44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO TAXATION; PROVIDING A CREDIT AGAINST GROSS RECEIPTS TAX FOR GROSS RECEIPTS TAX PAID ON CERTAIN SERVICES PURCHASED BY A TAXPAYER; ADJUSTING REVENUE TO LOCAL GOVERNMENTS FROM THE GROSS RECEIPTS TAX TO OFFSET THE REDUCTION IN REVENUE DUE TO THE CREDIT.

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

Section 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] CREDIT AGAINST GROSS RECEIPTS TAX--COMPUTATION--REPORTING.--

A. As used in this section, "eligible service" means a service purchased by a taxpayer that is:

(1) necessary for or a requirement of the taxpayer to provide products or services in the ordinary course of the taxpayer's business;

(2) not consumed by the taxpayer or in the taxpayer's business; and

(3) not deductible or exempt pursuant to the provisions of the Gross Receipts and Compensating Tax Act.

B. A taxpayer may take a credit against his gross receipts tax payable for a reporting period beginning on or after July 1, 1999. The credit is the percentage specified in Paragraph (1), (2) or (3) of this subsection of an amount equal to the gross receipts tax imposed on the seller of eligible services and passed on and paid by the taxpayer for the purchased eligible services during the indicated reporting periods:

(1) twenty-five percent from July 1, 1999 through June 30, 2000;

(2) fifty percent from July 1, 2000 through June 30, 2001; and

(3) one hundred percent after June 30, 2001.

C. For the purpose of determining the distribution and transfer of gross receipts tax revenue to local governments and to state funds other than the general fund, the department shall compute the distribution without regard to the credit authorized in this section.

D. The credit provided by this section must be claimed within one year from the last day of the reporting period in which the tax was passed on and paid by the claimant."