SENATE BILL 466

54th legislature - STATE OF NEW MEXICO - first session, 2019

INTRODUCED BY

Gerald Ortiz y Pino

AN ACT

RELATING TO TAXATION; CREATING A GROSS RECEIPTS TAX DEDUCTION FOR CERTAIN START-UP BUSINESSES.

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

     SECTION 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--CERTAIN START-UP BUSINESSES.--

          A. Receipts of a start-up business certified pursuant to Subsection C of this section may be deducted from gross receipts for a period of five consecutive years, beginning on the first day of the month in which the start-up business registers as a taxpayer with the department. The deduction provided by this section may be referred to as the "start-up business deduction".

          B. The purpose of the start-up business deduction is to promote the start-up and growth of science-, technology- and manufacturing-related small businesses located in proximity to post-secondary educational institutions.

          C. A municipality shall certify a start-up business for purposes of this section if the start-up business meets the requirements of this section and is:

                (1) located within three miles of a public post-secondary educational institution; or

                (2) located within:

                     (a) a research park; or

                     (b) property owned or operated by a research park corporation.

          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 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. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the deduction and whether the deduction is performing the purpose for which it was created.

          F. As used in this section:

                (1) "full-time employee" means an employee who works for the same employer an average of at least thirty-two hours per week for at least forty-eight weeks per year;

                (2) "professional services" means the services of architects, archaeologists, engineers, surveyors, landscape architects, medical arts practitioners, management and systems analysts, certified public accountants, registered public accountants, lawyers, psychologists, planners, construction managers and other similar professional services;

                (3) "research park" means "research park" pursuant to the University Research Park and Economic Development Act;

                (4) "research park corporation" means "research park corporation" pursuant to the University Research Park and Economic Development Act; and

                (5) "start-up business" means a business that:

                     (a) employs fewer than ten full-time employees;

                     (b) in the previous calendar year, had less than five hundred thousand dollars ($500,000) in gross receipts;

                     (c) except for the services of scientists or researchers or other similar professional services, does not include a business that provides professional services as the business's primary business activity; and

                     (d) does not include a business that provides as the business's primary business activity sales at retail."

     SECTION 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2019.

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