TAX CHANGES

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AN ACT
RELATING TO TAXATION; ALLOWING ATTORNEY FEES TO BE PAID FROM
REVENUE DISTRIBUTIONS; PREVENTING THE ACCRUAL OF INTEREST
WHEN AN EXTENSION OF TIME TO FILE A RETURN HAS BEEN GRANTED;
AMENDING ROUNDING REQUIREMENTS; CLARIFYING THAT A TAXPAYER
WHO HAS ENTERED INTO AN INSTALLMENT AGREEMENT IS NOT
CONSIDERED A DELINQUENT TAXPAYER FOR PURPOSES OF LICENSE OR
PERMIT RENEWAL; PROVIDING THAT A MINIMUM CIVIL PENALTY OF
FIVE DOLLARS ($5.00) SHALL NOT APPLY FOR FAILURE TO PAY A TAX
LEVIED PURSUANT TO THE WITHHOLDING TAX ACT, THE OIL AND GAS
PROCEEDS AND PASS-THROUGH ENTITY WITHHOLDING TAX ACT OR THE
WORKERS' COMPENSATION FEE; AMENDING THE FILM PRODUCTION TAX
CREDIT ACT; AMENDING DEFINITIONS IN THE TECHNOLOGY JOBS AND
RESEARCH AND DEVELOPMENT TAX CREDIT ACT; CLARIFYING THE
TOBACCO PRODUCTS TAX ON CLOSED SYSTEM CARTRIDGES; ALLOWING
EXCESS PROPERTY TAX AUCTION PROCEEDS TO BE APPLIED TO
OUTSTANDING TAX DEBT; REQUIRING SPECIFIC EFFECTIVE DATES FOR
AN ORDINANCE CHANGING THE IMPOSITION OF TAX IMPOSED BY AN
INDIAN NATION, TRIBE OR PUEBLO AND COLLECTED BY THE TAXATION
AND REVENUE DEPARTMENT PURSUANT TO A TRIBAL COOPERATIVE
AGREEMENT; AMENDING WITH WHOM THE SECRETARY OF TAXATION AND
REVENUE MAY ENTER INTO TRIBAL COOPERATIVE AGREEMENTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-1-6 NMSA 1978 (being Laws 1978,
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Chapter 55, Section 1, as amended) is amended to read:
"7-1-6. RECEIPTS--DISBURSEMENTS--FUNDS CREATED.--
A. All money received by the department with
respect to laws administered pursuant to the provisions of
the Tax Administration Act shall be deposited with the state
treasurer before the close of the next succeeding business
day after receipt of the money, except that money received
with respect to the Income Tax Act and the Corporate Income
and Franchise Tax Act during the period starting with the
fifth day prior to the due date for payment of the taxes for
the year and ending on the tenth day following that due date
shall be deposited before the close of the tenth business day
after receipt of the money.
B. Money received or disbursed by the department
shall be accounted for by the department as required by law
or rule of the secretary of finance and administration.
C. Disbursements for tax credits, tax rebates,
refunds, the payment of interest, the payment of fees charged
by attorneys or collection agencies for collection of
accounts as agent for the department, attorney fees and costs
awarded by a court or hearing officer, the payment of credit
card service charges on payments of taxes by use of credit
cards, distributions and transfers shall be made by the
department of finance and administration upon request and
certification of their appropriateness by the secretary or
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the secretary's delegate.
D. There are hereby created in the state treasury
the "tax administration suspense fund", the "extraction taxes
suspense fund" and the "workers' compensation collections
suspense fund" for the purpose of making the disbursements
authorized by the Tax Administration Act.
E. All revenues collected or received by the
department pursuant to the provisions of the taxes and tax
acts set forth in Subsection A of Section 7-1-2 NMSA 1978
shall be credited to the tax administration suspense fund and
are appropriated for the purpose of making the disbursements
authorized in this section or otherwise authorized or
required by law to be made from the tax administration
suspense fund.
