0001| HOUSE TAXATION AND REVENUE COMMITTEE SUBSTITUTE FOR
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0002| HOUSE BILLS 100, 15, 18 & 175
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0003| 43rd legislature - STATE OF NEW MEXICO - second session, 1998
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0004|
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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|
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0011| AN ACT
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0012| RELATING TO TAXATION; REDUCING PERSONAL INCOME TAX RATES;
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0013| INCREASING AND EXPANDING ELIGIBILITY FOR LOW-INCOME TAX
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0014| REBATES; PROVIDING A DEDUCTION FROM GROSS RECEIPTS AND
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0015| GOVERNMENTAL GROSS RECEIPTS FOR RECEIPTS FROM THE SALE OF
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0016| PRESCRIPTION DRUGS; ABOLISHING THE PRESCRIPTION DRUG TAX
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0017| CREDIT; AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA
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0018| 1978.
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0019|
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0020| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0021| Section 1. Section 7-2-7 NMSA 1978 (being Laws 1994,
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0022| Chapter 5, Section 20) is amended to read:
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0023| "7-2-7. INDIVIDUAL INCOME TAX RATES.--The tax imposed by
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0024| Section 7-2-3 NMSA 1978 shall be at the following rates for
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0025| any taxable year beginning on or after January 1, 1996:
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- 1 -0001| A. For married individuals filing separate
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0002| returns:
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0003| If the taxable income is: The tax shall be:
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0004| Not over $4,000 1.7% of taxable income
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0005| Over $ 4,000 but not over $ 8,000 $ 68.00 plus 3.2% of
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0006| excess over $ 4,000
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0007| Over $ 8,000 but not over $ 12,000 $ 196 plus 4.7% of
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0008| excess over $ 8,000
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0009| Over $ 12,000 but not over $ 20,000 $ 384 plus 6.0% of
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0010| excess over $ 12,000
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0011| Over $ 20,000 but not over $ 32,000 $ 864 plus 7.1% of
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0012| excess over $ 20,000
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0013| Over $ 32,000 but not over $ 50,000 $ 1,716 plus 7.9% of
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0014| excess over $ 32,000
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0015| Over $ 50,000 $ 3,138 plus [8.5%]
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0016| 8.2% of excess
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0017| over
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0018| $ 50,000.
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0019| B. For surviving spouses and married individuals
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0020| filing joint returns:
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0021| If the taxable income is: The tax shall be:
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0022| Not over $8,000 1.7% of taxable income
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0023| Over $ 8,000 but not over $ 16,000 $ 136 plus 3.2% of
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0024| excess over $ 8,000
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0025| Over $ 16,000 but not over $ 24,000 $ 392 plus 4.7% of
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- 2 -0001| excess over $ 16,000
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0002| Over $ 24,000 but not over $ 40,000 $ 768 plus 6.0% of
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0003| excess over $ 24,000
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0004| Over $ 40,000 but not over $ 64,000 $ 1,728 plus 7.1% of
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0005| excess over $ 40,000
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0006| Over $ 64,000 but not over $100,000 $ 3,432 plus 7.9% of
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0007| excess over $ 64,000
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0008| Over $100,000 $ 6,276 plus [8.5%]
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0009| 8.2% of excess over
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0010| $100,000.
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0011| C. For single individuals and for estates and trusts:
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0012| If the taxable income is: The tax shall be:
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0013| Not over $5,500 1.7% of taxable income
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0014| Over $ 5,500 but not over $ 11,000 $ 93.50 plus 3.2% of
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0015| excess over $ 5,500
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0016| Over $ 11,000 but not over $ 16,000 $ 269.50 plus 4.7% of
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0017| excess over $ 11,000
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0018| Over $ 16,000 but not over $ 26,000 $ 504.50 plus 6.0% of
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0019| excess over $ 16,000
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0020| Over $ 26,000 but not over $ 42,000 $1,104.50 plus 7.1% of
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0021| excess over $ 26,000
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0022| Over $ 42,000 but not over $ 65,000 $2,240.50 plus 7.9% of
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0023| excess over $ 42,000
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0024| Over $ 65,000 $4,057.50 plus [8.5%]
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0025| 8.2% of excess over
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- 3 -0001| $ 65,000.
