, institution, instrumentality or political subdivision from:

(1) the sale of tangible personal property other than water from facilities open to the general public;

(2) the performance of or admissions to recreational, athletic or entertainment services or events in facilities open to the general public;

(3) refuse collection or refuse disposal or both;

(4) sewage services;

(5) the sale of water by a utility owned or operated by a county, municipality or other political subdivision of the state; and

(6) the renting of parking, docking or tie-down spaces or the granting of permission to park vehicles, tie down aircraft or dock boats.

B. "Governmental gross receipts" includes receipts from the sale of tangible personal property handled on consignment when sold from facilities open to the general public but excludes cash discounts taken and allowed, governmental gross receipts tax payable on transactions reportable for the period and any type of time-price differential.

[B. As used in this section, "facilities open to the general public" does not include point of sale registers or electronic devices at a bookstore owned or operated by a public post-secondary educational institution when the registers or devices are utilized in the sale of textbooks or other materials required for courses at the institution to a student enrolled at the institution who displays a valid student identification card.]"

SECTION 23. Section 7-9-3.3 NMSA 1978 (being Laws 2003, Chapter 272, Section 4) is amended to read:

"7-9-3.3. DEFINITION--ENGAGING IN BUSINESS.--As used in the Gross Receipts and Compensating Tax Act, "engaging in business" means carrying on or causing to be carried on any activity with the purpose of direct or indirect benefit, without regard to having physical presence, including the presence of a representative acting on behalf of the person, in the state, except that engaging in business does not include:

A. ["engaging in business" does not include] having a worldwide [web site] website as a third-party content provider on a computer physically located in New Mexico but owned by another nonaffiliated person; [and]

B. ["engaging in business" does not include] using a nonaffiliated third-party call center to accept and process telephone or electronic orders of tangible personal property or licenses primarily from non-New Mexico buyers, which orders are forwarded to a location outside New Mexico for filling, or to provide services primarily to non-New Mexico customers; and

C. except for activities related to selling and delivering into this state or from selling services the tangible products of which are delivered for initial use into this state through unaffiliated multi-vendor platforms, the activities of a person without physical presence in this state if the person and the person's affiliates have less than one hundred thousand dollars ($100,000) of gross receipts in the state, including any gross receipts from sales through unaffiliated multi-vendor platforms, based on receipts during the prior calendar year."

SECTION 24. Section 7-9-3.5 NMSA 1978 (being Laws 2003, Chapter 272, Section 3, as amended) is amended to read:

"7-9-3.5. DEFINITION--GROSS RECEIPTS.--

A. As used in the Gross Receipts and Compensating Tax Act:

(1) "gross receipts" means the total amount of money or the value of other consideration received from selling property in New Mexico, from leasing or licensing property employed in New Mexico, from granting a right to use a franchise employed in New Mexico, from selling services performed outside New Mexico, the product of which is initially used in New Mexico, or from performing services in New Mexico. In an exchange in which the money or other consideration received does not represent the value of the property or service exchanged, "gross receipts" means the reasonable value of the property or service exchanged;

(2) "gross receipts" includes:

(a) any receipts from sales of tangible personal property handled on consignment, including third-party sales made over a multi-vendor marketplace platform that acts as the intermediary, typically as the processor of the transaction, between the seller and the buyer;

(b) the total commissions or fees derived from the business of buying, selling or promoting the purchase, sale or lease, as an agent or broker on a commission or fee basis, of any property, service, stock, bond or security;

(c) amounts paid by members of any cooperative association or similar organization for sales or leases of personal property or performance of services by such organization;

(d) amounts received from transmitting messages or conversations by persons providing telephone or telegraph services;

(e) amounts received by a New Mexico florist from the sale of flowers, plants or other products that are customarily sold by florists where the sale is made pursuant to orders placed with the New Mexico florist that are filled and delivered outside New Mexico by an out-of-state florist; and

(f) the receipts of a home service provider from providing mobile telecommunications services to customers whose place of primary use is in New Mexico if: 1) the mobile telecommunications services originate and terminate in the same state, regardless of where the services originate, terminate or pass through; and 2) the charges for mobile telecommunications services are billed by or for a customer's home service provider and are deemed provided by the home service provider. For the purposes of this section, "home service provider", "mobile telecommunications services", "customer" and "place of primary use" have the meanings given in the federal Mobile Telecommunications Sourcing Act; and

(3) "gross receipts" excludes:

(a) cash discounts allowed and taken;

(b) New Mexico gross receipts tax, governmental gross receipts tax and leased vehicle gross receipts tax payable on transactions for the reporting period;

(c) taxes imposed pursuant to the provisions of any local option gross receipts tax that is payable on transactions for the reporting period;

(d) any gross receipts or sales taxes imposed by an Indian nation, tribe or pueblo; provided that the tax is approved, if approval is required by federal law or regulation, by the secretary of the interior of the United States; and provided further that the gross receipts or sales tax imposed by the Indian nation, tribe or pueblo provides a reciprocal exclusion for gross receipts, sales or gross receipts-based excise taxes imposed by the state or its political subdivisions;

(e) any type of time-price differential;

(f) amounts received solely on behalf of another in a disclosed agency capacity; and

(g) amounts received by a New Mexico florist from the sale of flowers, plants or other products that are customarily sold by florists where the sale is made pursuant to orders placed with an out-of-state florist for filling and delivery in New Mexico by a New Mexico florist.

B. When the sale of property or service is made under any type of charge, conditional or time-sales contract or the leasing of property is made under a leasing contract, the seller or lessor may elect to treat all receipts, excluding any type of time-price differential, under such contracts as gross receipts as and when the payments are actually received. If the seller or lessor transfers the seller's or lessor's interest in any such contract to a third person, the seller or lessor shall pay the gross receipts tax upon the full sale or leasing contract amount, excluding any type of time-price differential."

SECTION 25. Section 7-9-4 NMSA 1978 (being Laws 1966, Chapter 47, Section 4, as amended) is amended to read:

"7-9-4. IMPOSITION AND RATE OF TAX--DENOMINATION AS "GROSS RECEIPTS TAX".--

A. For the privilege of engaging in business, an excise tax equal to [five and one-eighth percent of gross receipts] the following rates is imposed on any person engaging in business in New Mexico:

(1) beginning July 1, 2010 and prior to January 1, 2019, five and one-eighth percent of gross receipts;

(2) beginning January 1, 2019 and prior to July 1, 2020, three and nine-tenths percent of gross receipts; and

(3) on and after July 1, 2020, three and one-tenth percent of gross receipts.

B. The tax imposed by this section shall be referred to as the "gross receipts tax"."

SECTION 26. Section 7-9-7 NMSA 1978 (being Laws 1966, Chapter 47, Section 7, as amended) is amended to read:

"7-9-7. IMPOSITION AND RATE OF TAX--DENOMINATION AS "COMPENSATING TAX".--

A. For the privilege of using tangible property in New Mexico, there is imposed on the person using the property an excise tax equal to [five and one-eighth percent] the rate in effect and imposed pursuant to Section 7-9-4 NMSA 1978 of the value of tangible property that was:

(1) manufactured by the person using the property in the state;

(2) acquired inside or outside of this state as the result of a transaction with a person located outside this state that would have been subject to the gross receipts tax had the tangible personal property been acquired from a person with nexus with New Mexico; or

(3) acquired as the result of a transaction that was not initially subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax but which transaction, because of the buyer's subsequent use of the property, should have been subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax.

B. For the purpose of Subsection A of this section, value of tangible property shall be the adjusted basis of the property for federal income tax purposes determined as of the time of acquisition or introduction into this state or of conversion to use, whichever is later. If no adjusted basis for federal income tax purposes is established for the property, a reasonable value of the property shall be used.

C. For the privilege of using a license or franchise in New Mexico, there is imposed on the person using the property an excise tax equal to the rate in effect and imposed pursuant to Section 7-9-4 NMSA 1978 against the value of the property in its use in New Mexico. For use of a license or franchise to be taxable under this subsection, the property must have been sold, leased or licensed by a person outside this state and the receipts from the sale, lease or licensing of the license or franchise would have been subject to the gross receipts tax had the license or franchise been acquired from a person with nexus with New Mexico.

[C.] D. For the privilege of using services rendered in New Mexico, there is imposed on the person using such services an excise tax equal to [five percent] the rate in effect and imposed pursuant to Section 7-9-4 NMSA 1978 of the value of the services at the time they were rendered. [The] For use of services to be taxable under this subsection, the services must have been [rendered as the result of a transaction that was not initially subject to the gross receipts tax but which transaction, because of the buyer's subsequent use of the services, should] performed by a person outside this state and receipts from the performance or sale of the services would have been subject to the gross receipts tax had the service been performed or sold by a person with nexus with New Mexico.

[D.] E. The tax imposed by this section shall be referred to as the "compensating tax"."

SECTION 27. Section 7-9-7.1 NMSA 1978 (being Laws 1993, Chapter 45, Section 1, as amended) is amended to read:

"7-9-7.1. DEPARTMENT BARRED FROM TAKING COLLECTION ACTIONS WITH RESPECT TO CERTAIN COMPENSATING TAX LIABILITIES.--

A. The department shall take no action prior to July 1, 2019 to enforce collection of compensating tax due on purchases made by an individual if:

(1) the property is used only for nonbusiness purposes;

(2) the property is not a manufactured home; and

(3) the individual is not an agent for collection of compensating tax pursuant to Section 7-9-10 NMSA 1978.

B. The department shall take no action to enforce collection of gross receipts tax for a tax period prior to July 1, 2018 on persons engaging in business if, for those tax periods, those persons:

(1) lacked physical presence in this state, including presence attributable to agents or employees; and

(2) did not report taxable gross receipts.

[B.] C. The prohibition in Subsection A of this section does not prevent the department from enforcing collection of compensating tax on purchases from persons who are not individuals, who are agents for collection pursuant to Section 7-9-10 NMSA 1978 or who use the property in the course of engaging in business in New Mexico or from enforcing collection of compensating tax due on purchase of manufactured homes."

SECTION 28. Section 7-9-12 NMSA 1978 (being Laws 1969, Chapter 144, Section 5, as amended) is amended to read:

"7-9-12. EXEMPTIONS.--

A. Exemptions from either the gross receipts tax or the compensating tax are not exemptions from both taxes unless explicitly stated otherwise by law.

B. A taxpayer may elect to report exempt receipts as gross receipts and deduct those same receipts; provided that the taxpayer retains documentation that the receipts qualified for exemption."

SECTION 29. Section 7-9-14 NMSA 1978 (being Laws 1969, Chapter 144, Section 7, as amended) is amended to read:

"7-9-14. EXEMPTION--COMPENSATING TAX--GOVERNMENTAL AGENCIES--INDIANS.--

A. Except as otherwise provided in this subsection, there is exempted from the compensating tax the use of property or services by the United States or the state of New Mexico or any governmental unit or subdivision, agency, department or instrumentality thereof. The exemption provided by this subsection does not apply to:

(1) the use of property that is or will be incorporated into a metropolitan redevelopment project under the Metropolitan Redevelopment Code; or

(2) the use of construction material.

B. Exempted from the compensating tax is the use of property or services by any Indian nation, tribe or pueblo or any governmental unit, subdivision, agency, department or instrumentality thereof on Indian reservations or pueblo grants."

