SENATE BILL 499

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

INTRODUCED BY

William E. Sharer

AN ACT

RELATING TO TAXATION; CREATING THE CLIMATE CHANGE COMPLIANCE INCOME TAX CREDIT AND THE CLIMATE CHANGE COMPLIANCE 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] CLIMATE CHANGE COMPLIANCE INCOME TAX CREDIT.--

          A. A taxpayer who is not a dependent of another individual and who is subject to the Severance Tax Act, Oil and Gas Severance Tax Act, Oil and Gas Conservation Tax Act, Oil and Gas Emergency School Tax Act, Natural Gas Processors Tax Act or Oil and Gas Ad Valorem Production Tax Act may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The tax credit provided by this section may be referred to as the "climate change compliance income tax credit".

          B. The climate change compliance income tax credit shall be in an amount equal to the costs to the taxpayer of complying with executive order 2019-003.

          C. A taxpayer may claim a climate change compliance income tax credit for the taxable year in which the taxpayer incurred costs to comply with executive order 2019-003. To receive a climate change compliance income tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Subsection F of this section.

          D. That portion of a climate change compliance income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the credit is claimed may be carried forward for a maximum of ten consecutive taxable years.

          E. A taxpayer may be allocated the right to claim a climate change compliance 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.

          F. The taxation and revenue department and the energy, minerals and natural resources department shall adopt rules establishing procedures to provide certification of costs incurred by the taxpayer for complying with executive order 2019-003 for purposes of obtaining a climate change compliance income tax credit.

          G. 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.

          H. The department shall compile an annual report on the climate change compliance 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 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.

          I. As used in this section, "executive order 2019-003" means executive order 2019-003 issued by the governor of the state of New Mexico on January 29, 2019, addressing climate change and energy waste prevention."

     SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

     "[NEW MATERIAL] CLIMATE CHANGE COMPLIANCE CORPORATE INCOME TAX CREDIT.--

          A. A taxpayer that files a New Mexico corporate income tax return and is subject to the Severance Tax Act, Oil and Gas Severance Tax Act, Oil and Gas Conservation Tax Act, Oil and Gas Emergency School Tax Act, Natural Gas Processors Tax Act or Oil and Gas Ad Valorem Production Tax Act may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act. The tax credit provided by this section may be referred to as the "climate change compliance corporate income tax credit".

          B. The climate change compliance corporate income tax credit shall be in an amount equal to the costs to the taxpayer of complying with executive order 2019-003.

          C. A taxpayer may claim a climate change compliance corporate income tax credit for the taxable year in which the taxpayer incurred costs to comply with executive order 2019-003. To receive a climate change compliance corporate income tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department. The application shall include a certification made pursuant to Subsection E of this section.

          D. That portion of a climate change compliance corporate income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the credit is claimed may be carried forward for a maximum of ten consecutive taxable years.

          E. The taxation and revenue department and the energy, minerals and natural resources department shall adopt rules establishing procedures to provide certification of costs incurred by the taxpayer for complying with executive order 2019-003 for purposes of obtaining a climate change compliance corporate income tax credit.

          F. 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.

          G. The department shall compile an annual report on the climate change compliance 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 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.

          H. As used in this section, "executive order 2019-003" means executive order 2019-003 issued by the governor of the state of New Mexico on January 29, 2019, addressing climate change and energy waste prevention."

     SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2019.

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