State of New Mexico
                      House of Representatives
  
                      FORTY-THIRD LEGISLATURE
                        FIRST SESSION, 1997
  
  
                                                    March 5, 1997
  
  
  Mr. Speaker:
  
       Your TAXATION AND REVENUE COMMITTEE, to whom has
  been referred
  
                  HOUSE BILL 563, as amended
                               
  has had it under consideration and reports same with
  recommendation that it DO PASS, amended as follows:
  
       1.  Strike House Appropriations and Finance Committee
  Amendments 6 and 7.
  
       2.  On page 1, line 12, strike "NMSA 1978" and insert in lieu
  thereof "INCOME TAX ACT".
  
       3.  On page 2, line 11, strike the comma and insert in lieu
  thereof "or".
  
       4.  On page 2, line 12, after "commission", strike the
  remainder of the line and strike all of line 13 up to the semicolon.
  
       5.  On page 11, line 25, strike "exemption" and insert in lieu
  thereof "deduction".
  
       6.  On page 12, strike lines 4 through 10 and insert in lieu
  thereof:
  
       ""[NEW MATERIAL]  EDUCATION TRUST FUND--EARNINGS TAX EXEMPT--
  WITHDRAWALS ARE TAXABLE INCOME--AUTHORITY TO WITHHOLD TAX.--
            A.  All earnings of an investor, purchaser or beneficiary
  from investment of money paid by the investor or purchaser or on
  behalf of the beneficiary into the education trust fund pursuant to
  a college investment agreement or prepaid tuition contract
  authorized in the Education Trust Act are exempt from the income tax
  pursuant to the Income Tax Act.
  
            B.  All amounts refunded to an investor upon termination
  of a college investment agreement or to a purchaser upon termination
  of a prepaid tuition contract pursuant to the Education Trust Act
  are taxable in the year in which they are received.
  
  
            C.  Upon payment of a refund to an investor or purchaser
  pursuant to the provisions of the Education Trust Act, the education
  trust board shall deduct and withhold from that refund a tax in an
  amount equal to six percent of the refund.  The amount withheld
  shall be transmitted to the taxation and revenue department for
  disposition pursuant to regulations of the secretary."". 
  
                                Respectfully submitted,
  
  
  
                                                                                               
                                                              Jerry W. Sandel, Chairman
  
  
  Adopted                       Not Adopted                       
            (Chief Clerk)                       (Chief Clerk)
  
                         Date             
  
  The roll call vote was 13  For 0  Against
  Yes:      13
            Excused:  None
            Absent:   None
  
  
  .117987.1
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