F. All revenues collected or received by the
department pursuant to the taxes or tax acts set forth in
Subsection B of Section 7-1-2 NMSA 1978 shall be credited to
the extraction taxes suspense fund and are appropriated for
the purpose of making the disbursements authorized in this
section or otherwise authorized or required by law to be made
from the extraction taxes suspense fund.
G. All revenues collected or received by the
department pursuant to the taxes or tax acts set forth in
Subsection C of Section 7-1-2 NMSA 1978 may be credited to
the tax administration suspense fund, unless otherwise
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directed by law to be credited to another fund or agency, and
are appropriated for the purpose of making disbursements
authorized in this section or otherwise authorized or
required by law.
H. All revenues collected or received by the
department pursuant to the provisions of Section 52-5-19 NMSA
1978 shall be credited to the workers' compensation
collections suspense fund and are appropriated for the
purpose of making the disbursements authorized in this
section or otherwise authorized or required by law to be made
from the workers' compensation collections suspense fund.
I. Disbursements to cover expenditures of the
department shall be made only upon approval of the secretary
or the secretary's delegate.
J. Miscellaneous receipts from charges made by the
department to defray expenses pursuant to the provisions of
Section 9-11-6.1 NMSA 1978 and similar charges are
appropriated to the department for its use.
K. From the tax administration suspense fund,
there may be disbursed each month amounts approved by the
secretary or the secretary's delegate necessary to maintain a
fund hereby created and to be known as the "income tax
suspense fund". The income tax suspense fund shall be used
for the payment of income tax refunds."
SECTION 2. Section 7-1-13 NMSA 1978 (being Laws 1965,
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Chapter 248, Section 18, as amended) is amended to read:
"7-1-13. TAXPAYER RETURNS--PAYMENT OF TAXES--EXTENSION
OF TIME.--
A. Taxpayers are liable for tax at the time of and
after the transaction or incident giving rise to tax until
payment is made. Taxes are due on and after the date on
which their payment is required until payment is made.
B. Every taxpayer shall, on or before the date on
which payment of any tax is due, complete and file a tax
return in a form prescribed and according to the regulations
issued by the secretary. Except as provided in Section
7-1-13.1 NMSA 1978 or by regulation, ruling, order or
instruction of the secretary, the payment of any tax or the
filing of any return may be accomplished by mail. When the
filing of a tax return or payment of a tax is accomplished by
mail, the date of the postmark shall be considered the date
of submission of the return or payment.
C. Payment of the total amount of all taxes that
are due from the taxpayer shall precede or accompany the
return. Delivery to the department of a check or electronic
check that is not paid upon presentment does not constitute
payment.
D. The secretary or the secretary's delegate may,
for good cause, extend in favor of a taxpayer or a class of
taxpayers, for no more than a total of twelve months, the
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date on which payment of any tax is required or on which any
return required by provision of the Tax Administration Act
shall be filed. When an extension of time for income tax has
been granted a taxpayer pursuant to the Internal Revenue
Code, the extension shall serve to extend the time for filing
New Mexico income tax; provided that a copy of the approved
federal extension of time is attached to the taxpayer's New
Mexico income tax return. The secretary by regulation may
also provide for the automatic extension for no more than six
months of the date upon which payment of any New Mexico
income tax or the filing of any New Mexico income tax return
is required. If the secretary or the secretary's delegate
believes it necessary to ensure the collection of the tax,
the secretary or the secretary's delegate may require, as a
condition of granting any extension, that the taxpayer
furnish security in accordance with the provisions of Section
7-1-54 NMSA 1978.
E. Except as provided in Subsection F of this
section, no later than one hundred eighty days after the
final determination date, a taxpayer shall file a federal
adjustments report with the department and pay any state tax
due with respect to final net-positive federal adjustments
arising from:
(1) an audit or other action by the internal
revenue service; or
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(2) a timely filed amended federal income
tax return, including a return or other similar information
filed pursuant to Section 6225(c)(2) of the Internal Revenue
Code.