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0002| D. For heads of household filing returns:
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0003| If the taxable income is: The tax shall be:
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0004| Not over $7,000 1.7% of taxable income
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0005| Over $ 7,000 but not over $ 14,000 $ 119 plus 3.2% of
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0006| excess over $ 7,000
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0007| Over $ 14,000 but not over $ 20,000 $ 343 plus 4.7% of
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0008| excess over $ 14,000
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0009| Over $ 20,000 but not over $ 33,000 $ 625 plus 6.0% of
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0010| excess over $ 20,000
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0011| Over $ 33,000 but not over $ 53,000 $1,405 plus 7.1% of
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0012| excess over $ 33,000
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0013| Over $ 53,000 but not over $ 83,000 $2,825 plus 7.9% of
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0014| excess over $ 53,000
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0015| Over $ 83,000 $5,195 plus [8.5%]
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0016| 8.2% of excess over
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0017| $ 83,000.
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0018| E. The tax on the sum of any lump-sum amounts
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0019| included in net income is an amount equal to five multiplied by
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0020| the difference between:
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0021| (1) the amount of tax due on the taxpayer's
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0022| taxable income; and
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0023| (2) the amount of tax that would be due on an
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0024| amount equal to the taxpayer's taxable income and twenty percent
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0025| of the taxpayer's lump-sum amounts included in net income."
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- 4 -0001| Section 2. Section 7-2-14 NMSA 1978 (being Laws 1972,
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0002| Chapter 20, Section 2, as amended) is amended to read:
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0003| "7-2-14. LOW-INCOME COMPREHENSIVE TAX REBATE.--
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0004| A. Except as otherwise provided in Subsection B of
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0005| this section, any resident who files an individual New Mexico
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0006| income tax return and who is not a dependent of another
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0007| individual may claim a tax rebate for a portion of state and
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0008| local taxes to which the resident has been subject during the
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0009| taxable year for which the return is filed. The tax rebate may
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0010| be claimed even though the resident has no income taxable under
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0011| the Income Tax Act. A husband and wife who file separate returns
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0012| for a taxable year in which they could have filed a joint return
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0013| may each claim only one-half of the tax rebate that would have
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0014| been allowed on a joint return.
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0015| B. No claim for the tax rebate provided in this
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0016| section shall be filed by a resident who was an inmate of a
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0017| public institution for more than six months during the taxable
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0018| year for which the tax rebate could be claimed or who was not
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0019| physically present in New Mexico for at least six months during
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0020| the taxable year for which the tax rebate could be claimed.
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0021| C. For the purposes of this section, the total number
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0022| of exemptions for which a tax rebate may be claimed or allowed is
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0023| determined by adding the number of federal exemptions allowable
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0024| for federal income tax purposes for each individual included in
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0025| the return who is domiciled in New Mexico plus two additional
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- 5 -0001| exemptions for each individual domiciled in New Mexico included
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0002| in the return who is sixty-five years of age or older plus one
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0003| additional exemption for each individual domiciled in New Mexico
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0004| included in the return who, for federal income tax purposes, is
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0005| blind plus one exemption for each minor child or stepchild of the
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0006| resident who would be a dependent for federal income tax purposes
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0007| if the public assistance contributing to the support of the child
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0008| or stepchild was considered to have been contributed by the
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0009| resident.