SECTION 30. Section 7-9-15 NMSA 1978 (being Laws 1970, Chapter 12, Section 1, as amended) is amended to read:

"7-9-15. EXEMPTION--COMPENSATING TAX--CERTAIN ORGANIZATIONS.--Exempted from the compensating tax is the use of property by organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of [1954] 1986, as that section may be amended or renumbered, in the conduct of functions described in [Section 501(c)(3)] that section; provided that the gross receipts of the organization for the prior calendar year were less than one hundred thousand dollars ($100,000). The use of property as an ingredient or component part of a construction project is not a use in the conduct of functions described in Section 501(c)(3). This section does not apply to the use of property or services in an unrelated trade or business as defined in Section 513 of the United States Internal Revenue Code of [1954] 1986, as that section may be amended or renumbered."

SECTION 31. Section 7-9-18.1 NMSA 1978 (being Laws 1987, Chapter 264, Section 13 and Laws 1987, Chapter 304, Section 1) is amended to read:

"7-9-18.1. EXEMPTION--GROSS RECEIPTS TAX--[FOOD STAMPS] SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM.--Exempted from the gross receipts tax are the receipts of a taxpayer who is approved for participation in the [food stamp] federal supplemental nutrition assistance program authorized by U.S.C. Title 7, Chapter 51, as that chapter may be amended or renumbered, from the lawful acceptance [and deposit with a financial institution of food stamps issued] of electronic benefit transfers or other authorized payment by the United States department of agriculture pursuant to the [food stamp] program."

SECTION 32. Section 7-9-29 NMSA 1978 (being Laws 1970, Chapter 12, Section 3, as amended) is amended to read:

"7-9-29. EXEMPTION--GROSS RECEIPTS TAX--CERTAIN ORGANIZATIONS.--

A. Exempted from the gross receipts tax are the receipts of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of [1954] 1986, as that section may be amended or renumbered;

[B. Exempted from the gross receipts tax are the receipts from carrying on chamber of commerce, visitor bureau and convention bureau functions of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(6) of the United States Internal Revenue Code of 1954, as amended or renumbered] provided that the gross receipts of the organization for the prior calendar year were less than one hundred thousand dollars ($100,000).

[C.] B. This section does not apply to receipts derived from an unrelated trade or business as defined in Section 513 of the United States Internal Revenue Code of [1954] 1986, as that section may be amended or renumbered."

SECTION 33. Section 7-9-40 NMSA 1978 (being Laws 1970, Chapter 60, Section 2, as amended) is amended to read:

"7-9-40. EXEMPTION--GROSS RECEIPTS TAX--PURSES AND JOCKEY REMUNERATION AT NEW MEXICO RACETRACKS--RECEIPTS FROM GROSS AMOUNTS WAGERED.--

A. Exempted from the gross receipts tax are the receipts of horsemen, jockeys and trainers from race purses at New Mexico horse racetracks subject to the jurisdiction of the state racing commission.

B. Exempted from the gross receipts tax are the receipts of a racetrack from [the commissions and other] amounts [authorized by] subject to the daily pari-mutuel tax and amounts retained pursuant to Section [60-1-10] 60-1A-19 NMSA 1978 to be retained by a racetrack conducting horse races under the authority of a license from the state racing commission."

SECTION 34. A new Section 7-9-41.5 NMSA 1978 is enacted to read:

"7-9-41.5. [NEW MATERIAL] EXEMPTION--GROSS RECEIPTS TAX--DE MINIMIS IMPORTS.--Except for receipts from selling through an unaffiliated multi-vendor platform, exempted from the gross receipts tax are the receipts of a seller and the seller's affiliates from selling and delivering tangible personal property into this state, or from selling services the tangible products of which are delivered for initial use into this state, if neither the seller nor the seller's affiliates have a physical location in this state and together had less than one hundred thousand dollars ($100,000) of gross receipts, including gross receipts from sales through unaffiliated multi-vendor platforms, from sources within this state in the prior calendar year."

SECTION 35. Section 7-9-45 NMSA 1978 (being Laws 1969, Chapter 144, Section 35, as amended) is amended to read:

"7-9-45. DEDUCTIONS.--

A. Receipts may only be deducted once from gross receipts or governmental gross receipts when computing the gross receipts tax or governmental gross receipts tax due.

B. The same receipts shall not be both exempt from the gross receipts tax and deducted from gross receipts.

C. The same receipts shall not be both exempt from the governmental gross receipts tax and deducted from governmental gross receipts.

D. Taxpayers claiming deductions are required to report the deduction amounts claimed separately or in groups as follows; provided that if the statute providing the deduction or the department by rule or instruction requires that the amount of a deduction be reported separately, the deduction shall be reported separately:

(1) deductions that require a nontaxable transaction certificate, including any such deduction for which alternative evidence may be provided in lieu of the nontaxable transaction certificate, shall be reported in the aggregate as a separate group;

(2) deductions pursuant to Sections 7-9-60, 7-9-60.2 and 7-9-85 NMSA 1978 shall be reported in the aggregate as a separate group;

(3) deductions pursuant to Sections 7-9-54.2, 7-9-94 and 7-9-115 NMSA 1978 shall be reported in the aggregate as a separate group;

(4) deductions pursuant to Sections 7-9-73, 7-9-73.2, 7-9-73.3 and 7-9-111 NMSA 1978 shall be reported in the aggregate as a separate group;

(5) deductions pursuant to Sections 7-9-73.1, 7-9-77.1 and 7-9-109 NMSA 1978 shall be reported in the aggregate as a separate group; and

(6) all deductions not specified in Paragraphs (1) through (5) of this subsection shall be reported in the aggregate as a separate group."

SECTION 36. Section 7-9-46 NMSA 1978 (being Laws 1969, Chapter 144, Section 36, as amended) is amended to read:

"7-9-46. DEDUCTION--GROSS RECEIPTS [TAX]--GOVERNMENTAL GROSS RECEIPTS--SALES TO MANUFACTURERS.--

A. Receipts from selling tangible personal property may be deducted from gross receipts or from governmental gross receipts if the sale is made to a person engaged in the business of manufacturing who delivers a nontaxable transaction certificate to the seller. The buyer delivering the nontaxable transaction certificate must incorporate the tangible personal property as an ingredient or component part of the product that the buyer is in the business of manufacturing.

B. Receipts from selling tangible personal property that is a consumable and used in such a way that it is consumed in the manufacturing process of a product, provided that the tangible personal property is not a tool or equipment used to create the manufactured product, to a person engaged in the business of manufacturing that product and who delivers a nontaxable transaction certificate to the seller may be deducted [in the following percentages] from gross receipts or from governmental gross receipts

[(1) twenty percent of receipts received prior to January 1, 2014;

(2) forty percent of receipts received in calendar year 2014;

(3) sixty percent of receipts received in calendar year 2015;

(4) eighty percent of receipts received in calendar year 2016; and

(5) one hundred percent of receipts received on or after January 1, 2017].

C. The purpose of the deductions provided in this section is to encourage manufacturing businesses to locate in New Mexico and to reduce the tax burden, including reducing pyramiding, on the tangible personal property that is consumed in the manufacturing process and that is purchased by manufacturing businesses in New Mexico.

[D. The department shall annually report to the revenue stabilization and tax policy committee the aggregate amount of deductions taken pursuant to this section, the number of taxpayers claiming each of the deductions and any other information that is necessary to determine that the deductions are performing the purposes for which they are enacted.

E. A taxpayer deducting gross receipts pursuant to this section shall report the amount deducted separately for each deduction provided in this section and attribute the amount of the deduction to the appropriate authorization provided in this section in a manner required by the department that facilitates the evaluation by the legislature of the benefit to the state of these deductions.

F.] D. As used in Subsection B of this section, "consumable" means tangible personal property that is incorporated into, destroyed, depleted or transformed in the process of manufacturing a product:

(1) including electricity, fuels, water, manufacturing aids and supplies, chemicals, gases, repair parts, spares and other tangibles used to manufacture a product; but

(2) excluding tangible personal property used in:

(a) the generation of power;

(b) the processing of natural resources, including hydrocarbons; and

SECTION 37. Section 7-9-55 NMSA 1978 (being Laws 1969, Chapter 144, Section 45, as amended) is amended to read:

"7-9-55. DEDUCTION--GROSS RECEIPTS [TAX]--GOVERNMENTAL GROSS RECEIPTS [TAX]--TRANSACTION IN INTERSTATE COMMERCE.--

A. Receipts from transactions in interstate or foreign commerce may be deducted from gross receipts and governmental gross receipts to the extent that the imposition of the gross receipts tax would be unlawful under the United States constitution.

B. Receipts from transactions in interstate or foreign commerce may be deducted [from governmental gross receipts] pursuant to this section when a seller located in New Mexico delivers the property or product of the service to the buyer or the buyer's nominee outside New Mexico; provided that neither the buyer, the buyer's nominee nor any of the buyer's agents or employees makes initial use of the property or product of the service in New Mexico.

C. To qualify as a transaction in interstate or foreign commerce for purposes of this section, when tangible property is involved:

(1) the transaction shall involve actual and physical movement of the property or product of a service sold either into or out of New Mexico;

(2) such movement shall be an essential and not an incidental part of the sale; and

(3) the seller shall be obligated by the express or unavoidable implied terms of the sale, or contract to sell, to make physical delivery of the property or product of a service across a border of New Mexico to the buyer or end user.

D. Receipts from transportation services are deductible from gross receipts if the transportation of persons or property either originates in New Mexico and terminates outside New Mexico, originates outside New Mexico and terminates in New Mexico or originates and terminates outside New Mexico, regardless in all cases of any intermediate stops in New Mexico. In addition, receipts from transportation by air from one point in New Mexico to another point in New Mexico may be deducted from gross receipts.

E. Receipts from a transaction in interstate or foreign commerce may not be deducted pursuant to this section if the property or product of the service is delivered to the buyer or the buyer's nominee in New Mexico, except to the extent that the imposition of the gross receipts tax would be unlawful under the United States constitution.

F. Receipts of a licensor or franchisor having no physical presence in this state from granting a license or franchise employed in New Mexico shall not be deducted pursuant to this section.

[C.] G. Receipts from transmitting messages or conversations by radio other than from one point in this state to another point in this state and receipts from the sale of radio or television broadcast time when the advertising message is supplied by or on behalf of a national or regional seller or advertiser not having its principal place of business in or being incorporated under the laws of this state may be deducted from gross receipts. Commissions of advertising agencies from performing services in this state may not be deducted from gross receipts under this section.

H. As used in this section, "buyer's nominee" means a person other than the buyer to whom the buyer directs the property or product of a service to be shipped."

SECTION 38. Section 7-9-56.3 NMSA 1978 (being Laws 2003, Chapter 232, Section 1, as amended) is amended to read:

"7-9-56.3. DEDUCTION--GROSS RECEIPTS--TRADE-SUPPORT COMPANY IN A BORDER ZONE.--

A. The receipts of a trade-support company may be deducted from gross receipts if:

(1) the trade-support company first locates in New Mexico within twenty miles of a port of entry on New Mexico's border with Mexico [on or after July 1, 2003 but before July 1, 2013 or] on or after January 1, 2016 but before January 1, 2021;

(2) the receipts are received by the company within a five-year period beginning on the date the trade-support company locates in New Mexico and the receipts are derived from its business activities and operations at its border zone location; and

(3) the trade-support company employs at least two employees in New Mexico.