F. Except for federal adjustments that are
required to be reported pursuant to Subsection E of this
section, partnerships and partners shall report final
net-positive federal adjustments arising from a partnership
level audit or an administrative adjustment request and make
payments as follows:
(1) except for where the partnership or
tiered partner makes an election pursuant to Subsection G of
this section, the partnership or tiered partner shall:
(a) file: 1) a completed federal
adjustments report and notify each of its direct partners of
their distributive share of the final federal adjustments,
including information necessary for reporting state tax due
as required by the department; and 2) an amended withholding
return for the reviewed year if such return was filed, or
would have been required pursuant to the Withholding Tax Act;
(b) in the case of an audited
partnership, file the returns required by this paragraph no
later than ninety days after the final determination date;
and
(c) in the case of a tiered partner of
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an audited partnership, file the returns required by this
paragraph no later than ninety days after the time for the
audited partnership's filing and furnishing statements to
tiered partnerships and their partners as established
pursuant to Section 6226 of the Internal Revenue Code and the
regulations thereunder; and
(2) a partner of a partnership or a tiered
partner subject to tax pursuant to Section 7-2-3 or 7-2A-3
NMSA 1978 on adjustments to which Paragraph (1) of this
subsection applies shall file a federal adjustments report
reporting the partner's distributive share of the adjustments
and shall pay the additional amount of state tax due, plus
any penalty and interest due and less any credit for related
amounts paid or withheld and remitted on behalf of the
partner pursuant to Paragraph (1) of this subsection as
follows:
(a) for taxable direct partners of the
audited partnership, no later than one hundred eighty days
after the final determination date; or
(b) for taxable indirect partners of
the audited partnership, no later than one hundred eighty
days after the time for the audited partnership's filing and
furnishing statements to tiered partnerships and their
partners as established pursuant to Section 6226 of the
Internal Revenue Code and the regulations thereunder.
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G. The election provided by this subsection
applies only to federal adjustments other than the
distributive share of federal adjustments that must be
included in the unitary business income of any direct or
indirect corporate partner; provided that this can be
reasonably determined, or federal adjustments resulting from
an administrative adjustment request. A partnership making
an election pursuant to this subsection shall:
(1) file a completed federal adjustments
report and notify the department that it is making the
election pursuant to this subsection; and
(2) pay an amount, determined as follows, in
lieu of taxes owed by its direct and indirect taxable
partners:
(a) exclude from the total final
federal adjustments the distributive share reported to a
direct partner that is an exempt partner unless the
adjustment represents unrelated business taxable income;
(b) include only the portion of the
total federal adjustment to distributive shares of partners
taken into account pursuant to Section 6225(b)(2) of the
Internal Revenue Code;
(c) apportion and allocate the
adjustments as provided by the Uniform Division of Income for
Tax Purposes Act as applied at the partnership level
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following any department regulations adopted for this
purpose;
(d) multiply the resulting amount by
the highest tax rate provided by Section 7-2A-5 NMSA 1978;
and
(e) add to the amount calculated
pursuant to Subparagraph (d) of this paragraph an amount of
penalty and interest computed pursuant to the Tax
Administration Act.
H. In any action required or allowed to be taken
pursuant to the Tax Administration Act with respect to the
reporting of federal adjustments by a partnership, the state
partnership representative for the reviewed year shall have
the sole authority to act on behalf of the partnership, and
the partnership's direct partners and indirect partners shall
be bound by those actions. The state partnership
representative is the partnership's federal partnership
representative for the reviewed year, unless the partnership
designates in writing another person as its state partnership
representative; provided that the person meets any
qualifications established by the department.
I. Pursuant to procedures that may be adopted by
the department, an audited partnership or tiered partner of
that partnership may enter into an agreement with the
department to utilize an alternative reporting and payment
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method, including applicable time requirements or any other
provision pursuant to Subsections E through H of this
section, if the audited partnership or tiered partner
demonstrates that the requested method will reasonably
provide for the reporting and payment of taxes, penalties and
interest due pursuant to Subsections E through H of this
section. Application for approval of an alternative
reporting and payment method must be made by the audited
partnership or tiered partner within the time for election as
provided in Subsection G of this section, as appropriate.