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0010| D. The tax rebate provided for in this section may be
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0011| claimed in the amount shown in the following table:
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0012| Modified gross And the total number
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0013| income is: of exemptions is:
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0014| But Not 6 or
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0015| Over Over 1 2 3 4 5 More
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0016| [$ 0 $ 500 $120 $150 $175 $200 $225 $320
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500 1,000 135 185 225 265 300 415
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1,000 1,500 135 190 235 290 325 435
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1,500 2,000 135 190 235 290 325 450
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2,000 2,500 135 190 240 290 325 450
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2,500 3,000 135 190 240 290 325 450
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3,000 3,500 135 190 240 290 325 450
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3,500 4,000 135 190 240 300 335 450
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4,000 4,500 135 190 240 300 355 450
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4,500 5,000 115 150 205 300 355 450
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- 6 - 5,000 5,500 95 130 165 260 355 430
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5,500 6,000 75 110 145 220 315 410
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6,000 6,500 55 90 125 180 275 370
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6,500 7,000 35 70 105 140 235 330
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7,000 7,500 15 50 85 120 195 290
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7,500 8,000 10 20 50 80 130 220
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8,000 8,500 10 20 30 60 90 180
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8,500 9,000 10 20 30 40 70 140
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9,000 9,500 10 20 30 40 60 100
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9,500 10,000 10 20 30 40 50 80
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10,000 10,500 10 20 30 40 50 60
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10,500 11,000 10 20 30 40 50 60
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11,000 11,500 10 20 30 40 50 60
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11,500 12,000 5 10 15 20 25 30
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12,000 12,500 5 10 15 20 25 30
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12,500 13,000 5 10 15 20 25 30
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13,000 13,500 5 10 15 20 25 30
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13,500 14,000 5 10 15 20 25 30]
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0019| $ 0 $ 500 $ 120 $ 160 $ 200 $ 240 $ 280 $ 320
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0020| 500 1,000 135 195 250 310 350 415
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0021| 1,000 1,500 135 195 250 310 350 435
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0022| 1,500 2,000 135 195 250 310 350 450
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0023| 2,000 2,500 135 195 250 310 350 450
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0024| 2,500 3,000 135 195 250 310 350 450
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0025| 3,000 3,500 135 195 250 310 350 450
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- 7 -0001| 3,500 4,000 135 195 250 310 355 450
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0002| 4,000 4,500 135 195 250 310 355 450
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0003| 4,500 5,000 125 190 240 305 355 450
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0004| 5,000 5,500 115 175 230 295 355 430
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0005| 5,500 6,000 105 155 210 260 315 410
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0006| 6,000 7,000 90 130 170 220 275 370
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0007| 7,000 8,000 80 115 145 180 225 295
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0008| 8,000 9,000 70 105 135 170 195 240
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0009| 9,000 10,000 65 95 115 145 175 205
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0010| 10,000 11,000 60 80 100 130 155 185
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0011| 11,000 12,000 55 70 90 110 135 160
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0012| 12,000 13,000 50 65 85 100 115 140
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0013| 13,000 14,000 50 65 85 100 115 140
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0014| 14,000 15,000 45 60 75 90 105 120
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0015| 15,000 16,000 40 55 70 85 95 110
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0016| 16,000 17,000 35 50 65 80 85 105
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0017| 17,000 18,000 30 45 60 70 80 95
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0018| 18,000 19,000 25 35 50 60 70 80
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0019| 19,000 20,000 20 30 40 50 60 65
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0020| 20,000 21,000 15 25 30 40 50 55
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0021| 21,000 22,000 10 20 25 35 40
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0022| 45.
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0023| E. If a taxpayer's modified gross income is zero,
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0024| the taxpayer may claim a credit in the amount shown in the
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0025| first row of the table appropriate for the taxpayer's number
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- 8 -0001| of exemptions.
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0002| F. The tax rebates provided for in this section may
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0003| be deducted from the taxpayer's New Mexico income tax
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0004| liability for the taxable year. If the tax rebates exceed the
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0005| taxpayer's income tax liability, the excess shall be refunded
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0006| to the taxpayer.
