0001|                           SENATE BILL 848
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0002|     43rd legislature - STATE OF NEW MEXICO - first session, 1997
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0003|                            INTRODUCED BY
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0004|                               DON KIDD
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0005|     
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0006|                                   
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0007|     
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0008|                                   
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0009|     
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0010|                                AN ACT
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0011|     RELATING TO TAXATION; PROVIDING A DEDUCTION FROM GROSS RECEIPTS
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0012|     FOR RECEIPTS FROM THE SALE OF PRESCRIPTION DRUGS TO PERSONS
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0013|     SIXTY-FIVE YEARS OF AGE OR OLDER; AMENDING THE INCOME TAX
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0014|     CREDIT FOR PRESCRIPTION DRUGS.
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0015|     
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0016|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0017|          Section 1.  A new section of the Gross Receipts and
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0018|     Compensating Tax Act is enacted to read:
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0019|          "[<u>NEW MATERIAL</u>] DEDUCTION--SALES OF PRESCRIPTION DRUGS
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0020|     TO PERSONS SIXTY-FIVE YEARS OF AGE OR OLDER.--Receipts from
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0021|     selling prescription drugs prescribed for persons sixty-five
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0022|     years of age or older may be deducted from gross receipts,
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0023|     provided that the person to whom the drugs are sold furnishes
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0024|     to the seller proof acceptable to the department that the
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0025|     person for whom the drugs are prescribed is sixty-five years of
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0001|     age or older."
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0002|          Section 2.  Section 7-2-18.3 NMSA 1978 (being Laws 1994,
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0003|     Chapter 5, Section 17) is amended to read:
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0004|          "7-2-18.3.  CREDIT--PRESCRIPTION DRUGS.--
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0005|               A.  Except as otherwise provided in Subsection E of
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0006|     this section, any resident <u>under the age of sixty-five</u> who
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0007|     files an individual New Mexico income tax return and who is not
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0008|     a dependent of another individual may claim a credit for state
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0009|     and local gross receipts taxes imposed on the receipts from the
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0010|     sale of prescription drugs to the resident in New Mexico.
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0011|               B.  The amount of the credit that may be claimed
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0012|     pursuant to this section shall be three percent of the
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0013|     taxpayer's actual unreimbursed expenditures for prescription
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0014|     drugs purchased in New Mexico during the taxable year for which
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0015|     the return is filed, but the amount of the credit claimed shall
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0016|     not exceed one hundred fifty dollars ($150) per exemption
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0017|     allowable for federal income tax purposes for each individual
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0018|     included in the return or three hundred dollars ($300) per
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0019|     return, whichever is less.  As used in this subsection, the
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0020|     term "drugs purchased in New Mexico" excludes drugs purchased
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0021|     from any out-of-state source unless the New Mexico compensating
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0022|     tax has been paid on the purchase.
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0023|               C.  The credit provided under this section may be
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0024|     deducted from the taxpayer's New Mexico income tax liability
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0025|     for the taxable year.  If the credit exceeds the taxpayer's
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0001|     income tax liability for the taxable year, the excess shall be
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0002|     refunded to the taxpayer.
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0003|               D.  A husband and wife who file separate returns for
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0004|     a taxable year in which they could have filed a joint return
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0005|     may each claim only one-half of the credit provided under this
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0006|     section that would have been allowed on a joint return.
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0007|               E.  No claim for the credit provided under this
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0008|     section shall be filed by a resident who was an inmate of a
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0009|     public institution for more than six months during the taxable
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0010|     year for which the credit could be claimed or who was not
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0011|     physically present in New Mexico for at least six months during
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0012|     the taxable year for which the credit could be claimed.
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0013|               F.  As used in this section:
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0014|                    (1)  "dependent" means "dependent" as defined
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0015|     by Section 152 of the Internal Revenue Code, but also includes
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0016|     a minor child or stepchild of the resident who would be a
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0017|     dependent for federal income tax purposes if the public
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0018|     assistance contributing to the support of the child or
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0019|     stepchild was considered to have been contributed by the
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0020|     resident; and
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0021|                    (2)  "prescription drugs" means insulin and
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0022|     substances that are:
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0023|                         (a)  dispensed by or under the
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0024|     supervision of a licensed pharmacist or other person authorized

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0025|     under state law to dispense the substance;
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0001|                         (b)  prescribed for a specified
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0002|     individual by a person authorized under state law to prescribe
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0003|     the substance; and
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0004|                         (c)  subject to the restrictions on sale
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0005|     contained in 21 U.S.C. 353(b)(1)."