J. An election made pursuant to Subsection G or I
of this section is irrevocable, unless the department, in its
discretion, determines otherwise. If properly reported and
paid by the audited partnership or tiered partner, the amount
determined in Paragraph (2) of Subsection G of this section,
or similarly under an optional election pursuant to
Subsection I of this section, will be treated as paid in lieu
of taxes owed by its direct and indirect partners on the same
final federal adjustments. The direct or indirect partners
of the partnership that pays this in lieu of amount may not
claim any deduction, credit or refund with respect to that
amount.
K. A taxpayer may make estimated payments of state
tax expected to result from a pending audit by the internal
revenue service prior to the final determination date,
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following the process prescribed by the department, and such
payments will limit the accrual of further statutory interest
on that amount.
L. A taxpayer may claim an amount of state tax
resulting from final net-negative federal adjustments as
provided in Section 7-1-26 NMSA 1978.
M. Nothing in Subsections E through L of this
section shall prevent the department from assessing direct
partners or indirect partners for taxes they owe, using the
best information available, in the event that a partnership
or tiered partner fails to timely make any report or payment
required for any reason.
N. As used in this section:
(1) "administrative adjustment request"
means an administrative adjustment request filed by a
partnership pursuant to Section 6227 of the Internal Revenue
Code;
(2) "audited partnership" means a
partnership subject to a partnership level audit resulting in
a federal adjustment;
(3) "corporate partner" means a partner,
direct or indirect, that is subject to tax pursuant to the
Corporate Income and Franchise Tax Act;
(4) "direct partner" means any partner that
holds an interest directly in a partnership or pass-through
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entity;
(5) "exempt partner" means a partner, direct
or indirect, that is exempt from New Mexico income tax except
on unrelated business taxable income;
(6) "federal adjustment" means a change to
an item or amount determined pursuant to the Internal Revenue
Code that is used by a taxpayer to compute an amount of state
tax owed, whether that change results from action by the
internal revenue service, including a partnership level
audit, or the filing of an amended federal return, federal
refund claim or an administrative adjustment request by a
partnership;
(7) "federal adjustments report" includes
the methods or forms required by the department for use by a
taxpayer to report final federal adjustments, including an
amended tax return, information return or a uniform
multistate report;
(8) "final determination date" means:
(a) except as provided in Subparagraphs
(b), (c) and (d) of this paragraph, if a federal adjustment
arises from an audit or other action by the internal revenue
service, the final determination date is the first day on
which no federal adjustments arising from that audit or other
action remain to be finally determined, whether by a decision
of the internal revenue service with respect to which all
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rights of appeal have been waived or exhausted, by agreement,
or, if appealed or contested, by a final decision with
respect to which all rights of appeal have been waived or
exhausted. For agreements required to be signed by the
internal revenue service and the taxpayer, the final
determination date is the date on which the last party signed
the agreement;
(b) for federal adjustments arising
from an internal revenue service audit or other action by the
internal revenue service, if the taxpayer filed as a member
of a filing group pursuant to the Corporate Income and
Franchise Tax Act, the final determination date means the
first day on which no related federal adjustments arising
from that audit remain to be finally determined, as described
in Subparagraph (a) of this paragraph, for the entire group;
(c) except as provided in Subparagraph
(d) of this paragraph, if the federal adjustment results from
filing an amended federal return, a federal refund claim or
an administrative adjustment request, or if it is a federal
adjustment reported on an amended federal return or other
similar report filed pursuant to Section 6225(c) of the
Internal Revenue Code, the final determination date means the
day on which the amended return, refund claim, administrative
adjustment request or other similar report was filed; and
(d) for adjustments resulting from a
