SB0386

SENATE BILL 386

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

INTRODUCED BY

Ron Griggs

AN ACT

RELATING TO TAXATION; ENACTING THE RECORDATION TAX ACT; ENACTING THE FOOD GROSS RECEIPTS TAX ACT; DISTRIBUTING A PORTION OF THE REVENUE FROM THE FOOD GROSS RECEIPTS TAX TO MUNICIPALITIES AND COUNTIES; PROVIDING AN EXEMPTION FOR SOCIAL SECURITY INCOME FROM INCOME TAX; PROVIDING AN EXEMPTION FOR MILITARY RETIREMENT INCOME FROM INCOME TAX; REPEALING THE HOLD HARMLESS DISTRIBUTIONS TO MUNICIPALITIES AND COUNTIES THAT OFFSET THE FOOD AND HEALTH CARE PRACTITIONER DEDUCTIONS FROM GROSS RECEIPTS.

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

SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 6 of this act may be cited as the "Recordation Tax Act".

SECTION 2. [NEW MATERIAL] RECORDATION TAX--TRANSFERS OF REAL PROPERTY.--

A. An excise tax is imposed on all instruments evidencing a transfer of any interest in real property. The rate of tax shall be twenty-five cents ($.25) on each one hundred dollars ($100) or fractional part thereof on the value of each instrument transferring the interest, which value shall be based on the prior year's assessed value of the real property being transferred.

B. In the event the prior year's assessed value of the real property being transferred is based on undeveloped land that has since been subdivided or otherwise developed, the county shall, upon request, assess the value of the real property since being developed and provide a statement of the value to the taxpayer.

C. A person who obtains more than one deed or other instrument of conveyance for the same transfer of the same tract or parcel of real property shall pay the tax imposed by this section only once with respect to that transfer.

D. The tax imposed by this section shall be paid by the grantee or transferee of the interest in the real property to the county clerk of the county in which the real property is located. If the instrument transfers a parcel of real property lying in two or more counties, the tax shall be paid to the county clerk of the county in which the greater part of the real property with respect to value lies. The county clerk shall not record the transfer until the tax has been paid.

E. The tax imposed by this section shall not be imposed on the transfer of:

(1) a leasehold estate; or

(2) real property where such transfer is:

(a) the creation or dissolution of a tenancy by the entirety the conveyance from: 1) one spouse to another; 2) one spouse or both spouses to the original grantor in the instrument or the original grantor's spouse; or 3) one spouse or both spouses to a trustee and immediate reconveyance by the trustee in the same instrument as tenants in common, tenants in common with right of survivorship, joint tenants or joint tenants with right of survivorship;

(b) a deed of division in kind of real property formerly held by tenants in common;

(d) a deed executed by an executor to implement a testamentary devise;

(e) a decree or deed that is an adjustment of property rights between divorcing parties;

(f) a transfer by a transferor of real property to a revocable living trust created by the same transferor or by a spouse of the transferor, or a transfer by the trustee of a revocable living trust back to the same transferor or to the transferor's spouse; or

(g) a deed executed by the trustee of a revocable living trust to implement a testamentary devise by the trustor of the trust.

SECTION 3. [NEW MATERIAL] RECORDATION TAX--INSTRUMENT OF INDEBTEDNESS ON REAL PROPERTY.--

A. An excise tax is imposed on all instruments of indebtedness for real property, including a mortgage, deed of trust or other security device of greater than twenty-five thousand dollars ($25,000). The rate of tax shall be ten cents ($.10) on each one hundred dollars ($100), or fractional part thereof, of the indebtedness above twenty-five thousand dollars ($25,000).

B. The tax imposed by this section shall be paid by the mortgagor, grantor or debtor, as evidenced by the instrument offered for recording. The tax shall be paid to the county clerk of the county in which the real property is located. If the instrument is for a parcel of real property lying in two or more counties, the tax shall be paid to the county clerk of the county in which the greater part of the real property with respect to value lies. If some of the real property lies outside this state, the tax may be paid on the value of real property in this state. The county clerk shall not record the instrument until the tax has been paid.

C. If the consideration or stipulation of indebtedness does not appear on the face of the instrument being offered for recording, the county clerk shall require a separate statement made in recordable form indicating the amount of the indebtedness so secured.

D. When the instrument being offered for recording secures, or evidences the securing of, a line of credit or other indebtedness arising from more than one advance or extension of credit, the amount of which may vary from time to time, the tax shall be computed and paid on the maximum amount of the indebtedness as stated in the instrument or the accompanying sworn statement, and the reduction or subsequent increasing of the amount of the indebtedness within such limits shall not result in additional tax.

