0001|                           SENATE BILL 1223
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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|                         TIMOTHY Z. JENNINGS
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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; EXEMPTING CERTAIN SALES AND ACTIVITIES
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0012|     RELATED TO THE WORLD WIDE WEB FROM THE GROSS RECEIPTS AND
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0013|     COMPENSATING TAX; AMENDING SECTIONS OF THE GROSS RECEIPTS AND
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0014|     COMPENSATING TAX ACT.
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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--HOSTING WORLD WIDE WEB
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0020|     SITES.--
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0021|     Receipts from hosting world wide web sites may be deducted from
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0022|     gross receipts.  For purposes of this section, "hosting" means
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0023|     designing and preparing information for the world wide web and
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0024|     storing information on computers attached to the internet."
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0025|          Section 2.  A new section of the Gross Receipts and
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0001|     Compensating Tax Act is enacted to read:
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0002|          "[<u>NEW MATERIAL</u>]  DEDUCTION--SALES THROUGH WORLD WIDE WEB
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0003|     SITES.--Receipts of any person derived from the sale of a
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0004|     service or property made through a world wide web site to a
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0005|     person with a billing address outside New Mexico may be
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0006|     deducted from gross receipts."
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0007|          Section 3.  Section 7-9-3 NMSA 1978 (being Laws 1978,
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0008|     Chapter 46, Section 1, as amended) is amended to read:
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0009|          "7-9-3.  DEFINITIONS.--As used in the Gross Receipts and
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0010|     Compensating Tax Act:
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0011|               A.  "department" means the taxation and revenue
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0012|     department, the secretary of taxation and revenue or any
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0013|     employee of the department exercising authority lawfully
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0014|     delegated to that employee by the secretary;
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0015|               B.  "buying" or "selling" means any transfer of
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0016|     property for consideration or any performance of service for
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0017|     consideration;
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0018|               C.  "construction" means building, altering,
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0019|     repairing or demolishing in the ordinary course of business
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0020|     any:
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0021|                    (1)  road, highway, bridge, parking area or
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0022|     related project;
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0023|                    (2)  building, stadium or other structure;
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0024|                    (3)  airport, subway or similar facility;
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0025|                    (4)  park, trail, athletic field, golf course
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0001|     or similar facility;
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0002|                    (5)  dam, reservoir, canal, ditch or similar
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0003|     facility;
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0004|                    (6)  sewerage or water treatment facility,
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0005|     power generating plant, pump station, natural gas compressing
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0006|     station, gas processing plant, coal gasification plant,
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0007|     refinery, distillery or similar facility;
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0008|                    (7)  sewerage, water, gas or other pipeline;
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0009|                    (8)  transmission line;
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0010|                    (9)  radio, television or other tower;
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0011|                    (10)  water, oil or other storage tank;
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0012|                    (11)  shaft, tunnel or other mining
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0013|     appurtenance;
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0014|                    (12)  microwave station or similar facility; or
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0015|                    (13)  similar work;
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0016|     "construction" also means:
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0017|                    (14)  leveling or clearing land;
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0018|                    (15)  excavating earth;
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0019|                    (16)  drilling wells of any type, including
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0020|     seismograph shot holes or core drilling; or
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0021|                    (17)  similar work;
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0022|               D.  "financial corporation" means any savings and
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0023|     loan association or any incorporated savings and loan company,
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0024|     trust company, mortgage banking company, consumer finance
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0025|     company or other financial corporation;
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0001|               E.  "engaging in business" means carrying on or
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0002|     causing to be carried on any activity with the purpose of
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0003|     direct or indirect benefit; <u>except that "engaging in business"
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<u></u>0004| <u>    does not include having a world wide web site as a third-party
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<u></u>0005| <u>    content provider on a computer physically located in New Mexico
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<u></u>0006| <u>    but owned by another person;</u>
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0007|               F.  "gross receipts" means the total amount of money
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0008|     or the value of other consideration received from selling
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0009|     property in New Mexico, from leasing property employed in New
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0010|     Mexico, from selling services performed outside New Mexico the
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0011|     product of which is initially used in New Mexico or from
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0012|     performing services in New Mexico.  In an exchange in which the
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0013|     money or other consideration received does not represent the
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0014|     value of the property or service exchanged, "gross receipts"
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0015|     means the reasonable value of the property or service
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0016|     exchanged.
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0017|                    (1)  "Gross receipts" includes:
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0018|                         (a)  any receipts from sales of tangible
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0019|     personal property handled on consignment;
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0020|                         (b)  the total commissions or fees
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0021|     derived from the business of buying, selling or promoting the
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0022|     purchase, sale or leasing, as an agent or broker on a
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0023|     commission or fee basis, of any property, service, stock, bond
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0024|     or security;
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0025|                         (c)  amounts paid by members of any
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0001|     cooperative association or similar organization for sales or
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0002|     leases of personal property or performance of services by such
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0003|     organization; and
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0004|                         (d)  amounts received from transmitting
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0005|     messages or conversations by persons providing telephone or
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0006|     telegraph services.