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partnership level audit or an administrative adjustment
request for which the final determination date pursuant to
Subparagraph (a) or (c) of this paragraph is determined to be
a date occurring prior to June 18, 2021, the final
determination date shall be July 1, 2021;
(9) "final federal adjustments" means
adjustments for which the final determination date has
passed, including final net-positive federal adjustments and
final net-negative federal adjustments;
(10) "indirect partner" means a partner in a
partnership or pass-through entity in which the partner holds
an interest directly, or through another indirect partner, in
a partnership or pass-through entity;
(11) "net-negative federal adjustments"
means federal adjustments relating to the same tax period,
whether made by the taxpayer or the internal revenue service,
the net effect of which is to decrease state tax due as
compared to tax originally reported for that period;
(12) "net-positive federal adjustments"
means federal adjustments relating to the same tax period,
whether made by the taxpayer or the internal revenue service,
the net effect of which is to increase state tax due as
compared to tax originally reported for that period;
(13) "partner" means a person that holds an
interest directly or indirectly in a partnership or other
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pass-through entity;
(14) "partnership" means an entity subject
to taxation pursuant to Subchapter K of the Internal Revenue
Code;
(15) "partnership level audit" means an
examination by the internal revenue service at the
partnership level pursuant to Subchapter C or Subtitle F,
Chapter 63 of the Internal Revenue Code that results in
federal adjustments;
(16) "pass-through entity" means an entity,
other than a partnership, that is not subject to tax pursuant
to the Corporate Income and Franchise Tax Act;
(17) "reviewed year" means the taxable year
of a partnership that is subject to a partnership level audit
from which federal adjustments arise;
(18) "taxpayer" means a taxpayer, including
a partnership subject to a partnership level audit or a
partnership that has made an administrative adjustment
request, as well as a tiered partner of that partnership,
unless the context indicates otherwise;
(19) "tiered partner" means any partner that
is a partnership or pass-through entity; and
(20) "unrelated business taxable income"
means "unrelated business taxable income" as used in Section
512 of the Internal Revenue Code."
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SECTION 3. Section 7-1-15.1 NMSA 1978 (being Laws 1987,
Chapter 169, Section 4) is amended to read:
"7-1-15.1. SECRETARY MAY PERMIT OR REQUIRE ROUNDING.--
By regulation or instruction, the secretary may permit or
require rounding to the nearest whole dollar of an amount due
pursuant to the Income Tax Act or the Corporate Income and
Franchise Tax Act, and to the nearest five cents ($.05) of an
amount due pursuant to all other taxes administered by the
department pursuant to Section 7-1-2 NMSA 1978."
SECTION 4. Section 7-1-16 NMSA 1978 (being Laws 1965,
Chapter 248, Section 19, as amended) is amended to read:
"7-1-16. DELINQUENT TAXPAYER.--
A. Except as provided in Subsections D and E of
this section, any taxpayer to whom taxes have been assessed
as provided in Section 7-1-17 NMSA 1978 or upon whom demand
for payment has been made as provided in Section 7-1-63 NMSA
1978 who does not within ninety days after the date of
assessment or demand for payment make payment of the
undisputed amount, protest the assessment or demand for
payment as provided by Section 7-1-24 NMSA 1978 or furnish
security for payment as provided by Section 7-1-54 NMSA 1978
becomes a delinquent taxpayer and remains such until:
(1) payment of the total amount of all such
taxes is made;
(2) security is furnished for payment; or
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(3) no part of the assessment remains
unabated.
B. Any taxpayer who fails to provide security as
required by Subsection D of Section 7-1-54 NMSA 1978 shall be
deemed to be a delinquent taxpayer.
C. If a taxpayer files a protest as provided in
Section 7-1-24 NMSA 1978, the taxpayer nevertheless becomes a
delinquent taxpayer upon failure of the taxpayer to appear,
in person or by authorized representative, at the hearing set
or upon failure to perfect an appeal from any decision or
part thereof adverse to the taxpayer to the next higher
appellate level, as provided in that section, unless the
taxpayer makes payment of the total amount of all taxes
assessed and remaining unabated or furnishes security for
payment.
