HB0118

HOUSE BILL 118

55th legislature - STATE OF NEW MEXICO - first session, 2021

INTRODUCED BY

D. Wonda Johnson

AN ACT

RELATING TO TAXATION; ADDING HOMELESS YOUTHS TO THE FOSTER YOUTH EMPLOYMENT INCOME TAX CREDIT AND THE FOSTER YOUTH EMPLOYMENT CORPORATE INCOME TAX CREDIT; ALLOWING A CREDIT TO BE TAKEN FOR EACH YEAR AN EMPLOYER EMPLOYS A FOSTER OR HOMELESS YOUTH; AMENDING THE DEFINITION OF "QUALIFIED FOSTER YOUTH".

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

SECTION 1. Section 7-2-18.30 NMSA 1978 (being Laws 2018, Chapter 36, Section 1) is amended to read:

"7-2-18.30. FOSTER AND HOMELESS YOUTH EMPLOYMENT INCOME TAX CREDIT.--

A. A taxpayer who is not a dependent of another individual and who employs a [qualified] foster youth or homeless youth in New Mexico is eligible for a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act in an amount up to one thousand dollars ($1,000) of the gross wages paid to each [qualified] foster youth or homeless youth by the taxpayer during the taxable year for which the return is filed. A taxpayer who employs a [qualified] foster youth or homeless youth for less than the full taxable year is eligible for a credit amount equal to one thousand dollars ($1,000) multiplied by the fraction of a full year for which the [qualified] foster youth or homeless youth was employed. The tax credit provided by this section may be referred to as the "foster and homeless youth employment income tax credit".

[B. The purpose of the foster youth employment income tax credit is to encourage the employment of individuals who as youth were adjudicated as abused or neglected or who were in the legal custody of the children, youth and families department under the Children's Code or in the legal custody of a New Mexico Indian nation, tribe or pueblo or the United States department of the interior bureau of Indian affairs division of human services.

C.] B. A taxpayer may claim the foster and homeless youth employment income tax credit provided in this section for each taxable year in which the taxpayer employs one or more [qualified] foster youths [provided that the taxpayer may not claim the foster youth employment income tax credit for any individual qualified foster youth for more than one calendar year from the date of hire] or homeless youths.

[D.] C. That portion of a foster and homeless youth employment income tax credit approved by the department that exceeds a taxpayer's income tax liability in the taxable year in which the [foster youth employment income] tax credit is claimed shall not be refunded to the taxpayer but may be carried forward for up to three years. The foster and homeless youth employment income tax credit shall not be transferred to another taxpayer.

[E.] D. 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 foster and homeless youth employment income tax credit that would have been claimed on a joint return.

[F.] E. A taxpayer may be allocated the right to claim a foster and homeless youth employment 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 A of this section.

[G.] F. The taxpayer shall submit to the department with respect to each employee for whom the foster and homeless youth employment income tax credit is claimed information required by the department with respect to the [qualified] foster youth's or homeless youth's employment by the taxpayer during the taxable year for which the [foster youth employment income] tax credit is claimed, including [information] the annual certification establishing that the employee is a [qualified] foster youth [that can be used to determine that the employee was not also employed in the same taxable year by another taxpayer claiming a foster youth employment income or corporate income tax credit for that employee pursuant to this section or the Corporate Income and Franchise Tax Act] or homeless youth issued pursuant to Subsection G of this section.

[H.] G. The workforce solutions department, in collaboration with the children, youth and families department and New Mexico Indian nations, tribes and pueblos, shall [(1)] adopt rules establishing procedures to annually certify that an employee is a [qualified] foster youth or a homeless youth for purposes of obtaining a foster and homeless youth employment income tax credit. [The rules shall ensure that not more than one foster youth employment income tax credit per qualified foster youth shall be allowed in a taxable year and that the credits allowed per qualified foster youth are limited to a maximum of one year's employment; and

(2) collaborate with the children, youth and families department, the New Mexico Indian nations, tribes and pueblos and the United States department of the interior bureau of Indian affairs division of human services to establish the certification procedures.

I.] 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.

[J.] I. The department shall compile an annual report on the foster and homeless youth employment 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.