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0007| G. For purposes of this section, "dependent" means
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0008| "dependent" as defined by Section 152 of the Internal Revenue
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0009| Code of 1986, as that section may be amended or renumbered,
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0010| but also includes any minor child or stepchild of the resident
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0011| who would be a dependent for federal income tax purposes if
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0012| the public assistance contributing to the support of the child
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0013| or stepchild was considered to have been contributed by the
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0014| resident."
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0015| Section 3. Section 7-9-3 NMSA 1978 (being Laws 1978,
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0016| Chapter 46, Section 1, as amended) is amended to read:
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0017| "7-9-3. DEFINITIONS.--As used in the Gross Receipts and
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0018| Compensating Tax Act:
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0019| A. "department" means the taxation and revenue
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0020| department, the secretary of taxation and revenue or any
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0021| employee of the department exercising authority lawfully
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0022| delegated to that employee by the secretary;
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0023| B. "buying" or "selling" means any transfer of
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0024| property for consideration or any performance of service for
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0025| consideration;
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- 9 -0001| C. "construction" means building, altering,
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0002| repairing or demolishing in the ordinary course of business
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0003| any:
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0004| (1) road, highway, bridge, parking area or
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0005| related project;
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0006| (2) building, stadium or other structure;
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0007| (3) airport, subway or similar facility;
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0008| (4) park, trail, athletic field, golf course
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0009| or similar facility;
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0010| (5) dam, reservoir, canal, ditch or similar
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0011| facility;
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0012| (6) sewerage or water treatment facility,
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0013| power generating plant, pump station, natural gas compressing
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0014| station, gas processing plant, coal gasification plant,
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0015| refinery, distillery or similar facility;
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0016| (7) sewerage, water, gas or other pipeline;
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0017| (8) transmission line;
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0018| (9) radio, television or other tower;
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0019| (10) water, oil or other storage tank;
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0020| (11) shaft, tunnel or other mining
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0021| appurtenance;
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0022| (12) microwave station or similar facility;
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0023| or
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0024| (13) similar work;
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0025| "construction" also means:
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- 10 -0001| (14) leveling or clearing land;
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0002| (15) excavating earth;
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0003| (16) drilling wells of any type, including
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0004| seismograph shot holes or core drilling; or
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0005| (17) similar work;
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0006| D. "financial corporation" means any savings and
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0007| loan association or any incorporated savings and loan company,
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0008| trust company, mortgage banking company, consumer finance
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0009| company or other financial corporation;
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0010| E. "engaging in business" means carrying on or
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0011| causing to be carried on any activity with the purpose of
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0012| direct or indirect benefit;
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0013| F. "gross receipts" means the total amount of
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0014| money or the value of other consideration received from
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0015| selling property in New Mexico, from leasing property employed
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0016| in New Mexico, from selling services performed outside New
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0017| Mexico the product of which is initially used in New Mexico or
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0018| from performing services in New Mexico. In an exchange in
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0019| which the money or other consideration received does not
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0020| represent the value of the property or service exchanged,
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0021| "gross receipts" means the reasonable value of the property or
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0022| service exchanged.
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0023| (1) "Gross receipts" includes:
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0024| (a) any receipts from sales of tangible
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0025| personal property handled on consignment;
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- 11 -0001| (b) the total commissions or fees
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0002| derived from the business of buying, selling or promoting the
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0003| purchase, sale or leasing, as an agent or broker on a
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0004| commission or fee basis, of any property, service, stock, bond
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0005| or security;
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0006| (c) amounts paid by members of any
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0007| cooperative association or similar organization for sales or
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0008| leases of personal property or performance of services by such
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0009| organization; and
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0010| (d) amounts received from transmitting
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0011| messages or conversations by persons providing telephone or
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0012| telegraph services.