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

C. The department shall compile an annual report on the deduction created pursuant to this section that shall include the number of taxpayers approved by the department to receive the deduction, the aggregate amount of deductions approved and any other information necessary to evaluate the effectiveness of the deduction. Beginning in 2016 and every four years 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.

D.] B. As used in this section:

(1) "employee" means an individual, other than an individual who:

(a) bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to the employer or, if the employer is a corporation, to an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, to an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interests in the entity;

(b) if the employer is an estate or trust, is a grantor, beneficiary or fiduciary of the estate or trust or is an individual who bears any of the relationships described in Paragraphs (1) through (8) of 26 U.S.C. Section 152(a) to a grantor, beneficiary or fiduciary of the estate or trust; or

(c) is a dependent, as that term is described in 26 U.S.C. Section 152(a)(9), of the employer, or, if the taxpayer is a corporation, of an individual who owns, directly or indirectly, more than fifty percent in value of the outstanding stock of the corporation or, if the employer is an entity other than a corporation, an individual who owns, directly or indirectly, more than fifty percent of the capital and profits interests in the entity or, if the employer is an estate or trust, of a grantor, beneficiary or fiduciary of the estate or trust;

(2) "port of entry" means an international port of entry in New Mexico at which customs services are provided by United States customs and border protection; and

(3) "trade-support company" means a customs brokerage firm or a freight forwarder."

SECTION 39. Section 7-9-18 NMSA 1978 (being Laws 1969, Chapter 144, Section 11, as amended) is recompiled as Section 7-9-58.1 NMSA 1978 and is amended to read:

"7-9-58.1. [EXEMPTION] DEDUCTION--GROSS RECEIPTS [TAX AND]--GOVERNMENTAL GROSS RECEIPTS [TAX]--AGRICULTURAL PRODUCTS.--

A. [Exempted from the gross receipts tax and from the governmental gross receipts tax are the] Receipts from selling livestock and receipts of growers, producers, trappers or nonprofit marketing associations from selling livestock, live poultry, unprocessed agricultural products, hides or pelts [Persons engaged in the business of buying and selling wool or mohair or of buying and selling livestock on their own account are producers for the purposes of this section] may be deducted from gross receipts or governmental gross receipts.

B. Receipts from selling dairy products at retail [are not exempted] shall not be deducted from [the] gross receipts [tax] or governmental gross receipts.

C. As used in this section:

(1) "livestock" means all domestic or domesticated animals that are used or raised on a farm or ranch, including the carcasses thereof, and also includes horses, asses, mules, cattle, sheep, goats, swine, bison, poultry, ostriches, emus, rheas, camelids and farmed cervidae upon any land in New Mexico; provided that for the purposes of Chapter 77, Article 9 NMSA 1978, "animals" or "livestock" [have] has the meaning defined in that article. "Animals" or "livestock" does not include canine or feline animals. For the purpose of the rules governing meat inspection, wild animals, poultry and birds used for human consumption shall also be included within the meaning of "animals" or "livestock"; and

(2) "producers" means persons engaged in the business of buying and selling wool or mohair or of buying and selling livestock on their own account."

SECTION 40. A new Section 7-9-60.1 NMSA 1978 is enacted to read:

"7-9-60.1. [NEW MATERIAL] DEDUCTION--COMPENSATING TAX--CERTAIN ORGANIZATIONS.--

A. Except for organizations qualifying for the exemption pursuant to Section 7-9-15 NMSA 1978, up to one hundred thousand dollars ($100,000) annually of the value of property or services used by organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of 1986, as that section may be amended or renumbered, in the conduct of functions described in that Section 501(c)(3) may be deducted in computing compensating tax due. The use of property as an ingredient or component part of a construction project is not a use in the conduct of functions described in that Section 501(c)(3).

B. This section does not apply to the use of property or services in an unrelated trade or business as defined in Section 513 of the United States Internal Revenue Code of 1986, as that section may be amended or renumbered."

SECTION 41. A new Section 7-9-60.2 NMSA 1978 is enacted to read:

"7-9-60.2. [NEW MATERIAL] DEDUCTION--GROSS RECEIPTS-- CERTAIN ORGANIZATIONS.--

A. Except for organizations qualifying for the exemption pursuant to Section 7-9-29 NMSA 1978, up to one hundred thousand dollars ($100,000) annually of the receipts of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of 1986, as that section may be amended or renumbered, may be deducted from gross receipts.

B. Up to one hundred thousand dollars ($100,000) annually of receipts from carrying on chamber of commerce, visitor bureau and convention bureau functions of organizations that demonstrate to the department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(6) of the United States Internal Revenue Code of 1986, as that section may be amended or renumbered, may be deducted from gross receipts.

C. This section does not apply to receipts derived from an unrelated trade or business as defined in Section 513 of the United States Internal Revenue Code of 1986, as that section may be amended or renumbered."

SECTION 42. Section 7-9-62 NMSA 1978 (being Laws 1969, Chapter 144, Section 52, as amended) is amended to read:

"7-9-62. DEDUCTION--GROSS RECEIPTS [TAX]--AGRICULTURAL IMPLEMENTS--AIRCRAFT MANUFACTURERS--VEHICLES THAT ARE NOT REQUIRED TO BE REGISTERED--AIRCRAFT PARTS AND MAINTENANCE SERVICES [REPORTING REQUIREMENTS].--

A. Except for receipts deductible under Subsection B of this section, fifty percent of the receipts from selling agricultural implements, farm tractors, aircraft or vehicles that are not required to be registered under the Motor Vehicle Code may be deducted from gross receipts; provided that, with respect to agricultural implements, the sale is made to a person who states in writing that the person is regularly engaged in the business of farming or ranching. Any deduction allowed under Section 7-9-71 NMSA 1978 [must] shall be taken before the deduction allowed by this subsection is computed.

B. Receipts of an aircraft manufacturer or affiliate from selling aircraft or from selling aircraft flight support, pilot training or maintenance training services may be deducted from gross receipts. Any deduction allowed under Section 7-9-71 NMSA 1978 [must] shall be taken before the deduction allowed by this subsection is computed.

C. Receipts from selling aircraft parts or maintenance services for aircraft or aircraft parts may be deducted from gross receipts. Any deduction allowed under Section 7-9-71 NMSA 1978 [must] shall be taken before the deduction allowed by this subsection is computed.

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

E. The department shall compile an annual report on the deductions provided by this section that shall include the number of taxpayers approved by the department to receive the deductions, the aggregate amount of deductions approved and any other information necessary to evaluate the effectiveness of the deductions. Beginning in 2019 and every five years thereafter that the deductions are 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 deductions.

F.] D. As used in this section:

[(1) "affiliate" means a business entity that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the aircraft manufacturer;

(2)] (1) "agricultural implement" means a tool, utensil or instrument that is depreciable for federal income tax purposes and that is:

(a) designed to irrigate agricultural crops above ground or below ground at the place where the crop is grown; or

(b) designed primarily for use with a source of motive power, such as a tractor, in planting, growing, cultivating, harvesting or processing agricultural crops at the place where the crop is grown; in raising poultry or livestock; or in obtaining or processing food or fiber, such as eggs, milk, wool or mohair, from living poultry or livestock at the place where the poultry or livestock are kept for this purpose;

[(3)] (2) "aircraft manufacturer" means a business entity that in the ordinary course of business designs and builds private or commercial aircraft certified by the federal aviation administration;

[(4)] (3) "business entity" means a corporation, limited liability company, partnership, limited partnership, limited liability partnership or real estate investment trust, but does not mean an individual or a joint venture;

[(5) "control" means equity ownership in a business entity that:

(a) represents at least fifty percent of the total voting power of that business entity; and

(b) has a value equal to at least fifty percent of the total equity of that business entity;] and

[(6)] (4) "flight support" means providing navigation data, charts, weather information, online maintenance records and other aircraft or flight-related information and the software needed to access the information."

SECTION 43. Section 7-9-62.1 NMSA 1978 (being Laws 2000 (2nd S.S.), Chapter 4, Section 2, as amended) is amended to read:

"7-9-62.1. DEDUCTION--GROSS RECEIPTS [TAX]--AIRCRAFT SALES AND SERVICES [REPORTING REQUIREMENTS].--[A.] Receipts from the sale of or from maintaining, refurbishing, remodeling or otherwise modifying a commercial or military carrier over ten thousand pounds gross landing weight may be deducted from gross receipts.

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

C. The department shall compile an annual report on the deduction provided by this section that shall include the number of taxpayers approved by the department to receive the deduction, the aggregate amount of deductions approved and any other information necessary to evaluate the effectiveness of the deduction. Beginning in 2019 and every five years 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.]"

SECTION 44. Section 7-9-65 NMSA 1978 (being Laws 1969, Chapter 144, Section 56) is amended to read:

"7-9-65. DEDUCTION--GROSS RECEIPTS [TAX]--CHEMICALS AND REAGENTS.--Receipts from selling chemicals or reagents to any mining, milling or oil company for use in processing ores or oil in a mill, smelter or refinery or in acidizing oil wells [and receipts from selling chemicals or reagents in lots in excess of eighteen tons] may be deducted from gross receipts. Receipts from selling explosives, blasting powder or dynamite [may] and receipts from selling chemicals or reagents for use as fuel shall not be deducted from gross receipts pursuant to this section."

SECTION 45. Section 7-9-66 NMSA 1978 (being Laws 1969, Chapter 144, Section 57, as amended) is amended to read:

"7-9-66. DEDUCTION--GROSS RECEIPTS [TAX]--COMMISSIONS.-- [A.] Receipts derived from commissions on sales of tangible personal property [which] that are not subject to the gross receipts tax may be deducted from gross receipts.

[B. Receipts of the owner of a dealer store derived from commissions received for performing the service of selling from the owner's dealer store a principal's tangible personal property may be deducted from gross receipts.

C. As used in this section, "dealer store" means a merchandise facility open to the public that is owned and operated by a person who contracts with a principal to act as an agent for the sale from that facility of merchandise owned by the principal.]"

SECTION 46. Section 7-9-69 NMSA 1978 (being Laws 1969, Chapter 144, Section 61, as amended) is amended to read:

"7-9-69. DEDUCTION--GROSS RECEIPTS [TAX]--ADMINISTRATIVE AND ACCOUNTING SERVICES.--

A. Receipts of a business entity for administrative, managerial, accounting and customer services performed by it for an affiliate upon a nonprofit or cost basis and receipts of a business entity from an affiliate for the joint use or sharing of office machines and facilities upon a nonprofit or cost basis may be deducted from gross receipts.

B. For the purposes of this section,

[(1) "affiliate" means a business entity that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with another business entity;

(2)] "business entity" means a corporation, limited liability company, partnership, limited partnership, limited liability partnership or real estate investment trust, but does not mean an individual or a joint venture [and

(3) "control" means equity ownership in a business entity that:

(a) represents at least fifty percent of the total voting power of that business entity; or

(b) has a value equal to at least fifty percent of the total equity of that business entity]."