E. As used in this section, "indebtedness" means the principal debt or obligation that is reasonably contemplated by the parties to be included within the terms of the agreement. "Indebtedness" does not include any amount of interest, collection expense, including attorney fees and expenses incurred in preserving, protecting, improving or insuring property that serves as collateral for the indebtedness, or any other amount, other than the principal debt or obligation, for which a debtor becomes liable unless such amount is added to the principal debt or obligation, and is used to calculate additional interest pursuant to refinancing, reamortization, amendment or similar transaction or occurrence.

SECTION 4. [NEW MATERIAL] REPORT TO TAXATION AND REVENUE DEPARTMENT--ADMINISTRATION FEE.--The county clerk shall report all collections of taxes made pursuant to this section on forms prescribed by the taxation and revenue department and shall submit the proceeds of the taxes collected to the taxation and revenue department at the end of each month. A county may withhold an administrative fee of three percent of the net amount of the tax proceeds collected.

SECTION 5. [NEW MATERIAL] EXEMPTIONS.--

A. Instruments made pursuant to mergers, consolidations, sales or transfers of substantially all of the assets in this state of corporations, pursuant to plans of reorganization, are exempt from the taxes imposed by the Recordation Tax Act.

B. The recording and rerecording of all transfers of real property in which the state or any of its instrumentalities is the grantee or transferee and all instruments evidencing an indebtedness in which the state or any of its instrumentalities is the holder or owner of the indebtedness shall be exempt from the taxes imposed by the Recordation Tax Act.

C. Instruments for which a tax imposed pursuant to Section 2 of the Recordation Tax Act is paid shall be exempt from the tax imposed pursuant to Section 3 of that act.

D. Instruments for which a tax imposed pursuant to Section 3 of the Recordation Tax Act is paid shall be exempt from the tax imposed pursuant to Section 2 of that act.

SECTION 6. [NEW MATERIAL] LIMITATION ON AMOUNT OF TAX.--A tax imposed pursuant to the Recordation Tax Act shall not exceed one hundred thousand dollars ($100,000) with respect to instruments evidencing the same transfer of an interest in real property or each instrument of indebtedness for real property.

SECTION 7. [NEW MATERIAL] SHORT TITLE.--Sections 7 through 11 of this act may be cited as the "Food Gross Receipts Tax Act".

SECTION 8. [NEW MATERIAL] DEFINITIONS.--As used in the Food Gross Receipts Tax Act:

A. "engaging in business" means carrying on or causing to be carried on the selling of food at a retail food store with the purpose of direct or indirect benefit;

B. "food" means any food or food product for home consumption that meets the definition of food in 7 U.S.C. 2012(k)(1) for purposes of the federal supplemental nutrition assistance program;

C. "food gross receipts" means the total amount of money or the value of other consideration received from selling food at a retail food store in New Mexico, or, if in an exchange in which the money or other consideration received does not represent the value of the food, "food gross receipts" means the reasonable value of the food. "Food gross receipts" excludes:

(1) cash discounts allowed and taken;

(2) food gross receipts tax payable on transactions for the reporting period;

(3) gross receipts tax payable pursuant to the Gross Receipts and Compensating Tax Act on transactions for the reporting period;

(4) taxes imposed pursuant to the provisions of any local option gross receipts tax, as that term is defined in the Tax Administration Act, that is payable for the reporting period;

(5) a time-price differential; and

(6) 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 United States secretary of the interior; and provided further that the gross receipts or sales tax imposed by the Indian nation, tribe or pueblo provides a reciprocal exclusion from gross receipts, sales or gross receipts-based excise taxes imposed by the state or its political subdivisions; and

D. "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 U.S.C. 2012(p)(1) for purposes of the federal supplemental nutrition assistance program, whether or not the establishment participates in the federal supplemental nutrition assistance program.

SECTION 9. [NEW MATERIAL] FOOD GROSS RECEIPTS TAX.--For the privilege of engaging in business, an excise tax of four percent of gross receipts on the sale of food at a retail food store is imposed on any person engaging in business in New Mexico. The tax imposed by this section may be cited as the "food gross receipts tax".

SECTION 10. [NEW MATERIAL] EXEMPTIONS.--Exempted from the food gross receipts tax are receipts that are exempt from the gross receipts tax pursuant to the Gross Receipts and Compensating Tax Act pursuant to Sections 7-9-13, 7-9-13.1, 7-9-18.1, 7-9-28, 7-9-29 and 7-9-41.3 NMSA 1978.

SECTION 11. [NEW MATERIAL] DATE PAYMENT DUE.--The tax imposed by the Food Gross Receipts Tax is to be paid on or before the twenty-fifth day of the month following the month in which the taxable event occurs.