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0013| (2) "Gross receipts" excludes:
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0014| (a) cash discounts allowed and taken;
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0015| (b) New Mexico gross receipts tax,
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0016| governmental gross receipts tax and leased vehicle gross
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0017| receipts tax payable on transactions for the reporting period;
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0018| (c) taxes imposed pursuant to the
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0019| provisions of any local option gross receipts tax that is
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0020| payable on transactions for the reporting period;
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0021| (d) any gross receipts or sales taxes
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0022| imposed by an Indian nation, tribe or pueblo; provided that
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0023| the tax is approved, if approval is required by federal law or
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0024| regulation, by the secretary of the interior of the United
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0025| States; and provided further that the gross receipts or sales
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- 12 -0001| tax imposed by the Indian nation, tribe or pueblo provides a
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0002| reciprocal exclusion for gross receipts, sales or gross
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0003| receipts-based excise taxes imposed by the state or its
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0004| political subdivisions;
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0005| (e) any type of time-price
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0006| differential; and
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0007| (f) amounts received solely on behalf
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0008| of another in a disclosed agency capacity.
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0009| (3) When the sale of property or service is
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0010| made under any type of charge, conditional or time-sales
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0011| contract or the leasing of property is made under a leasing
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0012| contract, the seller or lessor may elect to treat all
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0013| receipts, excluding any type of time-price differential, under
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0014| such contracts as gross receipts as and when the payments are
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0015| actually received. If the seller or lessor transfers his
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0016| interest in any such contract to a third person, the seller or
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0017| lessor shall pay the gross receipts tax upon the full sale or
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0018| leasing contract amount, excluding any type of time-price
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0019| differential;
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0020| G. "manufacturing" means combining or processing
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0021| components or materials to increase their value for sale in
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0022| the ordinary course of business, but does not include
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0023| construction;
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0024| H. "person" means:
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0025| (1) any individual, estate, trust, receiver,
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- 13 -0001| cooperative association, club, corporation, company, firm,
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0002| partnership, limited liability company, limited liability
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0003| partnership, joint venture, syndicate or other entity,
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0004| including any gas, water or electric utility owned or operated
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0005| by a county, municipality or other political subdivision of
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0006| the state; or
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0007| (2) any national, federal, state, Indian or
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0008| other governmental unit or subdivision, or any agency,
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0009| department or instrumentality of any of the foregoing;
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0010| I. "property" means real property, tangible
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0011| personal property, licenses, franchises, patents, trademarks
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0012| and copyrights. Tangible personal property includes
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0013| electricity and manufactured homes;
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0014| J. "leasing" means any arrangement whereby, for a
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0015| consideration, property is employed for or by any person other
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0016| than the owner of the property, except that the granting of a
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0017| license to use property is the sale of a license and not a
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0018| lease;
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0019| K. "service" means all activities engaged in for
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0020| other persons for a consideration, which activities involve
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0021| predominantly the performance of a service as distinguished
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0022| from selling or leasing property. "Service" includes
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0023| activities performed by a person for its members or
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0024| shareholders. In determining what is a service, the intended
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0025| use, principal objective or ultimate objective of the
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- 14 -0001| contracting parties shall not be controlling. "Service"
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0002| includes construction activities and all tangible personal
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0003| property that will become an ingredient or component part of a
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0004| construction project. Such tangible personal property retains
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0005| its character as tangible personal property until it is
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0006| installed as an ingredient or component part of a construction
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0007| project in New Mexico. However, sales of tangible personal
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0008| property that will become an ingredient or component part of a
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0009| construction project to persons engaged in the construction
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0010| business are sales of tangible personal property;
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0011| L. "use" or "using" includes use, consumption or
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0012| storage other than storage for subsequent sale in the ordinary
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0013| course of business or for use solely outside this state;
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0014| M. "secretary" means the secretary of taxation and
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0015| revenue or the secretary's delegate;
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0016| N. "manufactured home" means a [moveable]
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0017| movable or portable housing structure for human occupancy