SECTION 47. Section 7-9-73.3 NMSA 1978 (being Laws 2014, Chapter 26, Section 1) is amended to read:

"7-9-73.3. DEDUCTION--GROSS RECEIPTS [TAX] AND GOVERNMENTAL GROSS RECEIPTS [TAX]--DURABLE MEDICAL EQUIPMENT--MEDICAL SUPPLIES.--

A. Receipts from transactions occurring prior to July 1, 2020 that are from the sale or rental of durable medical equipment and medical supplies may be deducted from gross receipts and governmental gross receipts.

B. The purpose of the deduction provided in this section is to help protect jobs and retain businesses in

New Mexico that sell or rent durable medical equipment and medical supplies.

[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.] C. The deduction provided in this section shall be taken only by a taxpayer participating in the New Mexico medicaid program whose gross receipts are no less than ninety percent derived from the sale or rental of durable medical equipment, medical supplies or infusion therapy services, including the medications used in infusion therapy services.

[E. Acceptance of a deduction provided by this section is authorization by the taxpayer receiving the deduction for the department to reveal information to the revenue stabilization and tax policy committee and the legislative finance committee necessary to analyze the effectiveness and cost of the deduction and whether the deduction is performing the purpose for which it was created.

F. The department shall compile an annual report on the deduction provided by this section that shall include the number of taxpayers approved by the department to receive the deduction, the aggregate amount of deductions approved and any other information necessary to evaluate the effectiveness of the deduction. Beginning in 2019 and every five years thereafter, 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.

G.] D. As used in this section:

(1) "durable medical equipment" means a medical assistive device or other equipment that:

(a) can withstand repeated use;

(b) is primarily and customarily used to serve a medical purpose and is not useful to an individual in the absence of an illness, injury or other medical necessity, including improved functioning of a body part;

(c) is appropriate for use at home exclusively by the eligible recipient for whom the durable medical equipment is prescribed; and

(d) is prescribed by a physician or other person licensed by the state to prescribe durable medical equipment;

(2) "infusion therapy services" means the administration of prescribed medication through a needle or catheter;

(3) "medical supplies" means items for a course of medical treatment, including nutritional products, that are:

(a) necessary for an ongoing course of medical treatment;

(b) disposable and cannot be reused; and

(4) "prescribe" means to authorize the use of an item or substance for a course of medical treatment."

SECTION 48. Section 7-9-77.1 NMSA 1978 (being Laws 1998, Chapter 96, Section 1, as amended) is amended to read:

"7-9-77.1. DEDUCTION--GROSS RECEIPTS [TAX]--CERTAIN MEDICAL AND HEALTH CARE SERVICES.--

A. Receipts of a health care practitioner from payments by the United States government or any agency thereof for provision of medical and other health services by a health care practitioner or of medical or other health and palliative services by hospices or nursing homes to medicare beneficiaries pursuant to the provisions of Title 18 of the federal Social Security Act may be deducted from gross receipts.

B. Receipts of a health care practitioner from payments by a third-party administrator of the federal TRICARE program for provision of medical and other health services by medical doctors and osteopathic physicians to covered beneficiaries may be deducted from gross receipts.

C. Receipts of a health care practitioner from payments by or on behalf of the Indian health service of the United States department of health and human services for provision of medical and other health services by medical doctors and osteopathic physicians to covered beneficiaries may be deducted from gross receipts.

D. Receipts of a clinical laboratory from payments by the United States government or any agency thereof for medical services provided by the clinical laboratory to medicare beneficiaries pursuant to the provisions of Title 18 of the federal Social Security Act may be deducted from gross receipts.

E. Receipts of a home health agency from payments by the United States government or any agency thereof for medical, other health and palliative services provided by the home health agency to medicare beneficiaries pursuant to the provisions of Title 18 of the federal Social Security Act may be deducted from gross receipts.

F. Prior to July 1, 2024, receipts of a dialysis facility from payments by the United States government or any agency thereof for medical and other health services provided by the dialysis facility to medicare beneficiaries pursuant to the provisions of Title 18 of the federal Social Security Act may be deducted from gross receipts.

[G. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department. A taxpayer who has receipts that are deductible pursuant to this section and Section 7-9-93 NMSA 1978 shall deduct the receipts under this section prior to calculating the receipts that may be deducted pursuant to Section 7-9-93 NMSA 1978.

H. The department shall compile an annual report on the deductions created pursuant to this section that shall include the number of taxpayers approved by the department to receive each deduction, the aggregate amount of deductions approved and any other information necessary to evaluate the effectiveness of the deductions. 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 deductions and whether the deductions are providing a benefit to the state.

I.] G. For the purposes of this section:

(1) "clinical laboratory" means a laboratory accredited pursuant to 42 USCA 263a;

(2) "dialysis facility" means an end-stage renal disease facility as defined pursuant to 42 C.F.R. 405.2102;

(3) "health care practitioner" means:

(a) an athletic trainer licensed pursuant to the Athletic Trainer Practice Act;

(b) an audiologist licensed pursuant to the Speech-Language Pathology, Audiology and Hearing Aid Dispensing Practices Act;

(d) a counselor or therapist practitioner licensed pursuant to the Counseling and Therapy Practice Act;

(e) a dentist licensed pursuant to the Dental Health Care Act;

(f) a doctor of oriental medicine licensed pursuant to the Acupuncture and Oriental Medicine Practice Act;

(g) an independent social worker licensed pursuant to the Social Work Practice Act;

(h) a massage therapist licensed pursuant to the Massage Therapy Practice Act;

(i) a naprapath licensed pursuant to the Naprapathic Practice Act;

(j) a nutritionist or dietitian licensed pursuant to the Nutrition and Dietetics Practice Act;

(k) an occupational therapist licensed pursuant to the Occupational Therapy Act;

(l) an optometrist licensed pursuant to the Optometry Act;

(m) an osteopathic physician licensed pursuant to the Osteopathic Medicine Act;

(n) a pharmacist licensed pursuant to the Pharmacy Act;

(o) a physical therapist licensed pursuant to the Physical Therapy Act;

(p) a physician licensed pursuant to the Medical Practice Act;

(q) a podiatrist licensed pursuant to the Podiatry Act;

(r) a psychologist licensed pursuant to the Professional Psychologist Act;

(s) a radiologic technologist licensed pursuant to the Medical Imaging and Radiation Therapy Health and Safety Act;

(t) a registered nurse licensed pursuant to the Nursing Practice Act;

(u) a respiratory care practitioner licensed pursuant to the Respiratory Care Act; and

(v) a speech-language pathologist licensed pursuant to the Speech-Language Pathology, Audiology and Hearing Aid Dispensing Practices Act;

(4) "home health agency" means a for-profit entity that is licensed by the department of health and certified by the federal centers for medicare and medicaid services as a home health agency and certified to provide medicare services;

(5) "hospice" means a for-profit entity licensed by the department of health as a hospice and certified to provide medicare services;

(6) "nursing home" means a for-profit entity licensed by the department of health as a nursing home and certified to provide medicare services; and

(7) "TRICARE program" means the program defined in 10 U.S.C. 1072(7)."

SECTION 49. Section 7-9-79 NMSA 1978 (being Laws 1966, Chapter 47, Section 16, as amended) is amended to read:

"7-9-79. CREDIT--STATE, MUNICIPAL AND COUNTY COMPENSATING TAX.--

A. If, on property bought outside this state, a gross receipts, sales, compensating or similar tax has been levied by another state or political subdivision thereof on the transaction by which the person using the property in New Mexico acquired the property or a compensating, use or similar tax has been levied by another state on the use of the property subsequent to its acquisition by the person using the property in New Mexico and such tax has been paid, the amount of such tax paid may be credited against any compensating tax, municipal compensating tax or county compensating tax due [this state] on the same property. The amount of the tax paid to the other state or its political subdivision shall be applied against the combined total compensating tax, municipal compensating tax and county compensating tax due in the ratio that the amount of such tax bears to the combined total, but in no event shall the amount credited exceed the combined total.

B. When the receipts from the sale of real property constructed by a person in the ordinary course of [his] the person's construction business are subject to the gross receipts tax, the amount of compensating tax previously paid by the person on materials [which] that became an ingredient or component part of the construction project and on construction services performed upon the construction project may be credited against the gross receipts tax due on the sale. If the person also previously paid a municipal or county compensating tax on the construction materials or construction services, those tax amounts may be credited against any local option gross receipts tax due on the receipts from the sale. In no event shall the amount of the compensating tax, municipal compensating tax or county compensating tax credited exceed respectively the gross receipts tax or combined local option gross receipts taxes due."

SECTION 50. Section 7-9-79.1 NMSA 1978 (being Laws 1989, Chapter 262, Section 8, as amended) is amended to read:

"7-9-79.1. CREDIT--GROSS RECEIPTS TAX--SERVICES.--If on services performed outside the state a gross receipts sales or similar tax has been levied by another state or a political subdivision thereof and such tax has been paid, the amount of the tax paid may be credited against any gross receipts tax and any local option gross receipts tax due [this state] on the receipts [after July 1, 1989] from the sale in New Mexico of the product of the services performed outside this state. The amount of credit shall not exceed an amount equal to the combined sum of the rate of tax imposed under Section 7-9-4 NMSA 1978, plus any local option gross receipts tax rates imposed, multiplied by the amount subject to tax by both New Mexico and the other state or political subdivision of that state. The amount of credit granted shall be applied against the gross receipts tax and applicable local option gross receipts taxes in the proportion that each tax rate bears to the total combined rate of gross receipts tax plus applicable local option gross receipts tax rates."

SECTION 51. Section 7-9-26.1 NMSA 1978 (being Laws 2003, Chapter 62, Section 1) is recompiled as Section 7-9-84.1 NMSA 1978 and is amended to read:

"7-9-84.1. [EXEMPTION] DEDUCTION--GROSS RECEIPTS [TAX AND]--COMPENSATING TAX--FUEL FOR SPACE VEHICLES.--

A. [Exempted from the gross receipts tax are the] Receipts from selling fuel, oxidizer or a substance that combines fuel and oxidizer to propel space vehicles or to operate space vehicle launchers may be deducted from gross receipts.

B. [Exempted from the compensating tax is the use] The value of fuel, oxidizer or a substance that combines fuel and oxidizer to propel space vehicles or to operate space vehicle launchers may be deducted when computing compensating tax due."

SECTION 52. Section 7-9-92 NMSA 1978 (being Laws 2004, Chapter 116, Section 5) is amended to read:

"7-9-92. [DEDUCTION] CREDIT--GROSS RECEIPTS TAX--SALE OF FOOD AT RETAIL FOOD STORE.--

A. A credit may be claimed against the gross receipts tax imposed pursuant to Section 7-9-4 NMSA 1978, but not against any local option gross receipts tax, for receipts from the sale of food at a retail food store that are not exempt from gross receipts taxation and are not deductible pursuant to another provision of the Gross Receipts and Compensating Tax Act [may be deducted from gross receipts]. The [deduction] credit provided by this section shall be separately stated by the taxpayer. The amount of the credit shall equal the gross receipts from the sale of food at a retail food store that are not otherwise exempt or deductible multiplied by the gross receipts tax rate in effect at the time the receipts were received.

B. For the purposes of this section:

(1) "food" means any food or food product for home consumption that meets the definition of food in 7 USCA [2012(g)(1)] 2012(k)(1) for purposes of the federal [food stamp] supplemental nutrition assistance program; and

(2) "retail food store" means an establishment that sells food for home preparation and consumption and that meets the definition of retail food store in 7 USCA [2012(k)(1)] 2012(o)(1) for purposes of the federal [food stamp] supplemental nutrition assistance program, whether or not the establishment participates in the [food stamp] supplemental nutrition assistance program."