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0006|          Section 3.  Section 7-9-3 NMSA 1978 (being Laws 1978,
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0007|     Chapter 46, Section 1, as amended) is amended to read:
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0008|          "7-9-3.  DEFINITIONS.--As used in the Gross Receipts and
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0009|     Compensating Tax Act:
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0010|               A.  "department" means the taxation and revenue
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0011|     department, the secretary of taxation and revenue or any
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0012|     employee of the department exercising authority lawfully
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0013|     delegated to that employee by the secretary;
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0014|               B.  "buying" or "selling" means any transfer of
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0015|     property for consideration or any performance of service for
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0016|     consideration;
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0017|               C.  "construction" means building, altering,
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0018|     repairing or demolishing in the ordinary course of business
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0019|     any:
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0020|                    (1)  road, highway, bridge, parking area or
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0021|     related project;
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0022|                    (2)  building, stadium or other structure;
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0023|                    (3)  airport, subway or similar facility;
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0024|                    (4)  park, trail, athletic field, golf course
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0025|     or similar facility;
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0001|                    (5)  dam, reservoir, canal, ditch or similar
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0002|     facility;
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0003|                    (6)  sewerage or water treatment facility,
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0004|     power generating plant, pump station, natural gas compressing
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0005|     station, gas processing plant, coal gasification plant,
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0006|     refinery, distillery or similar facility;
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0007|                    (7)  sewerage, water, gas or other pipeline;
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0008|                    (8)  transmission line;
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0009|                    (9)  radio, television or other tower;
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0010|                    (10)  water, oil or other storage tank;
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0011|                    (11)  shaft, tunnel or other mining
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0012|     appurtenance;
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0013|                    (12)  microwave station or similar facility; or
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0014|                    (13)  similar work;
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0015|     "construction" also means:
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0016|                    (14)  leveling or clearing land;
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0017|                    (15)  excavating earth;
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0018|                    (16)  drilling wells of any type, including
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0019|     seismograph shot holes or core drilling; or
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0020|                    (17)  similar work;
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0021|               D.  "financial corporation" means any savings and
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0022|     loan association or any incorporated savings and loan company,
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0023|     trust company, mortgage banking company, consumer finance
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0024|     company or other financial corporation;
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0025|               E.  "engaging in business" means carrying on or
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0001|     causing to be carried on any activity with the purpose of
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0002|     direct or indirect benefit;
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0003|               F.  "gross receipts" means the total amount of money
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0004|     or the value of other consideration received from selling
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0005|     property in New Mexico, from leasing property employed in New
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0006|     Mexico, from selling services performed outside New Mexico the
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0007|     product of which is initially used in New Mexico or from
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0008|     performing services in New Mexico.  In an exchange in which the
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0009|     money or other consideration received does not represent the
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0010|     value of the property or service exchanged, "gross receipts"
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0011|     means the reasonable value of the property or service
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0012|     exchanged.
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0013|                    (1)  "Gross receipts" includes:
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0014|                         (a)  any receipts from sales of tangible
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0015|     personal property handled on consignment;
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0016|                         (b)  the total commissions or fees
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0017|     derived from the business of buying, selling or promoting the
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0018|     purchase, sale or leasing, as an agent or broker on a
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0019|     commission or fee basis, of any property, service, stock, bond
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0020|     or security;
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0021|                         (c)  amounts paid by members of any
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0022|     cooperative association or similar organization for sales or
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0023|     leases of personal property or performance of services by such
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0024|     organization; and
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0025|                         (d)  amounts received from transmitting
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0001|     messages or conversations by persons providing telephone or
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0002|     telegraph services.
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0003|                    (2)  "Gross receipts" excludes:
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0004|                         (a)  cash discounts allowed and taken;
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0005|                         (b)  New Mexico gross receipts tax,
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0006|     governmental gross receipts tax and leased vehicle gross
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0007|     receipts tax payable on transactions for the reporting period;
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0008|                         (c)  taxes imposed pursuant to the
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0009|     provisions of any local option gross receipts tax that is
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0010|     payable on transactions for the reporting period;
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0011|                         (d)  any gross receipts or sales taxes
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0012|     imposed by an Indian nation, tribe or pueblo provided that the
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0013|     tax is approved, if approval is required by federal law or
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0014|     regulation, by the secretary of the interior of the United
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0015|     States and provided further that the gross receipts or sales
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0016|     tax imposed by the Indian nation, tribe or pueblo provides a
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0017|     reciprocal exclusion for gross receipts, sales or gross
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0018|     receipts-based excise taxes imposed by the state or its
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0019|     political subdivisions;
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0020|                         (e)  any type of time-price differential;
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0021|     and
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0022|                         (f)  amounts received solely on behalf of
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0023|     another in a disclosed agency capacity.
