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(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

Legislative Finance Committee (LFC)

SUMMARY

Synopsis of Bill

This bill adds a new section to the Tax Administration Act and amends an existing section.

The new section required the department of taxation and revenue to publish a taxpayers requested investment credit, the amount approved, and the amount of available credit that remains unclaimed. The publication will be produced on a quarterly basis.

The amendment redefines "Qualified Equipment" pursuant to the investment credit act. The new definition requires that gross receipts or compensating tax be paid on the equipment prior to credit approval and that the taxpayer does not claim credit pursuant to Section 7-9-79 NMSA 1978:

7-9-79. Credit; compensating tax.

A. If on property bought outside this state, a gross receipts, sales, compensating or similar tax has been levied by another state or political subdivision thereof on the transaction by which the person using the property in New Mexico acquired the property or a compensating, use or similar tax has been levied by another state on the use of the property subsequent to its acquisition by the person using the property in New Mexico and such tax has been paid, the amount of such tax paid may be credited against any compensating tax due this state on the same property.

B. When the receipts from the sale of real property constructed by a person in the ordinary course of his construction business are subject to the gross receipts tax, the amount of compensating tax previously paid by the person on materials which became an ingredient or component part of the construction project and on construction services performed upon the construction project may be credited against the gross receipts tax due on the sale.

History: 1953 Comp., § 72-16A-16, enacted by Laws 1966, ch. 47, § 16; 1973, ch. 342, § 1; 1991, ch. 203, § 10.

This bill also strikes language saying that qualified equipment is equipment "...that is owned by the taxpayer or owned by the United States or an agency or is instrumentality thereof or the state political subdivision thereof and leased or subleased to the taxpayer...".

FISCAL IMPLICATIONS

The Taxation and Revenue Department (TRD) has not reported an impact as February 27, 1999. However due to the nature of the amendment, there will be a positive fiscal impact to the general fund.

ADMINISTRATIVE IMPLICATIONS

There are relatively few taxpayers who would request an investment credit. As the Taxation and Revenue Department (TRD) has not reported an impact as of this date, TRD's estimate of the administrative impact is unknown. It is estimated by this analyst to be a small impact as it would only involve a relatively simple report to be generated on quarterly basis.

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