SECTION 53. Section 7-9-93 NMSA 1978 (being Laws 2004, Chapter 116, Section 6, as amended) is amended to read:

"7-9-93. [DEDUCTION] CREDIT--GROSS RECEIPTS TAX--CERTAIN RECEIPTS FOR SERVICES PROVIDED BY HEALTH CARE PRACTITIONER.--

A. A credit may be claimed against the gross receipts tax imposed pursuant to Section 7-9-4 NMSA 1978, but not against any local option gross receipts tax, for receipts of a health care practitioner for commercial contract services or medicare part C services paid by a managed health care provider or health care insurer [may be deducted from gross receipts] if the services are within the scope of practice of the health care practitioner providing the service and if receipts from the services are not exempt from taxation or deductible under other provisions of the Gross Receipts and Compensating Tax Act. Credit for receipts from fee-for-service payments by a health care insurer may not be [deducted from gross receipts] claimed or allowed.

B. [The deduction provided by this section shall be applied only to gross receipts remaining after all other allowable deductions available under the Gross Receipts and Compensating Tax Act have been taken and shall be separately stated by the taxpayer] The amount of the credit described in Subsection A of this section shall equal the receipts described in that subsection multiplied by the gross receipts tax rate in effect at the time the receipts were received.

C. For the purposes of this section:

(1) "commercial contract services" means health care services performed by a health care practitioner pursuant to a contract with a managed health care provider or health care insurer other than those health care services provided for medicare patients pursuant to Title 18 of the federal Social Security Act or for medicaid patients pursuant to Title 19 or Title 21 of the federal Social Security Act;

(2) "health care insurer" means a person that:

(a) has a valid certificate of authority in good standing pursuant to the New Mexico Insurance Code to act as an insurer, health maintenance organization or nonprofit health care plan or prepaid dental plan; and

(b) contracts to reimburse licensed health care practitioners for providing basic health services to enrollees at negotiated fee rates;

(3) "health care practitioner" means:

(a) a chiropractic physician licensed pursuant to the provisions of the Chiropractic Physician Practice Act;

(b) a dentist or dental hygienist licensed pursuant to the Dental Health Care Act;

(c) a doctor of oriental medicine licensed pursuant to the provisions of the Acupuncture and Oriental Medicine Practice Act;

(d) an optometrist licensed pursuant to the provisions of the Optometry Act;

(e) an osteopathic physician or an osteopathic physician's assistant licensed pursuant to the provisions of the Osteopathic Medicine Act;

(f) a physical therapist licensed pursuant to the provisions of the Physical Therapy Act;

(g) a physician or physician assistant licensed pursuant to the provisions of the Medical Practice Act;

(h) a podiatrist licensed pursuant to the provisions of the Podiatry Act;

(i) a psychologist licensed pursuant to the provisions of the Professional Psychologist Act;

(j) a registered lay midwife registered by the department of health;

(k) a registered nurse or licensed practical nurse licensed pursuant to the provisions of the Nursing Practice Act;

(l) a registered occupational therapist licensed pursuant to the provisions of the Occupational Therapy Act;

(m) a respiratory care practitioner licensed pursuant to the provisions of the Respiratory Care Act;

(n) a speech-language pathologist or audiologist licensed pursuant to the Speech-Language Pathology, Audiology and Hearing Aid Dispensing Practices Act;

(o) a professional clinical mental health counselor, marriage and family therapist or professional art therapist licensed pursuant to the provisions of the Counseling and Therapy Practice Act who has obtained a master's degree or a doctorate;

(p) an independent social worker licensed pursuant to the provisions of the Social Work Practice Act; and

(q) a clinical laboratory that is accredited pursuant to 42 U.S.C. Section 263a but that is not a laboratory in a physician's office or in a hospital defined pursuant to 42 U.S.C. Section 1395x;

(4) "managed health care provider" means a person that provides for the delivery of comprehensive basic health care services and medically necessary services to individuals enrolled in a plan through its own employed health care providers or by contracting with selected or participating health care providers. "Managed health care provider" includes only those persons that provide comprehensive basic health care services to enrollees on a contract basis, including the following:

(a) health maintenance organizations;

(b) preferred provider organizations;

(d) competitive medical plans;

(e) exclusive provider organizations;

(f) integrated delivery systems;

(g) independent physician-provider organizations;

(h) physician hospital-provider organizations; and

(i) managed care services organizations; and

(5) "medicare part C services" means services performed pursuant to a contract with a managed health care provider for medicare patients pursuant to Title 18 of the federal Social Security Act."

SECTION 54. Section 7-9-94 NMSA 1978 (being Laws 2005, Chapter 104, Section 23, as amended) is amended to read:

"7-9-94. DEDUCTION--GROSS RECEIPTS--MILITARY TRANSFORMATIONAL ACQUISITION PROGRAMS.--

A. Receipts from transformational acquisition programs performing research and development, test and evaluation at New Mexico major range and test facility bases pursuant to contracts entered into with the United States department of defense may be deducted from gross receipts through June 30, 2025.

B. As used in this section, "transformational acquisition program" means a military acquisition program authorized by the office of the secretary of defense force transformation and not physically tested in New Mexico on or before July 1, 2005.

C. The deduction provided in this section does not apply to receipts of a prime contractor operating facilities designated as a national laboratory by act of congress and is not applicable to current force programs as of July 1, 2005.

[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. No later than December 1 of each year that the deduction 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 cost and benefit to the state of the deduction.]"

SECTION 55. Section 7-9-96.1 NMSA 1978 (being Laws 2007, Chapter 361, Section 7) is amended to read:

"7-9-96.1. CREDIT--GROSS RECEIPTS TAX--RECEIPTS OF CERTAIN HOSPITALS.--

A. A hospital licensed by the department of health may claim a credit for each reporting period against the gross receipts tax due for that reporting period as follows:

(1) for a hospital located in a municipality:

(a) on or after [July 1, 2007 but before July 1, 2008, in an amount equal to seven hundred fifty-five thousandths percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken;

(b) on or after July 1, 2008 but before July 1, 2009, in an amount equal to one and fifty-one hundredths percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken;

(c) on or after July 1, 2009 but before July 1, 2010, in an amount equal to two and two hundred sixty-five thousandths percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken;

(d) on or after July 1, 2010 but before July 1, 2011, in an amount equal to three and two hundredths percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken; and

(e) on or after] July 1, 2011 but prior to January 1, 2019, in an amount equal to three and seven hundred seventy-five thousandths percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken; and

(b) on and after January 1, 2019, the hospital's taxable gross receipts multiplied by the applicable gross receipts tax rate imposed pursuant to Section 7-9-4 NMSA 1978; and

(2) for a hospital located in the unincorporated area of a county:

(a) on or after [July 1, 2007 but before July 1, 2008, in an amount equal to one percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken;

(b) on or after July 1, 2008, but before July 1, 2009, in an amount equal to two percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken;

(c) on or after July 1, 2009 but before July 1, 2010, in an amount equal to three percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken;

(d) on or after July 1, 2010 but before July 1, 2011, in an amount equal to four percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken; and

(e) on or after] July 1, 2011 and prior to January 1, 2019, in an amount equal to five percent of the hospital's taxable gross receipts for that reporting period after all applicable deductions have been taken; and

(b) on and after January 1, 2019, the hospital's taxable gross receipts multiplied by the applicable gross receipts tax rate imposed pursuant to Section 7-9-4 NMSA 1978.

B. For the purposes of this section, "hospital" means a facility providing emergency or urgent care, inpatient medical care and nursing care for acute illness, injury, surgery or obstetrics and includes a facility licensed by the department of health as a critical access hospital, general hospital, long-term acute care hospital, psychiatric hospital, rehabilitation hospital, limited services hospital and special hospital."

SECTION 56. Section 7-9G-2 NMSA 1978 (being Laws 2007, Chapter 229, Section 1, as amended) is amended to read:

"7-9G-2. ADVANCED ENERGY COMBINED REPORTING TAX CREDIT--GROSS RECEIPTS TAX--COMPENSATING TAX--WITHHOLDING TAX.--

A. Except as otherwise provided in this section, a taxpayer that holds an interest in a qualified generating facility located in New Mexico may claim a credit to be computed pursuant to the provisions of this section. The credit provided by this section may be referred to as the "advanced energy combined reporting tax credit".

B. As used in this section:

(1) "advanced energy tax credit" means the advanced energy income tax credit, the advanced energy corporate income tax credit and the advanced energy combined reporting tax credit;

(2) "coal-based electric generating facility" means a new or repowered generating facility and an associated coal gasification facility, if any, that uses coal to generate electricity and that meets the following specifications:

(a) emits the lesser of: 1) what is achievable with the best available control technology; or 2) thirty-five thousandths pound per million British thermal units of sulfur dioxide, twenty-five thousandths pound per million British thermal units of oxides of nitrogen and one hundredth pound per million British thermal units of total particulates in the flue gas;

(b) removes the greater of: 1) what is achievable with the best available control technology; or 2) ninety percent of the mercury from the input fuel;

(c) captures and sequesters or controls carbon dioxide emissions so that by the later of January 1, 2017 or eighteen months after the commercial operation date of the coal-based electric generating facility, no more than one thousand one hundred pounds per megawatt-hour of carbon dioxide is emitted into the atmosphere;

(d) all infrastructure required for sequestration is in place by the later of January 1, 2017 or eighteen months after the commercial operation date of the coal-based electric generating facility;

(e) includes methods and procedures to monitor the disposition of the carbon dioxide captured and sequestered from the coal-based electric generating facility; and

(f) does not exceed a name-plate capacity of seven hundred net megawatts;

(3) "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

(4) "eligible generation plant costs" means expenditures for the development and construction of a qualified generating facility, including permitting; site characterization and assessment; engineering; design; carbon dioxide capture, treatment, compression, transportation and sequestration; site and equipment acquisition; and fuel supply development used directly and exclusively in a qualified generating facility;

(5) "entity" means an individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, limited liability partnership, joint venture, syndicate or other association or a gas, water or electric utility owned or operated by a county or municipality;

(6) "geothermal electric generating facility" means a facility with a name-plate capacity of one megawatt or more that uses geothermal energy to generate electricity, including a facility that captures and provides geothermal energy to a preexisting electric generating facility using other fuels in part;

(7) "gross receipts tax due to the state" means the taxpayer's gross receipts liability for the reporting period [that is:

(a) determined by, if the taxpayer's business location is described in Subsection A of Section

7-1-6.4 NMSA 1978, multiplying the taxpayer's taxable gross receipts for the reporting period by the difference between the gross receipts tax rate specified in Section 7-9-4 NMSA 1978 and one and two hundred twenty-five thousandths percent; or

(b) equal to, if the taxpayer's business location is not described in Subsection A of Section 7-1-6.4 NMSA 1978, the gross receipts tax rate specified in Section 7-9-4 NMSA 1978];

(8) "interest in a qualified generating facility" means title to a qualified generating facility; a leasehold interest in a qualified generating facility; an ownership interest in a business or entity that is taxed for federal income tax purposes as a partnership that holds title to or a leasehold interest in a qualified generating facility; or an ownership interest, through one or more intermediate entities that are each taxed for federal income tax purposes as a partnership, in a business that holds title to or a leasehold interest in a qualified generating facility;

(9) "name-plate capacity" means the maximum rated output of the facility measured as alternating current or the equivalent direct current measurement;

(10) "qualified generating facility" means a facility that begins construction not later than December 31, 2015 and is:

(a) a solar thermal electric generating facility that begins construction on or after July 1, 2007 and that may include an associated renewable energy storage facility;

(b) a solar photovoltaic electric generating facility that begins construction on or after July 1, 2009 and that may include an associated renewable energy storage facility;

(d) a recycled energy project if that facility begins construction on or after July 1, 2007; or

(e) a new or repowered coal-based electric generating facility and an associated coal gasification facility;

(11) "recycled energy" means energy produced by a generation unit with a name-plate capacity of not more than fifteen megawatts that converts the otherwise lost energy from the exhaust stacks or pipes to electricity without combustion of additional fossil fuel;

(12) "sequester" means to store, or chemically convert, carbon dioxide in a manner that prevents its release into the atmosphere and may include the use of geologic formations and enhanced oil, coalbed methane or natural gas recovery techniques;

(13) "solar photovoltaic electric generating facility" means an electric generating facility with a name-plate capacity of one megawatt or more that uses solar photovoltaic energy to generate electricity; and

(14) "solar thermal electric generating facility" means an electric generating facility with a name-plate capacity of one megawatt or more that uses solar thermal energy to generate electricity, including a facility that captures and provides solar energy to a preexisting electric generating facility using other fuels in part.