D. A taxpayer does not become a delinquent
taxpayer if the taxpayer has been issued an assessment as a
result of a managed audit but is still within the allowed
time period to pay the tax due as specified in Paragraph (4)
of Subsection A of Section 7-1-67 NMSA 1978.
E. For the purposes of license or permit renewal,
a taxpayer shall not be considered a delinquent taxpayer if
the taxpayer has entered into an installment agreement
pursuant to Section 7-1-21 NMSA 1978 that is in good standing
with the department and the taxpayer has not failed to meet
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the conditions of the installment agreement with the
department during the five calendar years immediately
preceding the current calendar year. If an installment
agreement is relied on for purposes of license or permit
renewal, it shall be secured with a payment of a minimum of
twenty percent of the taxpayer's delinquent tax amount for
the tax programs required for renewal."
SECTION 5. Section 7-1-69 NMSA 1978 (being Laws 1965,
Chapter 248, Section 70, as amended) is amended to read:
"7-1-69. CIVIL PENALTY FOR FAILURE TO PAY TAX OR FILE A
RETURN.--
A. Except as provided in Subsection C of this
section, in the case of failure due to negligence or
disregard of department rules and regulations, but without
intent to evade or defeat a tax, to pay when due the amount
of tax required to be paid, to pay in accordance with the
provisions of Section 7-1-13.1 NMSA 1978 when required to do
so or to file by the date required a return regardless of
whether a tax is due, there shall be added to the amount
assessed a penalty in an amount equal to the greater of:
(1) two percent per month or any fraction of
a month from the date the tax was due multiplied by the
amount of tax due but not paid, not to exceed twenty percent
of the tax due but not paid;
(2) two percent per month or any fraction of
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a month from the date the return was required to be filed
multiplied by the tax liability established in the late
return, not to exceed twenty percent of the tax liability
established in the late return; or
(3) a minimum of five dollars ($5.00), but
the five-dollar ($5.00) minimum penalty shall not apply to
taxes levied under the Income Tax Act, Corporate Income and
Franchise Tax Act, Withholding Tax Act, Oil and Gas Proceeds
and Pass-Through Entity Withholding Tax Act, workers'
compensation fee authorized by Section 52-5-19 NMSA 1978 or
taxes administered by the department pursuant to Subsection B
of Section 7-1-2 NMSA 1978.
B. No penalty shall be assessed against a taxpayer
if the failure to pay an amount of tax when due results from
a mistake of law made in good faith and on reasonable
grounds.
C. If a different penalty is specified in a
compact or other interstate agreement to which New Mexico is
a party, the penalty provided in the compact or other
interstate agreement shall be applied to amounts due under
the compact or other interstate agreement at the rate and in
the manner prescribed by the compact or other interstate
agreement.
D. In the case of failure, with willful intent to
evade or defeat a tax, to pay when due the amount of tax
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required to be paid, there shall be added to the amount fifty
percent of the tax or a minimum of twenty-five dollars
($25.00), whichever is greater, as penalty.
E. If demand is made for payment of a tax,
including penalty imposed pursuant to this section, and if
the tax is paid within ten days after the date of such
demand, no penalty shall be imposed for the period after the
date of the demand with respect to the amount paid.
F. If a taxpayer makes electronic payment of a tax
but the payment does not include all of the information
required by the department pursuant to the provisions of
Section 7-1-13.1 NMSA 1978 and if the department does not
receive the required information within five business days
from the later of the date a request by the department for
that information is received by the taxpayer or the due date,
the taxpayer shall be subject to a penalty of two percent per
month or any fraction of a month from the fifth day following
the date the request is received. If a penalty is imposed
under Subsection A of this section with respect to the same
transaction for the same period, no penalty shall be imposed
under this subsection.