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0007|                    (2)  "Gross receipts" excludes:
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0008|                         (a)  cash discounts allowed and taken;
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0009|                         (b)  New Mexico gross receipts tax,
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0010|     governmental gross receipts tax and leased vehicle gross
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0011|     receipts tax payable on transactions for the reporting period;
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0012|                         (c)  taxes imposed pursuant to the
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0013|     provisions of any local option gross receipts tax that is
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0014|     payable on transactions for the reporting period;
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0015|                         (d)  any gross receipts or sales taxes
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0016|     imposed by an Indian nation, tribe or pueblo provided that the
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0017|     tax is approved, if approval is required by federal law or
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0018|     regulation, by the secretary of the interior of the United
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0019|     States and provided further that the gross receipts or sales
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0020|     tax imposed by the Indian nation, tribe or pueblo provides a
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0021|     reciprocal exclusion for gross receipts, sales or gross
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0022|     receipts-based excise taxes imposed by the state or its
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0023|     political subdivisions;
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0024|                         (e)  any type of time-price differential;
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0025|     and
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0001|                         (f)  amounts received solely on behalf of
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0002|     another in a disclosed agency capacity.
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0003|                    (3)  When the sale of property or service is
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0004|     made under any type of charge, conditional or time-sales
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0005|     contract or the leasing of property is made under a leasing
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0006|     contract, the seller or lessor may elect to treat all receipts,
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0007|     excluding any type of time-price differential, under such
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0008|     contracts as gross receipts as and when the payments are
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0009|     actually received.  If the seller or lessor transfers his
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0010|     interest in any such contract to a third person, the seller or
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0011|     lessor shall pay the gross receipts tax upon the full sale or
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0012|     leasing contract amount, excluding any type of time-price
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0013|     differential;
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0014|               G.  "manufacturing" means combining or processing
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0015|     components or materials to increase their value for sale in the
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0016|     ordinary course of business, but does not include construction;
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0017|               H.  "person" means:
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0018|                    (1)  any individual, estate, trust, receiver,
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0019|     cooperative association, club, corporation, company, firm,
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0020|     partnership, limited liability company, limited liability
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0021|     partnership, joint venture, syndicate or other entity,
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0022|     including any gas, water or electric utility owned or operated
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0023|     by a county, municipality or other political subdivision of the
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0024|     state; or
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0025|                    (2)  any national, federal, state, Indian or
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0001|     other governmental unit or subdivision, or any agency,
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0002|     department or instrumentality of any of the foregoing;
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0003|               I.  "property" means real property, tangible
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0004|     personal property, licenses, franchises, patents, trademarks
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0005|     and copyrights.  Tangible personal property includes
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0006|     electricity and manufactured homes;
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0007|               J.  "leasing" means any arrangement whereby, for a
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0008|     consideration, property is employed for or by any person other
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0009|     than the owner of the property, except that the granting of a
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0010|     license to use property is the sale of a license and not a
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0011|     lease;
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0012|               K.  "service" means all activities engaged in for
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0013|     other persons for a consideration, which activities involve
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0014|     predominantly the performance of a service as distinguished
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0015|     from selling or leasing property.  "Service" includes
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0016|     activities performed by a person for its members or
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0017|     shareholders.  In determining what is a service, the intended
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0018|     use, principal objective or ultimate objective of the
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0019|     contracting parties shall not be controlling.  "Service"
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0020|     includes construction activities and all tangible personal
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0021|     property that will become an ingredient or component part of a
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0022|     construction project.  Such tangible personal property retains
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0023|     its character as tangible personal property until it is
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0024|     installed as an ingredient or component part of a construction
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0025|     project in New Mexico.  However, sales of tangible personal
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0001|     property that will become an ingredient or component part of a
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0002|     construction project to persons engaged in the construction
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0003|     business are sales of tangible personal property;
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0004|               L.  "use" or "using" includes use, consumption or
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0005|     storage other than storage for subsequent sale in the ordinary
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0006|     course of business or for use solely outside this state;
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0007|               M.  "secretary" means the secretary of taxation and
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0008|     revenue or the secretary's delegate;
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0009|               N.  "manufactured home" means a moveable or portable
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0010|     housing structure for human occupancy that exceeds either a
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0011|     width of eight feet or a length of forty feet constructed to be
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0012|     towed on its own chassis and designed to be installed with or
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0013|     without a permanent foundation;
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0014|               O.  "initial use" or "initially used" means the
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0015|     first employment for the intended purpose and does not include
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0016|     the following activities:
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0017|                    (1)  observation of tests conducted by the
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0018|     performer of services;
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0019|                    (2)  participation in progress reviews,
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0020|     briefings, consultations and conferences conducted by the
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0021|     performer of services;
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0022|                    (3)  review of preliminary drafts, drawings and
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0023|     other materials prepared by the performer of the services;
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0024|                    (4)  inspection of preliminary prototypes
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0025|     developed by the performer of services; or
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0001|                    (5)  similar activities; 
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0002|               P.  "research and development services" means any
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0003|     activity engaged in for other persons for consideration, for
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0004|     one or more of the following purposes:
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0005|                    (1)  advancing basic knowledge in a recognized