SECTION 12. Section 7-1-2 NMSA 1978 (being Laws 1965, Chapter 248, Section 2, as amended by Laws 2019, Chapter 47, Section 1 and by Laws 2019, Chapter 53, Section 10 and also by Laws 2019, Chapter 270, Section 1) 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) Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act;

(4) Gross Receipts and Compensating Tax Act, Interstate Telecommunications Gross Receipts Tax Act and Leased Vehicle Gross Receipts Tax Act;

(5) Liquor Excise Tax Act;

(6) Local Liquor Excise Tax Act;

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

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

(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; [and]

(22) the Insurance Premium Tax Act;

(23) the Health Care Quality Surcharge Act;

(24) the Food Gross Receipts Tax Act; and

(25) the Recordation Tax 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 13. 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 provisions of this section apply to:

(1) any distribution to a municipality pursuant to Section 7-1-6.4 or 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 imposed by that municipality;

(3) any transfer to a county with respect to any local option gross receipts 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) 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] pursuant to Section 14 of this 2021 act.

B. Before making a distribution or transfer specified in Subsection A of this section to a municipality or county 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 shall be reported each month to that municipality or county. 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, then the following procedures shall be carried out:

(1) all negative amounts relating to any period prior to the three calendar years 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 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, 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 shall be equal to the amount for the current month.

C. The department shall recover from a municipality or county 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 of the adjusted net receipts, the department shall notify the municipality or county 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 and that the department intends to recover that amount from future distributions or transfers to the municipality or county;

(2) that the municipality or county 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 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 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 as follows:

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

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

(b) except as provided in Paragraphs (2) and (3) of this subsection, if the municipality or county fails to act within the ninety days, decreasing the amount of the next six distributions or transfers to the municipality or county 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, the secretary:

(a) shall recover only up to fifty percent of the average distribution or transfer of net receipts for that municipality or county; 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 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 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 in the prior fiscal year.

H. The secretary is authorized to decrease a distribution or transfer to a municipality or county 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 and a written agreement of the municipality or county 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, 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 and a written agreement with the New Mexico finance authority. The secretary shall transfer the state distributions intercept amount to the municipal or county 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 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, 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 and shall not be distributed to the general fund. An amount withheld pursuant to this subsection shall be distributed to the municipality or county upon direction of the secretary of finance and administration.

J. 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 average of the total amount distributed or transferred to a municipality or county in each of the three twelve-month periods preceding the current month;

(b) if a distribution or transfer to a municipality or county has been made for less than three years, the total amount distributed or transferred in the year preceding the current month; or

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

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

(5) "repayment agreement" means an agreement between the department and a municipality or county under which the municipality or county 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 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 14. A new section of the Tax Administration Act is enacted to read:

"[NEW MATERIAL] DISTRIBUTION--FOOD GROSS RECEIPTS TAX-- MUNICIPALITIES AND COUNTIES.--

A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality in an amount equal to sixty-eight and seventy-five hundredths percent of the net receipts attributable to the food gross receipts tax on food sold in the municipality.

B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county in an amount equal to eighteen and seventy-five hundredths percent of the net receipts attributable to the food gross receipts tax on food sold in that portion of a county that is located inside the boundaries of a municipality.

C. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county in an amount equal to eighty-seven and one-half percent of the net receipts attributable to the food gross receipts tax on food sold in that portion of a county that is located outside the boundaries of a municipality.

D. The distribution amounts made pursuant to this section shall be subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978.

E. The department may withhold an administrative fee of three percent of the net amount to be distributed pursuant to this section."

SECTION 15. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] EXEMPTION--SOCIAL SECURITY INCOME.--

A. An individual may claim an exemption in an amount equal to the amount included in adjusted gross income pursuant to Section 86 of the Internal Revenue Code, as that section may be amended or renumbered, of income includable except for this exemption in net income. The exempted amount shall not exceed the individual's net income.

B. An individual who claims an exemption pursuant to this section shall not claim the exemption pursuant to Section 7-2-5.2 NMSA 1978."

SECTION 16. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] EXEMPTION--MILITARY RETIREMENT INCOME.--

A. An individual who is a uniformed services retiree or a uniformed services retiree's surviving spouse may claim an exemption in an amount not to exceed the individual's net income from the amount of military retirement income that the individual received in a taxable year.

B. As used in this section:

(1) "uniformed services" means the United States army, navy, air force, marine corps and coast guard and the commissioned officer corps of the national oceanic and atmospheric administration; and

(2) "uniformed services retiree" means a former member of the uniformed services who has qualified by years of service or disability to separate from service with lifetime benefits."

SECTION 17. 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;

(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;

(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

(g) receipts collected by a marketplace provider engaging in business in the state from sales, leases and licenses of tangible personal property, sales of licenses and sales of services or licenses for use of real property that are sourced to this state and are facilitated by the marketplace provider on behalf of marketplace sellers, regardless of whether the marketplace sellers are engaging in business in the state; 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 and food 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 18. 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.

SECTION 19. APPLICABILITY.--The provisions of Sections 15 and 16 of this act apply to taxable years beginning on or after January 1, 2021.

SECTION 20. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2021.

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