C. A taxpayer that holds an interest in a qualified generating facility may be allocated the right to claim the advanced energy combined reporting tax credit without regard to the taxpayer's relative interest in the qualified generating facility if:

(1) the business entity making the allocation provides notice of the allocation and the taxpayer's interest in the qualified generating facility to the department on forms prescribed by the department;

(2) allocations to the taxpayer and all other taxpayers allocated a right to claim the advanced energy tax credit shall not exceed one hundred percent of the advanced energy tax credit allowed for the qualified generating facility; and

(3) the taxpayer and all other taxpayers allocated a right to claim the advanced energy tax credits collectively own at least a five percent interest in the qualified generating facility.

D. Upon receipt of the notice of an allocation of the right to claim all or a portion of the advanced energy combined reporting tax credit, the department shall verify the allocation due to the recipient.

E. Subject to the limit imposed in Subsection [K] J of this section, the advanced energy combined reporting tax credit with respect to a qualified generating facility shall equal six percent of the eligible generation plant costs of the qualified generating facility. Taxpayers eligible to claim an advanced energy combined reporting tax credit holding less than one hundred percent of the interest in the qualified generating facility shall designate an individual to report annually to the department. That designated individual shall report the eligible generation plant costs incurred during the calendar year and the relative interest of those costs attributed to each eligible interest holder. The taxpayers shall submit a copy of the relative interests attributed to each interest holder to the department, and any change to the apportioned interests shall be submitted to the department. The designated person and the department may identify a mutually acceptable reporting schedule.

F. A taxpayer may apply for the advanced energy combined reporting tax credit by submitting to the taxation and revenue department a certificate issued by the department of environment pursuant to Subsection K of this section, documentation showing the taxpayer's interest in the qualified generating facility identified in the certificate, documentation of all eligible generation plant costs incurred by the taxpayer prior to the date of the application by the taxpayer for the advanced energy combined reporting tax credit and any other information the taxation and revenue department requests to determine the amount of tax credit due to the taxpayer.

G. A taxpayer having applied for and been granted approval to claim an advanced energy combined reporting tax credit by the department pursuant to this section may claim an amount of available credit against the taxpayer's gross receipts tax, compensating tax or withholding tax due to the state. Any balance of the advanced energy combined reporting tax credit that the taxpayer is approved to claim after applying that tax credit against the taxpayer's gross receipts tax, compensating tax or withholding tax liabilities may be claimed by the taxpayer against the taxpayer's tax liability pursuant to the Income Tax Act by claiming an advanced energy income tax credit or against the taxpayer's tax liability pursuant to the Corporate Income and Franchise Tax Act by claiming an advanced energy corporate income tax credit. The advanced energy combined reporting tax credit is not refundable. The total amount of tax credit claimed pursuant to this section, when combined with the advanced energy tax credits claimed pursuant to the Income Tax Act and the Corporate Income and Franchise Tax Act, shall not exceed the total amount of advanced energy tax credits approved by the department for the qualified generating facility.

H. A taxpayer that is liable for the payment of gross receipts or compensating tax with respect to the ownership, development, construction, maintenance or operation of a new coal-based electric generating facility that does not meet the criteria for a qualified generating facility and that begins construction after January 1, 2007 shall not claim an advanced energy tax combined reporting credit pursuant to this section or a gross receipts tax credit, a compensating tax credit or a withholding tax credit pursuant to any other state law.

I. If the amount of the advanced energy tax credit approved by the department exceeds the taxpayer's liability, the excess may be carried forward for up to ten years.

J. The aggregate amount of advanced energy tax credit that may be claimed with respect to each qualified generating facility shall not exceed sixty million dollars ($60,000,000).

K. An entity that holds an interest in a qualified generating facility may request a certificate of eligibility from the department of environment to enable the requester to apply for the advanced energy combined reporting tax credit. The department of environment:

(1) shall determine if the facility is a qualified generating facility;

(2) shall require that the requester provide the department of environment with the information necessary to assess whether the requester's facility meets the criteria to be a qualified generating facility;

(3) shall issue a certificate to the requester stating that the facility is or is not a qualified generating facility within one hundred eighty days after receiving all information necessary to make a determination;

(4) shall:

(a) issue rules governing the procedure for administering the provisions of this subsection and Subsection L of this section and for providing certificates of eligibility for advanced energy tax credits;

(b) issue a schedule of fees in which no fee exceeds one hundred fifty thousand dollars ($150,000); and

(c) deposit fees collected pursuant to this paragraph in the state air quality permit fund created pursuant to Section 74-2-15 NMSA 1978; and

(5) shall report annually to the appropriate interim legislative committee information that will allow the legislative committee to analyze the effectiveness of the advanced energy tax credits, including the identity of qualified generating facilities, the energy production means used, the amount of emissions identified in this section reduced and removed by those qualified generating facilities and whether any requests for certificates of eligibility could not be approved due to program limits.

L. If the department of environment issues a certificate of eligibility to a taxpayer stating that the taxpayer holds an interest in a qualified generating facility and the taxpayer does not sequester or control carbon dioxide emissions to the extent required by this section by the later of January 1, 2017 or eighteen months after the commercial operation date of the qualified generating facility, the taxpayer's certification as a qualified generating facility shall be revoked by the department of environment and the taxpayer shall repay to the state tax credits granted pursuant to this section; provided that if the taxpayer demonstrates to the department of environment that the taxpayer made every effort to sequester or control carbon dioxide emissions to the extent feasible and the facility's inability to meet the sequestration requirements of a qualified generating facility was beyond the facility's control, in which case the department of environment shall determine, after a public hearing, the amount of the tax credit that should be repaid to the state. The department of environment, in its determination, shall consider the environmental performance of the facility and the extent to which the inability to meet the sequestration requirements of a qualified generating facility was in the control of the taxpayer. The repayment as determined by the department of environment shall be paid within one hundred eighty days following a final order by the department of environment.

M. Expenditures for which a taxpayer claims an advanced energy combined reporting tax credit pursuant to this section are ineligible for credits pursuant to the provisions of the Investment Credit Act or any other credit against personal income tax, corporate income tax, compensating tax, gross receipts tax or withholding tax.

N. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the eligible generation plant costs are incurred."

SECTION 57. Section 7-19-14 NMSA 1978 (being Laws 1979, Chapter 397, Section 5, as amended) is amended to read:

"7-19-14. SPECIFIC EXEMPTIONS.--No supplemental municipal gross receipts tax shall be imposed on the gross receipts arising from

[A. transporting persons or property for hire by railroad, motor vehicle, air transportation or any other means from one point within the municipality to another point outside the municipality; or

B.] a business located outside the boundaries of a municipality on land owned by that municipality for which a gross receipts tax distribution is made pursuant to Section 7-1-6.4 NMSA 1978."

SECTION 58. Section 7-19-15 NMSA 1978 (being Laws 1979, Chapter 397, Section 6, as amended) is amended to read:

"7-19-15. COLLECTION BY DEPARTMENT--TRANSFER OF PROCEEDS [DEDUCTIONS].--

A. The department shall collect the supplemental municipal gross receipts tax in the same manner and at the same time it collects the state gross receipts tax.

B. [The department shall withhold an administrative fee pursuant to Section 1 of this 1997 act. The department shall transfer to each municipality for which it is collecting a supplemental municipal gross receipts tax the amount of the tax collected less the administrative fee withheld and less any disbursements for tax credits, refunds and the payment of interest applicable to the supplemental municipal gross receipts tax.] Transfer of the tax to a municipality shall be made pursuant to Section 7-1-6.12 NMSA 1978 within the month following the month in which the tax is collected."

SECTION 59. Section 7-19D-1 NMSA 1978 (being Laws 1993, Chapter 346, Section 1) is amended to read:

"7-19D-1. SHORT TITLE.--Chapter 7, Article 19D NMSA 1978 may be cited as the "Municipal Local Option Gross Receipts [Taxes] and Compensating Tax Act"."

SECTION 60. Section 7-19D-5 NMSA 1978 (being Laws 1993, Chapter 346, Section 5, as amended) is amended to read:

"7-19D-5. SPECIFIC EXEMPTIONS.--No tax authorized by the provisions of the Municipal Local Option Gross Receipts [Taxes] and Compensating Tax Act shall be imposed on the gross receipts arising from

[A. transporting persons or property for hire by railroad, motor vehicle, air transportation or any other means from one point within the municipality to another point outside the municipality; or

B.] a business located outside the boundaries of a municipality on land owned by that municipality for which a state gross receipts tax distribution is made pursuant to Section 7-1-6.4 NMSA 1978."

SECTION 61. Section 7-19D-7 NMSA 1978 (being Laws 1993, Chapter 346, Section 7, as amended) is amended to read:

"7-19D-7. COLLECTION BY DEPARTMENT--TRANSFER OF

PROCEEDS--DEDUCTIONS.--

A. The department shall collect each tax imposed pursuant to the provisions of the Municipal Local Option Gross Receipts [Taxes] and Compensating Tax Act in the same manner and at the same time it collects the state gross receipts tax.

B. [Except as provided in Subsection C of this section, the department shall withhold an administrative fee pursuant to Section 1 of this 1997 act. The department shall transfer to each municipality for which it is collecting a tax pursuant to the provisions of the Municipal Local Option Gross Receipts Taxes Act the amount of each tax collected for that municipality, less the administrative fee withheld and less any disbursements for tax credits, refunds and the payment of interest applicable to the tax.] The transfer to the municipality shall be made pursuant to Section 7-1-6.12 NMSA 1978, except as provided in Subsection C of this section, within the month following the month in which the tax is collected.