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

(1) "[qualified] foster youth" means an individual:

[(1)] (a) who: [(a)] 1) is currently in the legal custody of the children, youth and families department pursuant to the Children's Code or in the legal custody of a New Mexico Indian nation, tribe or pueblo or the United States department of the interior bureau of Indian affairs division of human services; or [(b)] 2) within the seven years prior to the taxable year for which the tax credit is claimed, was aged fourteen years or older and was in the legal custody of the children, youth and families department pursuant to the Children's Code or in the legal custody of a New Mexico Indian nation, tribe or pueblo or the United States department of the interior bureau of Indian affairs division of human services; and

[(2)] (b) who works at least nine hundred twenty hours [per week] during the taxable year for which the foster and homeless youth employment income tax credit is claimed, prorated accordingly if the foster youth works less than one year for the taxpayer; and

[(3) who was not previously employed by the taxpayer prior to the taxable year for which the foster youth employment income tax credit is claimed;]

(2) "homeless youth" means an individual who:

(a) meets the definition of "homeless children and youths" pursuant to 42 U.S.C. Section 11434a, as that section may be amended or renumbered, as determined by the rules for certification pursuant to Subsection G of this section;

(b) is aged twenty-five years or younger in the taxable year for which the tax credit is claimed; and

(c) works at least nine hundred twenty hours during the taxable year for which the tax credit is claimed, prorated accordingly if the homeless youth works less than one year for the taxpayer."

SECTION 2. Section 7-2A-29 NMSA 1978 (being Laws 2018, Chapter 36, Section 2) is amended to read:

"7-2A-29. FOSTER AND HOMELESS YOUTH EMPLOYMENT CORPORATE INCOME TAX CREDIT.--

A. A taxpayer that employs a [qualified] foster youth or homeless youth in New Mexico is eligible for a credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act in an amount up to one thousand dollars ($1,000) of the gross wages paid to each [qualified] foster youth or homeless youth by the taxpayer during the taxable year for which the return is filed. A taxpayer that employs a [qualified] foster youth or homeless youth for less than the full taxable year is eligible for a credit amount equal to one thousand dollars ($1,000) multiplied by the fraction of a full year for which the [qualified] foster youth or homeless youth was employed. The tax credit provided by this section may be referred to as the "foster and homeless youth employment corporate income tax credit".

[B. The purpose of the foster youth employment corporate income tax credit is to encourage the employment of individuals who as youth were adjudicated as abused or neglected or who were in the legal custody of the children, youth and families department under the Children's Code or in the legal custody of a New Mexico Indian nation, tribe or pueblo or the United States department of the interior bureau of Indian affairs division of human services.

C.] B. A taxpayer may claim the foster and homeless youth employment corporate income tax credit provided in this section for each taxable year in which the taxpayer employs one or more [qualified] foster youths [provided that the taxpayer may not claim the foster youth employment corporate income tax credit for any individual qualified foster youth for more than one calendar year from the date of hire] or homeless youths.

[D.] C. That portion of a foster and homeless youth employment corporate income tax credit approved by the department that exceeds a taxpayer's corporate income tax liability in the taxable year in which the [foster youth employment corporate income] tax credit is claimed shall not be refunded to the taxpayer but may be carried forward for up to three years. The foster and homeless youth employment corporate income tax credit shall not be transferred to another taxpayer.

[E.] D. The taxpayer shall submit to the department with respect to each employee for whom the foster and homeless youth employment corporate income tax credit is claimed information required by the department with respect to the [qualified] foster youth's or homeless youth's employment by the taxpayer during the taxable year for which the [foster youth employment corporate income] tax credit is claimed, including [information] the annual certification establishing that the employee is a [qualified] foster youth [that can be used to determine that the employee was not also employed in the same taxable year by another taxpayer claiming a foster youth employment income or corporate income tax credit for that employee pursuant to this section or the Income Tax Act] or homeless youth issued pursuant to Subsection E of this section.

[F.] E. The workforce solutions department, in collaboration with the children, youth and families department and New Mexico Indian nations, tribes and pueblos, shall [(1)] adopt rules establishing procedures to annually certify that an employee is a [qualified] foster youth or a homeless youth for purposes of obtaining a foster and homeless youth employment corporate income tax credit. [The rules shall ensure that not more than one foster youth employment corporate income tax credit per qualified foster youth shall be allowed in a taxable year and that the credits allowed per qualified foster youth are limited to a maximum of one year's employment; and

G.] 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.

[H.] G. The department shall compile an annual report on the foster and homeless youth employment 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.

[I.] H. As used in this section:

(1) "[qualified] foster youth" means an individual:

[(2)] (b) who works at least nine hundred twenty hours [per week] during the taxable year for which the foster and homeless youth employment corporate income tax credit is claimed, prorated accordingly if the homeless youth works less than one year for the taxpayer; and

[(3) who was not previously employed by the taxpayer prior to the taxable year for which the foster youth employment corporate income tax credit is claimed;]

(2) "homeless youth" means an individual who:

(b) is aged twenty-five years or younger in the taxable year for which the tax credit is claimed; and

(c) works at least nine hundred twenty hours during the taxable year for which the tax credit is claimed, prorated accordingly if the homeless youth works less than one year for the taxpayer."

SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on and after January 1, 2021.

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