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0024|                    (3)  When the sale of property or service is
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0025|     made under any type of charge, conditional or time-sales
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0001|     contract or the leasing of property is made under a leasing
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0002|     contract, the seller or lessor may elect to treat all receipts,
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0003|     excluding any type of time-price differential, under such
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0004|     contracts as gross receipts as and when the payments are
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0005|     actually received.  If the seller or lessor transfers his
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0006|     interest in any such contract to a third person, the seller or
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0007|     lessor shall pay the gross receipts tax upon the full sale or
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0008|     leasing contract amount, excluding any type of time-price
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0009|     differential;
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0010|               G.  "manufacturing" means combining or processing
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0011|     components or materials to increase their value for sale in the
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0012|     ordinary course of business, but does not include construction;
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0013|               H.  "person" means:
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0014|                    (1)  any individual, estate, trust, receiver,
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0015|     cooperative association, club, corporation, company, firm,
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0016|     partnership, limited liability company, limited liability
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0017|     partnership, joint venture, syndicate or other entity,
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0018|     including any gas, water or electric utility owned or operated
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0019|     by a county, municipality or other political subdivision of the
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0020|     state; or
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0021|                    (2)  any national, federal, state, Indian or
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0022|     other governmental unit or subdivision, or any agency,
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0023|     department or instrumentality of any of the foregoing;
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0024|               I.  "property" means real property, tangible
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0025|     personal property, licenses, franchises, patents, trademarks
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0001|     and copyrights.  Tangible personal property includes
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0002|     electricity and manufactured homes;
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0003|               J.  "leasing" means any arrangement whereby, for a
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0004|     consideration, property is employed for or by any person other
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0005|     than the owner of the property, except that the granting of a
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0006|     license to use property is the sale of a license and not a
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0007|     lease;
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0008|               K.  "service" means all activities engaged in for
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0009|     other persons for a consideration, which activities involve
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0010|     predominantly the performance of a service as distinguished
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0011|     from selling or leasing property.  "Service" includes
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0012|     activities performed by a person for its members or
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0013|     shareholders.  In determining what is a service, the intended
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0014|     use, principal objective or ultimate objective of the
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0015|     contracting parties shall not be controlling.  "Service"
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0016|     includes construction activities and all tangible personal
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0017|     property that will become an ingredient or component part of a
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0018|     construction project.  Such tangible personal property retains
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0019|     its character as tangible personal property until it is
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0020|     installed as an ingredient or component part of a construction
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0021|     project in New Mexico.  However, sales of tangible personal
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0022|     property that will become an ingredient or component part of a
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0023|     construction project to persons engaged in the construction
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0024|     business are sales of tangible personal property;
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0025|               L.  "use" or "using" includes use, consumption or
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0001|     storage other than storage for subsequent sale in the ordinary
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0002|     course of business or for use solely outside this state;
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0003|               M.  "secretary" means the secretary of taxation and
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0004|     revenue or the secretary's delegate;
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0005|               N.  "manufactured home" means a moveable or portable
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0006|     housing structure for human occupancy that exceeds either a
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0007|     width of eight feet or a length of forty feet constructed to be
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0008|     towed on its own chassis and designed to be installed with or
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0009|     without a permanent foundation;
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0010|               O.  "initial use" or "initially used" means the
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0011|     first employment for the intended purpose and does not include
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0012|     the following activities:
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0013|                    (1)  observation of tests conducted by the
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0014|     performer of services;
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0015|                    (2)  participation in progress reviews,
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0016|     briefings, consultations and conferences conducted by the
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0017|     performer of services;
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0018|                    (3)  review of preliminary drafts, drawings and
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0019|     other materials prepared by the performer of the services;
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0020|                    (4)  inspection of preliminary prototypes
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0021|     developed by the performer of services; or
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0022|                    (5)  similar activities; 
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0023|               P.  "research and development services" means any
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0024|     activity engaged in for other persons for consideration, for
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0025|     one or more of the following purposes:
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0001|                    (1)  advancing basic knowledge in a recognized
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0002|     field of natural science;
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0003|                    (2)  advancing technology in a field of
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0004|     technical endeavor;
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0005|                    (3)  the development of a new or improved
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0006|     product, process or system with new or improved function,
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0007|     performance, reliability or quality, whether or not the new or
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0008|     improved product, process or system is offered for sale, lease
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0009|     or other transfer;
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0010|                    (4)  the development of new uses or
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0011|     applications for an existing product, process or system,
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0012|     whether or not the new use or application is offered as the
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0013|     rationale for purchase, lease or other transfer of the product,
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0014|     process or system;
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0015|                    (5)  analytical or survey activities
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0016|     incorporating technology review, application, trade-off study,
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0017|     modeling, simulation, conceptual design or similar activities,
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0018|     whether or not offered for sale, lease or other transfer; or
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0019|                    (6)  the design and development of prototypes
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0020|     or the integration of systems incorporating advances,