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0018| that exceeds either a width of eight feet or a length of forty
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0019| feet constructed to be towed on its own chassis and designed
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0020| to be installed with or without a permanent foundation;
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0021| O. "initial use" or "initially used" means the
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0022| first employment for the intended purpose and does not include
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0023| the following activities:
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0024| (1) observation of tests conducted by the
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0025| performer of services;
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- 15 -0001| (2) participation in progress reviews,
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0002| briefings, consultations and conferences conducted by the
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0003| performer of services;
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0004| (3) review of preliminary drafts, drawings
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0005| and other materials prepared by the performer of the services;
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0006| (4) inspection of preliminary prototypes
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0007| developed by the performer of services; or
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0008| (5) similar activities;
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0009| P. "research and development services" means any
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0010| activity engaged in for other persons for consideration, for
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0011| one or more of the following purposes:
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0012| (1) advancing basic knowledge in a recognized
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0013| field of natural science;
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0014| (2) advancing technology in a field of
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0015| technical endeavor;
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0016| (3) the development of a new or improved
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0017| product, process or system with new or improved function,
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0018| performance, reliability or quality, whether or not the new or
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0019| improved product, process or system is offered for sale, lease
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0020| or other transfer;
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0021| (4) the development of new uses or
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0022| applications for an existing product, process or system,
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0023| whether or not the new use or application is offered as the
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0024| rationale for purchase, lease or other transfer of the
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0025| product, process or system;
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- 16 -0001| (5) analytical or survey activities
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0002| incorporating technology review, application, trade-off study,
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0003| modeling, simulation, conceptual design or similar activities,
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0004| whether or not offered for sale, lease or other transfer; or
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0005| (6) the design and development of prototypes
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0006| or the integration of systems incorporating advances,
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0007| developments or improvements included in Paragraphs (1)
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0008| through (5) of this subsection; [and]
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0009| Q. "local option gross receipts tax" means a tax
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0010| authorized to be imposed by a county or municipality upon the
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0011| taxpayer's gross receipts and required to be collected by the
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0012| department at the same time and in the same manner as the
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0013| gross receipts tax; "local option gross receipts tax" includes
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0014| the taxes imposed pursuant to the Municipal Local Option Gross
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0015| Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax
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0016| Act, Special Municipal Gross Receipts Tax Act, County Local
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0017| Option Gross Receipts Taxes Act, Local Hospital Gross Receipts
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0018| Tax Act, County Correctional Facility Gross Receipts Tax Act
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0019| and such other acts as may be enacted authorizing counties or
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0020| municipalities to impose taxes on gross receipts, which taxes
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0021| are to be collected by the department; and
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0022| R. "prescription drugs" means insulin and
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0023| substances that are:
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0024| (1) dispensed by or under the supervision of
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0025| a licensed pharmacist or by a physician or other person
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- 17 -0001| authorized under state law to do so;
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0002| (2) prescribed for a specified person by a
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0003| person authorized under state law to prescribe the substance;
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0004| and
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0005| (3) subject to the restrictions on sale
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0006| contained in Subparagraph 1 of Subsection (b) of 21 USCA
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0007| 353."
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0008| Section 4. A new section of the Gross Receipts and
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0009| Compensating Tax Act is enacted to read:
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0010| "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX AND
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0011| GOVERNMENTAL GROSS RECEIPTS TAX--PRESCRIPTION DRUGS.--Receipts
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0012| from the sale of prescription drugs may be deducted from gross
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0013| receipts and governmental gross receipts."
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0014| Section 5. REPEAL.--Section 7-2-18.3 NMSA 1978 (being
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0015| Laws 1994, Chapter 5, Section 17) is repealed.
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0016| Section 6. APPLICABILITY.--
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0017| A. The provisions of Sections 1 and 2 of this act
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0018| apply to taxable years beginning on or after January 1, 1998.
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0019| B. The provisions of Section 5 of this act apply
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0020| to taxable years beginning on or after January 1, 1999.
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0021| Section 7. EFFECTIVE DATE.--The effective date of the
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0022| provisions of Sections 3 and 4 of this act is January 1, 1999.
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0023|
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