HOUSE BILL 184
54th legislature - STATE OF NEW MEXICO - first session, 2019
INTRODUCED BY
Linda M. Trujillo
AN ACT
RELATING TO TAXATION; ENACTING THE APPRENTICESHIP PROGRAM INCOME TAX CREDIT AND THE APPRENTICESHIP PROGRAM CORPORATE INCOME TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] APPRENTICESHIP PROGRAM INCOME TAX CREDIT.--
A. The tax credit provided by this section may be referred to as the "apprenticeship program income tax credit".
B. For taxable years prior to January 1, 2024, a taxpayer who is not a dependent of another individual, who is a participating employer in a registered apprenticeship program and who:
(1) employs a qualified apprentice in New Mexico for the full taxable year is eligible for a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act in the following amounts:
(a) up to one thousand dollars ($1,000) of the gross wages paid to the qualified apprentice by the taxpayer during the taxable year for which the return is filed; or
(b) if the qualified apprentice received a high school diploma or high school equivalency credential less than four years prior to employment with the taxpayer, up to two thousand dollars ($2,000) of the gross wages paid to the qualified apprentice by the taxpayer during the taxable year for which the return is filed; or
(2) employs a qualified apprentice in New Mexico for less than the full taxable year is eligible for a credit amount equal to:
(a) one thousand dollars ($1,000) multiplied by the fraction of a full year for which the qualified apprentice was employed; provided that the taxpayer employed the qualified apprentice for at least seven months of the taxable year; or
(b) if the qualified apprentice received a high school diploma or high school equivalency credential less than four years prior to employment with the taxpayer, two thousand dollars ($2,000) multiplied by the fraction of a full year for which the qualified apprentice was employed; provided that the taxpayer employed the qualified apprentice for at least seven months of the taxable year.
C. The purpose of the apprenticeship program income tax credit is to encourage employers to create and participate in registered apprenticeship programs approved and administered by the workforce solutions department.
D. A taxpayer may claim the apprenticeship program income tax credit provided in this section for each taxable year in which the taxpayer employs one or more qualified apprentices; provided that the taxpayer may not claim the apprenticeship program income tax credit for any individual qualified apprentice for more than five calendar years from the date of hire.
E. That portion of an apprenticeship program income tax credit approved by the department that exceeds a taxpayer's income tax liability in the taxable year in which the apprenticeship program income tax credit is claimed shall not be refunded to the taxpayer but may be carried forward for up to three taxable years. The apprenticeship program income tax credit shall not be transferred to another taxpayer.
F. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the apprenticeship program income tax credit that would have been claimed on a joint return.
G. A taxpayer may be allocated the right to claim an apprenticeship program income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or limited liability company and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to Subsection B of this section.
H. The taxpayer shall submit to the department with respect to each employee for whom the apprenticeship program income tax credit is claimed information required by the department with respect to the qualified apprentice's employment by the taxpayer during the taxable year for which the apprenticeship program income tax credit is claimed, including information establishing that the taxpayer is a participating employer in a registered apprenticeship program and that the employee is a qualified apprentice, which information can be used to determine that the employee was not also employed in the same taxable year by another taxpayer claiming an apprenticeship program income or corporate income tax credit for that employee pursuant to this section or the Corporate Income and Franchise Tax Act.
I. The department shall adopt rules establishing procedures to certify that the taxpayer is a participating employer in a registered apprenticeship program and that an employee is a qualified apprentice for purposes of obtaining an apprenticeship program income tax credit. The rules shall ensure that not more than one apprenticeship program income tax credit per qualified apprentice shall be allowed in a taxable year and that the credits allowed per qualified apprentice are limited to a maximum of five years' employment.
J. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.
K. The department shall compile an annual report on the apprenticeship program income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. The department shall present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing the purpose for which it was created.
L. As used in this section:
(1) "qualified apprentice" means an individual who is approved by the secretary of workforce solutions with the advice of the apprenticeship council and is covered by a written agreement with an employer or with an association of employers or employees acting as agent for an employer, which written agreement provides for reasonably continuous employment of the individual for not less than two thousand hours in the given trade in which that individual is apprenticed in an approved schedule of work experience and for at least one hundred forty-four hours per year of related and supplemental instruction; and
(2) "registered apprenticeship program" means a program approved by the secretary of workforce solutions with the advice of the state's apprenticeship council to train apprentices."
SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:
"[NEW MATERIAL] APPRENTICESHIP PROGRAM CORPORATE INCOME TAX CREDIT.--
A. The tax credit provided by this section may be referred to as the "apprenticeship program corporate income tax credit".
B. For taxable years prior to January 1, 2024, a taxpayer that is a participating employer in a registered apprenticeship program and that:
(1) employs a qualified apprentice in New Mexico for the full taxable year is eligible for a credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act in the following amounts:
(a) up to one thousand dollars ($1,000) of the gross wages paid to the qualified apprentice by the taxpayer during the taxable year for which the return is filed; or
(b) if the qualified apprentice received a high school diploma or high school equivalency credential less than four years prior to employment with the taxpayer, up to two thousand dollars ($2,000) of the gross wages paid to the qualified apprentice by the taxpayer during the taxable year for which the return is filed; or
(2) employs a qualified apprentice in New Mexico for less than the full taxable year is eligible for a credit amount equal to:
(a) one thousand dollars ($1,000) multiplied by the fraction of a full year for which the qualified apprentice was employed; provided that the taxpayer employed the qualified apprentice for at least seven months of the taxable year; or
(b) if the qualified apprentice received a high school diploma or high school equivalency credential less than four years prior to employment with the taxpayer, two thousand dollars ($2,000) multiplied by the fraction of a full year for which the qualified apprentice was employed; provided that the taxpayer employed the qualified apprentice for at least seven months of the taxable year.
C. The purpose of the apprenticeship program corporate income tax credit is to encourage employers to create and participate in registered apprenticeship programs approved and administered by the workforce solutions department.
D. A taxpayer may claim the apprenticeship program corporate income tax credit provided in this section for each taxable year in which the taxpayer employs one or more qualified apprentices; provided that the taxpayer may not claim the apprenticeship program corporate income tax credit for any individual qualified apprentice for more than five calendar years from the date of hire.
E. That portion of an apprenticeship program corporate income tax credit approved by the department that exceeds a taxpayer's corporate income tax liability in the taxable year in which the apprenticeship program corporate income tax credit is claimed shall not be refunded to the taxpayer but may be carried forward for up to three taxable years. The apprenticeship program corporate income tax credit shall not be transferred to another taxpayer.
F. The taxpayer shall submit to the department with respect to each employee for whom the apprenticeship program corporate income tax credit is claimed information required by the department with respect to the qualified apprentice's employment by the taxpayer during the taxable year for which the apprenticeship program corporate income tax credit is claimed, including information establishing that the taxpayer is a participating employer in a registered apprenticeship program and that the employee is a qualified apprentice, which information can be used to determine that the employee was not also employed in the same taxable year by another taxpayer claiming an apprenticeship program income or corporate income tax credit for that employee pursuant to this section or the Income Tax Act.
G. The department shall adopt rules establishing procedures to certify that the taxpayer is a participating employer in a registered apprenticeship program and that an employee is a qualified apprentice for purposes of obtaining an apprenticeship program corporate income tax credit. The rules shall ensure that not more than one apprenticeship program corporate income tax credit per qualified apprentice shall be allowed in a taxable year and that the credits allowed per qualified apprentice are limited to a maximum of five years' employment.
H. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.
I. The department shall compile an annual report on the apprenticeship program corporate income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. The department shall present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing the purpose for which it was created.
J. As used in this section:
(1) "qualified apprentice" means an individual who is approved by the secretary of workforce solutions with the advice of the apprenticeship council and is covered by a written agreement with an employer or with an association of employers or employees acting as agent for an employer, which written agreement provides for reasonably continuous employment of the individual for not less than two thousand hours in the given trade in which that individual is apprenticed in an approved schedule of work experience and for at least one hundred forty-four hours per year of related and supplemental instruction; and
(2) "registered apprenticeship program" means a program approved by the secretary of workforce solutions with the advice of the state's apprenticeship council to train apprentices."
SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2019.
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