C. With respect to the municipal gross receipts tax imposed by a municipality pursuant to Section 7-19D-9 NMSA 1978, the department shall withhold the administrative fee pursuant to Section [1 of this 1997 act] 7-1-6.41 NMSA 1978 only on that portion of the net receipts from municipal gross receipts tax arising from a municipal gross receipts tax rate in excess of one-half of one percent."

SECTION 62. Section 7-19D-9 NMSA 1978 (being Laws 1978, Chapter 151, Section 1, as amended) is amended to read:

"7-19D-9. MUNICIPAL GROSS RECEIPTS TAX--AUTHORITY TO IMPOSE RATE.--

A. Except as provided in Subsection K of this section, the majority of the members of the governing body of any municipality may impose by ordinance an excise tax not to exceed a rate of [one and one-half] two and six hundred twenty-five thousandths percent of the gross receipts of any person engaging in business in the municipality for the privilege of engaging in business in the municipality. A tax imposed pursuant to this [section] subsection shall be imposed by the enactment of one or more ordinances [each imposing any number of municipal gross receipts tax rate increments, but the total municipal gross receipts tax rate imposed by all ordinances shall not exceed an aggregate rate of one and one-half percent of the gross receipts of a person engaging in business]. Municipalities may impose increments of [one-eighth of one] one-sixteenth percent or any multiple thereof.

B. In addition to any rate of municipal gross receipts tax imposed pursuant to Subsection A of this section, each municipality incorporated on January 1, 2018 is deemed to have imposed by ordinance, effective July 1, 2019, an additional rate of nine hundred eighty thousandths percent of the gross receipts of any person engaging in business in the municipality. The revenue from the additional rate imposed pursuant to this subsection is dedicated to the payment of any outstanding bonds issued by the municipality to the extent that the municipality by ordinance pledged the revenues received from the distribution pursuant to Section 7-1-6.4 NMSA 1978 to the repayment of such bonds, until such time as the bonds are discharged in full or provision has been fully made therefor. If a municipality by ordinance dedicates any portion of the revenues received from the distribution pursuant to Section 7-1-6.4 NMSA 1978 to a purpose other than repayment of bonds, the revenues from the rate of tax deemed imposed by this subsection are subject to such dedication but the municipality may change the dedication at any time. If no bonds are outstanding and no ordinance has dedicated these revenues to any other purposes, the revenues are for general purposes. A municipality incorporating after January 1, 2019 shall impose pursuant to this subsection, by ordinance and without referendum, a rate of municipal gross receipts tax of one and two hundred twenty-five thousandths percent of the gross receipts of any person engaging in business in the municipality for the privilege of engaging in business in the municipality.

[B.] C. The tax imposed pursuant to Subsection A of this section may be referred to as the "municipal gross receipts tax". The aggregate rate imposed pursuant to Subsections A and B of this section shall not exceed three and six hundred five thousandths percent.

[C.] D. The governing body of a municipality may, at the time of enacting an ordinance imposing the tax authorized in Subsection A of this section, dedicate the revenue for a specific purpose or area of municipal government services [including but not limited to police protection, fire protection, public transportation or street repair and maintenance]. If the governing body proposes to dedicate such revenue, the ordinance and, if any election is held, the ballot shall clearly state the purpose to which the revenue will be dedicated, and any revenue so dedicated shall be used by the municipality for that purpose unless a subsequent ordinance is adopted to change the purpose to which dedicated or to place the revenue in the general fund of the municipality. If revenue is pledged to the retirement of debt, the dedication shall not be changed unless the debt has been discharged in full or provision has been fully made therefor.

[D.] E. An election shall be called on the questions of disapproval or approval of any ordinance enacted pursuant to Subsection A of this section or any ordinance amending such ordinance:

(1) if the governing body chooses to provide in the ordinance that it shall not be effective until the ordinance is approved by the majority of the registered voters voting on the question at an election to be held pursuant to the provisions of a [home-rule] home rule charter or on a date set by the governing body and pursuant to the provisions of the Municipal Election Code governing special elections; or

(2) if the ordinance does not contain a mandatory election provision as provided in Paragraph (1) of this subsection, upon the filing of a petition requesting such an election if the petition is filed:

(a) pursuant to the requirements of a referendum provision contained in a municipal [home-rule] home rule charter and signed by the number of registered voters in the municipality equal to the number of registered voters required in its charter to seek a referendum; or

(b) in all other municipalities, with the municipal clerk within thirty days after the adoption of such ordinance and the petition has been signed by a number of registered voters in the municipality equal to at least five percent of the number of the voters in the municipality who were registered to vote in the most recent regular municipal election.

[E.] F. The signatures on the petition filed in accordance with Subsection [D] E of this section shall be verified by the municipal clerk. If the petition is verified by the municipal clerk as containing the required number of signatures of registered voters, the governing body shall adopt an election resolution calling for the holding of a special election on the question of approving or disapproving the ordinance unless the ordinance is repealed before the adoption of the election resolution. An election held pursuant to Subparagraph (a) or (b) of Paragraph (2) of Subsection [D] E of this section shall be called, conducted and canvassed as provided in the Municipal Election Code for special elections, and the election shall be held within seventy-five days after the date the petition is verified by the municipal clerk or it may be held in conjunction with a regular municipal election if such election occurs within seventy-five days after the date of verification by the municipal clerk.

[F.] G. If at an election called pursuant to Subsection [D] E of this section a majority of the registered voters voting on the question approves the ordinance imposing the tax, the ordinance shall become effective in accordance with the provisions of the Municipal Local Option Gross Receipts [Taxes] and Compensating Tax Act. If at such an election a majority of the registered voters voting on the question disapproves the ordinance, the ordinance imposing the tax shall be deemed repealed and the question of imposing any increment of the municipal gross receipts tax authorized in this section shall not be considered again by the governing body for a period of one year from the date of the election.

[G.] H. Any municipality that has lawfully imposed by the requirements of the Special Municipal Gross Receipts Tax Act a rate of at least one-fourth of one percent shall be deemed to have imposed one-fourth of one percent municipal gross receipts tax pursuant to this section. Any rate of tax deemed to be imposed pursuant to this subsection shall continue to be dedicated to the payment of outstanding bonds issued by the municipality that pledged the tax revenues by ordinance until such time as the bonds are fully paid. A municipality may by ordinance change the purpose for any rate of tax deemed to be imposed at any time the revenues are not committed to payment of bonds.

[H.] I. Any law that imposes or authorizes the imposition of a municipal gross receipts tax or that affects the municipal gross receipts tax, or any law supplemental thereto or otherwise appertaining thereto, shall not be repealed or amended or otherwise directly or indirectly modified in such a manner as to impair adversely any outstanding revenue bonds that may be secured by a pledge of such municipal gross receipts tax unless such outstanding revenue bonds have been discharged in full or provision has been fully made therefor.

J. A rate of municipal gross receipts tax initially imposed pursuant to Subsection A of Section 7-19D-10 NMSA 1978 or Section 7-19D-11 or 7-19D-12 NMSA 1978, as that subsection or those sections were in effect immediately prior to the effective date of this section, is deemed to be an imposition of an increment of municipal gross receipts tax pursuant to this section on the effective date of this section. If revenue from one of those taxes is dedicated to a purpose or purposes at that time, the revenue remains dedicated to the purpose or purposes until the municipality by ordinance changes the dedication or places the revenue in the general fund of the municipality; provided that a dedication to repay principal and interest of indebtedness of the municipality may not be changed unless such outstanding indebtedness has been discharged in full or provision has been fully made therefor.

K. On and after January 1, 2019, for so long as the municipality has in effect an ordinance imposing a municipal environmental services gross receipts tax pursuant to that version of Section 7-19D-10 NMSA 1978 amended by this 2018 act, the maximum rate of municipal gross receipts tax that the municipality may impose pursuant to this section is a rate equal to the difference between the aggregate rate specified in Subsection A of this section and the rate imposed pursuant to Section 7-19D-10 NMSA 1978."

SECTION 63. A new Section 7-19D-9.1 NMSA 1978 is enacted to read:

"7-19D-9.1. [NEW MATERIAL] MUNICIPAL COMPENSATING TAX.--

A. For the privilege of using tangible property, a license, a franchise or a service, there is imposed on the person using the property, license, franchise or service in the municipality an excise tax on the person using the tangible personal property, license, franchise or service in the municipality on the value of the tangible personal property, license, franchise or service at a rate equal to the combined rates imposed and in effect pursuant to the Supplemental Municipal Gross Receipts Tax Act and the Municipal Local Option Gross Receipts and Compensating Tax Act. This tax is deemed to be imposed by the municipality for purposes of the Tax Administration Act.

B. For use of tangible property, a license, a franchise or a service to be taxable pursuant to Subsection A of this section, the use must be subject to the compensating tax pursuant to Section 7-9-7 NMSA 1978 and the value of the use will be that determined for the purposes of Section 7-9-7 NMSA 1978.

C. The tax imposed by this section may be cited as the "municipal compensating tax".

D. The governing body of a municipality may dedicate by ordinance the revenue from the tax imposed pursuant to this section for any municipal purpose. If the governing body proposes to dedicate revenue for a specific purpose, the dedicated revenue shall be used for the purpose unless a subsequent ordinance is adopted to change the purpose to which the revenue is dedicated or to place the revenue in the general fund of the municipality.

E. Any law that affects the municipal compensating tax, or any law supplemental or otherwise appertaining thereto, shall not be repealed or amended or otherwise directly or indirectly modified in such a manner as to impair adversely any outstanding revenue bonds that may be secured by a pledge of municipal compensating tax unless such outstanding revenue bonds have been discharged in full or provision has been made fully therefor."

SECTION 64. Section 7-19D-10 NMSA 1978 (being Laws 1990, Chapter 99, Section 51, as amended) is amended to read:

"7-19D-10. MUNICIPAL ENVIRONMENTAL SERVICES GROSS RECEIPTS TAX--AUTHORITY TO IMPOSE--ORDINANCE REQUIREMENTS.--

[A. Except as otherwise provided in this section, the majority of the members of the governing body of a municipality may enact an ordinance imposing an excise tax on any person engaging in business in the municipality for the privilege of engaging in business. The rate of the tax shall be one-sixteenth of one percent of the gross receipts of the person engaging in business.

B.] A. The tax imposed in accordance with Subsection [A] C of this section may be referred to as the "municipal environmental services gross receipts tax". The imposition of a municipal environmental services gross receipts tax is not subject to referendum.

[C.] B. The governing body of a municipality shall, at the time of enacting an ordinance imposing the rate of the tax authorized in Subsection [A] C of this section, dedicate the revenue for acquisition, construction, operation and maintenance of solid waste facilities, water facilities, wastewater facilities, sewer systems and related facilities.

[D.] C. The governing body of a municipality in a class B county with a net taxable value used for rate-setting purposes for the 2008 property tax year of greater than seven hundred fifty million dollars ($750,000,000) and a population in the entire county according to the most recent federal decennial census of less than twenty-five thousand may enact an ordinance imposing an excise tax on any person engaging in business in the municipality for the privilege of engaging in business; provided that:

(1) the rate of the tax imposed shall not exceed one-half of one percent of the gross receipts of the person engaging in business;

(2) the tax is imposed in one-fourth of one percent increments; and

(3) the population of the municipality imposing the municipal environmental services gross receipts tax according to the most recent federal decennial census is:

(a) more than seven thousand five hundred but less than seven thousand eight hundred; or

(b) more than one thousand five hundred but less than two thousand."