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0006|     field of natural science;
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0007|                    (2)  advancing technology in a field of
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0008|     technical endeavor;
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0009|                    (3)  the development of a new or improved
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0010|     product, process or system with new or improved function,
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0011|     performance, reliability or quality, whether or not the new or
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0012|     improved product, process or system is offered for sale, lease
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0013|     or other transfer;
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0014|                    (4)  the development of new uses or
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0015|     applications for an existing product, process or system,
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0016|     whether or not the new use or application is offered as the
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0017|     rationale for purchase, lease or other transfer of the product,
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0018|     process or system;
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0019|                    (5)  analytical or survey activities
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0020|     incorporating technology review, application, trade-off study,
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0021|     modeling, simulation, conceptual design or similar activities,
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0022|     whether or not offered for sale, lease or other transfer; or
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0023|                    (6)  the design and development of prototypes
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0024|     or the integration of systems incorporating advances,
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0025|     developments or improvements included in Paragraphs (1) through
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0001|     (5) of this subsection; and
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0002|               Q.  "local option gross receipts tax" means a tax
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0003|     authorized to be imposed by a county or municipality upon the
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0004|     taxpayer's gross receipts and required to be collected by the
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0005|     department at the same time and in the same manner as the gross
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0006|     receipts tax; "local option gross receipts tax" includes the
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0007|     taxes imposed pursuant to the Municipal Local Option Gross
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0008|     Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax
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0009|     Act, Special Municipal Gross Receipts Tax Act, County Local
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0010|     Option Gross Receipts Taxes Act, Local Hospital Gross Receipts
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0011|     Tax Act, County Correctional Facility Gross Receipts Tax Act
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0012|     and such other acts as may be enacted authorizing counties or
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0013|     municipalities to impose taxes on gross receipts, which taxes
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0014|     are to be collected by the department."
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0015|          Section 4.  Section 7-9-10 NMSA 1978 (being Laws 1966,
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0016|     Chapter 47, Section 10, as amended) is amended to read:
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0017|          "7-9-10.  AGENTS FOR COLLECTION OF COMPENSATING TAX--
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0018|     DUTIES.--
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0019|               A.  Every person carrying on or causing to be
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0020|     carried on any activity within this state attempting to exploit
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0021|     New Mexico's markets who sells property or sells property and
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0022|     service for use in this state and who is not subject to the
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0023|     gross receipts tax on receipts from these sales shall collect
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0024|     the compensating tax from the buyer and pay the tax collected
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0025|     to the department.  "Activity", for the purposes of this
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0001|     section, includes, but is not limited to, engaging in any of
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0002|     the following in New Mexico:  maintaining an office or other
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0003|     place of business, soliciting orders through employees or
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0004|     independent contractors, soliciting orders through
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0005|     advertisements placed in newspapers or magazines published in
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0006|     New Mexico or advertisements broadcast by New Mexico radio or
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0007|     television stations, soliciting orders through programs
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0008|     broadcast by New Mexico radio or television stations or
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0009|     transmitted by cable systems in New Mexico, canvassing,
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0010|     demonstrating, collecting money, warehousing or storing
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0011|     merchandise or delivering or distributing products as a
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0012|     consequence of an advertising or other sales program directed
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0013|     at potential customers, <u>but "activity" does not include having
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<u></u>0014| <u>    a world wide web site as a third-party provider on a computer
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<u></u>0015| <u>    physically located in New Mexico but owned by another person.</u>
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0016|               B.  To <s>[insure]</s> <u>ensure</u> orderly and efficient
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0017|     collection of the public revenue, if any application of this
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0018|     section is held invalid, the section's application to other
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0019|     situations or persons shall not be affected."
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0020|          Section 5.  EFFECTIVE DATE.--The effective date of the
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0021|     provisions of this act is July 1, 1997.
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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 1223/a
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0001|   
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0002|   
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0003|                                                  March 12, 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 1223
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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 1, line 13, after "AMENDING" insert "AND
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0016|   ENACTING".
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0017|   
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0018|       2.  On page 1, strike line 22 in its entirety.
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0019|   
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0020|       3.  On page 1, lines 24 and 25, and on page 2, lines 1
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0021|   through 5, strike Section 2 in its entirety.
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0022|   
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0023|       4.  Renumber succeeding sections accordingly.
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0024|   
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0025|   and thence referred to the FINANCE COMMITTEE. 
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0001|                
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0002|                                Respectfully submitted,
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0003|   
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0004|   
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0005|                                
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0006|   __________________________________
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0007|                                Carlos R. Cisneros, Chairman 
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0008|   
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0009|   
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0010|   
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0011|   Adopted_______________________   Not
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0012|   Adopted_______________________
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0013|             (Chief Clerk)                          (Chief Clerk)
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0014|   
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0015|   
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0016|                     Date ________________________
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0017|   
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0018|   The roll call vote was <u> 5 </u> For <u> 0 </u> Against
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0019|           Yes:    5
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0020|           No:     0
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0021|                Excused:     Kidd, Leavell, McSorley, Wilson
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0022|           Absent: None
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0023|   
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0024|   S1223WM1                                            .118776.1
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0025|   
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0002|   
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