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0021|     developments or improvements included in Paragraphs (1) through
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0022|     (5) of this subsection; <s>[and]</s>
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0023|               Q.  "local option gross receipts tax" means a tax
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0024|     authorized to be imposed by a county or municipality upon the
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0025|     taxpayer's gross receipts and required to be collected by the
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0001|     department at the same time and in the same manner as the gross
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0002|     receipts tax; "local option gross receipts tax" includes the
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0003|     taxes imposed pursuant to the Municipal Local Option Gross
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0004|     Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax
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0005|     Act, Special Municipal Gross Receipts Tax Act, County Local
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0006|     Option Gross Receipts Taxes Act, Local Hospital Gross Receipts
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0007|     Tax Act, County Correctional Facility Gross Receipts Tax Act
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0008|     and such other acts as may be enacted authorizing counties or
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0009|     municipalities to impose taxes on gross receipts, which taxes
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0010|     are to be collected by the department; <u>and</u>
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0011|               <u>R.  "prescription drugs" means insulin and
</u>    |
<u></u>0012| <u>    substances that are:</u>
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0013|               <u>    (1)  dispensed by or under the supervision of a
</u>    |
<u></u>0014| <u>    licensed pharmacist or other person authorized under state law
</u>    |
<u></u>0015| <u>    to dispense the substance;</u>
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0016|               <u>    (2)  prescribed for a specified individual by a
</u>    |
<u></u>0017| <u>    person authorized under state law to prescribe the substance;
</u>    |
<u></u>0018| <u>    and</u>
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0019|               <u>    (3)  subject to the restrictions on sale
</u>    |
<u></u>0020| <u>    contained in 21 U.S.C. 353(b)(1)</u>."
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0021|          Section 4.  APPLICABILITY.--The provisions of Section 2 of
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0022|     this act apply to taxable years beginning on or after January
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0023|     1, 1998.
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0024|          Section 5.  EFFECTIVE DATE.--The effective date of the
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0025|     provisions of this act is July 1, 1997.
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0001|                                    
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0002|   
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0003|                      FORTY-THIRD LEGISLATURE
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0004|                        FIRST SESSION, 1997
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0005|   
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0006|   
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0007|                                               February 26, 1997
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0008|   
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0009|   Mr. President:
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0010|   
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0011|       Your CORPORATIONS & TRANSPORTATION COMMITTEE, to
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0012|   whom has been referred
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0013|   
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0014|                          SENATE BILL 848
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0015|   
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0016|   has had it under consideration and reports same with
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0017|   recommendation that it DO PASS, and thence referred to the
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0018|   WAYS & MEANS COMMITTEE.
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0019|   
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0020|                                Respectfully submitted,
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0021|   
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0022|   
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0023|   
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0024|                                
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0025|   __________________________________
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0001|                                Roman M. Maes, III, Chairman 
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0002|   
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0003|   
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0004|   
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0005|   Adopted_______________________   Not
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0006|   Adopted_______________________
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0007|             (Chief Clerk)                          (Chief Clerk)
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0008|   
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0009|   
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0010|                     Date ________________________
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0011|   
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0012|   
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0013|   The roll call vote was <u> 7 </u> For <u> 0 </u> Against
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0014|           Yes:    7
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0015|           No:     0

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0016|                Excused:     Fidel, Robinson, Wilson
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0017|           Absent: None
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0018|   
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0019|   
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0020|   S0848CT1
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0021|   
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0022|     
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0023|   
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0024|                      FORTY-THIRD LEGISLATURE
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0025|                        FIRST SESSION, 1997             SB 848/a
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0001|   
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0002|   
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0003|                                                  March 14, 1997
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0004|   
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0005|   Mr. President:
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0006|   
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0007|       Your WAYS AND MEANS COMMITTEE, to whom has been
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0008|   referred
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0009|   
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0010|                          SENATE BILL 848
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0011|   
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0012|   has had it under consideration and reports same with
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0013|   recommendation that it DO PASS, amended as follows:
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0014|   
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0015|       1.  On page 12, line 19 strike "July 1, 1997" and insert in
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0016|   lieu thereof "January 1, 1998".,
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0017|   
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0018|   and thence referred to the FINANCE COMMITTEE. 
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0019|                
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0020|                                Respectfully submitted,
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0021|   
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0022|   
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0023|   
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0024|                                
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0025|   __________________________________
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0001|                                Carlos R. Cisneros, Chairman 
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0002|   
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0003|   
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0004|   
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0005|   Adopted_______________________   Not
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0006|   Adopted_______________________
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0007|             (Chief Clerk)                          (Chief Clerk)
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0008|   
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0009|   
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0010|                     Date ________________________
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0011|   
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0012|   
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0013|   The roll call vote was <u> 5 </u> For <u> 1 </u> Against
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0014|           Yes:    5
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0015|           No:     Nava
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0016|                Excused:     Duran, Jennings, McSorley
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0017|           Absent: None
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0018|   
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0019|   
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0020|   S0848WM1
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