SECTION 65. Section 7-20C-6 NMSA 1978 (being Laws 1991, Chapter 176, Section 6, as amended) is amended to read:

"7-20C-6. COLLECTION BY DEPARTMENT--TRANSFER OF PROCEEDS [DEDUCTIONS].--

A. The department shall collect the local hospital gross receipts tax in the same manner and at the same time it collects the state gross receipts tax.

B. [The department shall withhold an administrative fee pursuant to Section 7-1-6.41 NMSA 1978. The department shall transfer to each county for which it is collecting such tax the amount of the tax collected less the administrative fee withheld and less any disbursements for tax credits, refunds and the payment of interest applicable to the tax.] Transfer of the tax to a county shall be made pursuant to Section 7-1-6.13 NMSA 1978 within the month following the month in which the tax is collected."

SECTION 66. Section 7-20E-1 NMSA 1978 (being Laws 1993, Chapter 354, Section 1) is amended to read:

"7-20E-1. SHORT TITLE.--Chapter 7, Article 20E NMSA 1978 may be cited as the "County Local Option Gross Receipts [Taxes] and Compensating Tax Act"."

SECTION 67. Section 7-20E-7 NMSA 1978 (being Laws 1993, Chapter 354, Section 7, as amended) is amended to read:

"7-20E-7. COLLECTION BY DEPARTMENT--TRANSFER OF

PROCEEDS [DEDUCTIONS].--

A. The department shall collect each tax imposed pursuant to the provisions of the County Local Option Gross Receipts [Taxes] and Compensating Tax Act in the same manner and at the same time it collects the state gross receipts tax.

B. [The department shall withhold an administrative fee pursuant to Section 7-1-6.41 NMSA 1978. The department shall transfer to each county for which it is collecting a tax pursuant to the provisions of the County Local Option Gross Receipts Taxes Act the amount of each tax collected for that county, less the administrative fee withheld and less any disbursements for tax credits, refunds and the payment of interest applicable to the tax.] The transfer to the county shall be made pursuant to Section 7-1-6.13 NMSA 1978 within the month following the month in which the tax is collected."

SECTION 68. A new Section 7-20E-9.1 NMSA 1978 is enacted to read:

"7-20E-9.1. [NEW MATERIAL] COUNTY COMPENSATING TAX.--

A. For the privilege of using tangible property, a license, a franchise or a service, there is imposed on the person using the property, license, franchise or service in the county an excise tax on the person using the tangible personal property, license, franchise or service in the county on the value of the tangible personal property, license, franchise or service at a rate equal to the combined rates imposed and in effect pursuant to the Local Hospital Gross Receipts Tax Act, the County Local Option Gross Receipts and Compensating Tax Act and the County Correctional Facility Gross Receipts Tax Act in the county area if the use is in the county area or if not in the county area, then at the rate in effect county-wide. This tax is deemed to be imposed by the county for purposes of the Tax Administration Act.

B. For use of tangible property, a license, a franchise or a service to be taxable pursuant to Subsection A of this section, the use shall be subject to the compensating tax pursuant to Section 7-9-7 NMSA 1978 and the value of the use shall be that determined for the purposes of Section 7-9-7 NMSA 1978.

C. The tax imposed by this section may be cited as the "county compensating tax".

D. The governing body of a county may dedicate by ordinance the revenue from the tax imposed pursuant to this section for any county purpose. If the governing body proposes to dedicate revenue for a specific purpose, the dedicated revenue shall be used for the purpose unless a subsequent ordinance is adopted to change the purpose to which the revenue is dedicated or to place the revenue in the general fund of the county.

E. Any law that affects the county compensating tax, or any law supplemental or otherwise appertaining thereto, shall not be repealed or amended or otherwise directly or indirectly modified in such a manner as to impair adversely any outstanding revenue bonds that may be secured by a pledge of county compensating tax unless such outstanding revenue bonds have been discharged in full or provision has been made fully therefor."

SECTION 69. Section 7-20F-5 NMSA 1978 (being Laws 1993, Chapter 303, Section 5) is amended to read:

"7-20F-5. COLLECTION BY DEPARTMENT--TRANSFER OF

PROCEEDS [DEDUCTIONS].--

A. The department shall collect the county correctional facility gross receipts tax in the same manner and at the same time it collects the state gross receipts tax.

B. [The department shall remit to each county for which it is collecting a county correctional facility gross receipts tax the amount of the tax collected, less any disbursement for tax credits, refunds and the payment of interest applicable to the county correctional facility gross receipts tax.] Transfer of the tax to a county shall be made pursuant to Section 7-1-6.13 NMSA 1978 within the month following the month in which the tax is collected."

SECTION 70. Section 7-24-16 NMSA 1978 (being Laws 1989, Chapter 326, Section 9) is amended to read:

"7-24-16. INTERPRETATION OF ACT--ADMINISTRATION AND ENFORCEMENT OF THE TAX.--

A. The department shall interpret the provisions of the Local Liquor Excise Tax Act.

B. The department shall administer and enforce the Local Liquor Excise Tax Act, and the Tax Administration Act applies to the collection and enforcement of the local liquor excise tax. Transfer of the tax to a county shall be made within the month following the month in which the tax is collected."

SECTION 71. TEMPORARY PROVISION--REFERENCES IN LAW.--

A. References in law to the Municipal Local Option Gross Receipts Taxes Act shall be deemed to be references to the Municipal Local Option Gross Receipts and Compensating Tax Act.

B. References in law to the County Local Option

Gross Receipts Taxes Act shall be deemed to be references to

the County Local Option Gross Receipts and Compensating Tax Act.

SECTION 72. TEMPORARY PROVISION--OUTSTANDING REVENUE BONDS AND OTHER OBLIGATIONS.--

A. The repeal of the distributions made by Section 76 of this act shall not impair outstanding bonds that are secured by a pledge of those distributions or other obligations for which payment is measured by the receipt of those distributions.

B. If a municipality or county has issued a revenue bond or other obligation that is secured by a pledge of or for which payment is measured by receipt of the distributions being repealed by Section 76 of this act, the municipality or county is impressed with the obligation to repay the outstanding bond or obligation with the local option gross receipts tax revenue the municipality or county receives and such revenue is dedicated to that repayment until the bond or obligation is fully discharged, satisfied or otherwise provided for in full.

SECTION 73. REPEAL.--

A. Sections 7-1-6.52, 7-1-6.57 and 7-1-6.60 NMSA 1978 (being Laws 2005, Chapter 104, Section 1, Laws 2007, Chapter 361, Section 1 and Laws 2010, Chapter 31, Section 2) are repealed.

B. Sections 7-2D-1 through 7-2D-14 NMSA 1978 (being Laws 1993, Chapter 313, Sections 1, 2 and 4 through 8, Laws 1995, Chapter 89, Section 8 and Laws 1993, Chapter 313, Sections 9 through 14, as amended) are repealed.

C. Sections 7-9-13.4, 7-9-16, 7-9-74, 7-9-95, 7-9-96, 7-9-97, 7-9-99 through 7-9-103.2, 7-9-105 through 7-9-107 and 7-9-114 NMSA 1978 (being Laws 2002, Chapter 20, Section 1; Laws 1969, Chapter 144, Section 9; Laws 1971, Chapter 217, Section 2; Laws 2005, Chapter 104, Sections 25 and 26; Laws 2005, Chapter 169, Section 1; Laws 2006, Chapter 35, Sections 1 and 2; Laws 2007, Chapter 3, Sections 16 through 18; Laws 2012, Chapter 12, Sections 2 and 3; Laws 2007, Chapter 45, Section 6; Laws 2007, Chapter 172, Sections 8 and 9; and Laws 2010, Chapter 77, Section 1 and Laws 2010, Chapter 78, Section 1, as amended) are repealed.

D. Section 7-19D-14 NMSA 1978 (being Laws 2005, Chapter 212, Section 2) is repealed.

E. Section 7-20E-27 NMSA 1978 (being Laws 2010, Chapter 31, Section 1) is repealed.

SECTION 74. DELAYED REPEAL.--

A. Sections 7-2-5.9, 7-2-7.2, 7-2-7.3, 7-2-18.5, 7-2-18.8, 7-2-18.14, 7-2-18.19, 7-2-18.21, 7-2-18.23, 7-2-18.25 and 7-2-18.27 NMSA 1978 (being Laws 2005, Chapter 104, Section 6, Laws 2005 (1st S.S.), Chapter 3, Sections 3 and 4, Laws 1998, Chapter 97, Section 2, Laws 2001, Chapter 73, Section 1, Laws 2006, Chapter 93, Section 1, Laws 2007, Chapter 204, Sections 3 and 7, Laws 2008 (2nd S.S.), Chapter 3, Section 1, Laws 2009, Chapter 279, Section 1 and Laws 2011, Chapter 89, Section 1, as amended) are repealed effective January 1, 2019.

B. Sections 7-2A-8.8, 7-2A-18, 7-2A-21, 7-2A-23 and 7-2A-25 NMSA 1978 (being Laws 1998, Chapter 97, Section 3, Laws 2001, Chapter 73, Section 2, Laws 2007, Chapter 204, Sections 4 and 8 and Laws 2009, Chapter 279, Section 2, as amended) are repealed effective January 1, 2019.

SECTION 75. DELAYED REPEAL.--

A. Sections 7-9-13.1, 7-9-54.1 and 7-9-57 NMSA 1978 (being Laws 1989, Chapter 262, Section 4, Laws 1992, Chapter 40, Section 1 and Laws 1969, Chapter 144, Section 47, as amended) are repealed effective January 1, 2019.

B. Sections 7-19D-11 and 7-19D-12 NMSA 1978 (being Laws 1991, Chapter 9, Section 3 and Laws 2001, Chapter 172, Section 1, as amended) are repealed effective January 1, 2019.

C. Sections 7-20C-5, 7-20E-5 and 7-20F-6 NMSA 1978 (being Laws 1991, Chapter 176, Section 5, Laws 1993, Chapter 354, Section 5 and Laws 1993, Chapter 303, Section 6, as amended) are repealed effective January 1, 2019.

D. Section 7-1-6.55 NMSA 1978 (being Laws 2007, Chapter 331, Section 4) is repealed effective April 1, 2019.

SECTION 76. DELAYED REPEAL.--Sections 7-1-6.46 and 7-1-6.47 NMSA 1978 (being Laws 2004, Chapter 116, Sections 1 and 2, as amended) are repealed effective February 1, 2019.

SECTION 77. APPLICABILITY.--

A. The provisions of Section 16 of this act apply to claims for refund submitted on or after the effective date of that section.

B. The provisions of Sections 18 through 20 and 75 of this act apply to taxable years beginning on or after January 1, 2019.

C. The provisions of Section 76 of this act apply to gross receipts tax reporting periods beginning on or after February 1, 2019.

SECTION 78. EFFECTIVE DATE.--

A. The effective date of the provisions of Sections 1 through 4, 8, 10 through 14, 16, 17, 21 through 25, 27, 28, 31, 33, 34, 39, 44 through 46, 70, 71 and 73 of this act is July 1, 2018.

B. The effective date of the provisions of Sections 5 through 7, 9, 15, 18 through 20, 26, 29, 30, 32, 35 through 38, 40 through 43, 47 through 69 and 72 of this act is January 1, 2019.

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