G. No penalty shall be imposed on:
(1) tax due in excess of tax paid in
accordance with an approved estimated basis pursuant to
Section 7-1-10 NMSA 1978;
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(2) tax due as the result of a managed
audit; or
(3) tax that is deemed paid by crediting
overpayments found in an audit or managed audit of multiple
periods pursuant to Section 7-1-29 NMSA 1978."
SECTION 6. Section 7-2F-2 NMSA 1978 (being Laws 2003,
Chapter 127, Section 2, as amended) is amended to read:
"7-2F-2. DEFINITIONS.--As used in the Film Production
Tax Credit Act:
A. "affiliated person" means a person who directly
or indirectly owns or controls, is owned or controlled by or
is under common ownership or control with another person
through ownership of voting securities or other ownership
interests representing a majority of the total voting power
of the entity;
B. "background artist" means a person who is not a
performing artist but is a person of atmospheric business
whose work includes atmospheric noise, normal actions,
gestures and facial expressions of that person's assignment;
or a person of atmospheric business whose work includes
special abilities that are not stunts; or a substitute for
another actor, whether photographed as a double or acting as
a stand-in;
C. "below-the-line crew" means a person in a
position that is off-camera and who provides technical
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services during the physical production of a film. "Below-
the-line crew" does not include a person who is a writer,
director, producer or background artist or performing artist
for the film;
D. "commercial audiovisual product" means a film
or a video game intended for commercial exploitation;
E. "direct production expenditure" means a
transaction that is subject to taxation in New Mexico and is
certified pursuant to Subsection A of Section 7-2F-12 NMSA
1978:
(1) including an expenditure for:
(a) payment of wages, fringe benefits
or fees for talent, management or labor to a person who is a
New Mexico resident;
(b) payment for standard industry craft
inventory when provided by a below-the-line crew that is a
New Mexico resident in addition to its below-the-line crew
services;
(c) payment for wages and per diem for
a performing artist who is not a New Mexico resident and who
is directly employed by the film production company; provided
that the film production company deducts and remits, or
causes to be deducted and remitted, income tax from the first
day of services rendered in New Mexico at the maximum rate
pursuant to the Withholding Tax Act;
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(d) payment to a personal services
business for the services of a performing artist if: 1) the
personal services business pays gross receipts tax in New
Mexico on the portion of those payments qualifying for the
tax credit; and 2) the film production company deducts and
remits, or causes to be deducted and remitted, income tax at
the maximum rate in New Mexico pursuant to Subsection H of
Section 7-3A-3 NMSA 1978 on the portion of those payments
qualifying for the tax credit paid to a personal services
business where the performing artist is a full or part owner
of that business or subcontracts with a personal services
business where the performing artist is a full or part owner
of that business; and
(e) any of the following provided by a
vendor: 1) the story and scenario to be used for a film; 2)
set construction and operations, wardrobe, accessories and
related services; 3) photography, sound synchronization,
lighting and related services; 4) editing and related
services; 5) rental of facilities and equipment; 6) the first
one hundred fifty dollars ($150) of the daily expense of
leasing of vehicles, not including the chartering of aircraft
for out-of-state transportation; however, New Mexico-based
chartered aircraft for in-state transportation directly
attributable to the production shall be considered a direct
production expenditure; 7) food; 8) the first three hundred
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dollars ($300) of lodging per individual, per day; 9)
commercial airfare if purchased through a New Mexico-based
travel agency or travel company for travel to and from New
Mexico or within New Mexico that is directly attributable to
the production; 10) insurance coverage and bonding if
purchased through a New Mexico-based insurance agent, broker
or bonding agent; 11) subcontracted goods and services from
businesses; provided that the ordinary course of business of
the vendor procuring the goods and services from the
subcontractor directly relates to standard film industry
goods and services; and 12) other direct costs of producing a
film in accordance with generally accepted entertainment
industry practice; and
(2) does not include an expenditure for:
(a) a gift with a value greater than
one hundred dollars ($100);
(b) artwork or jewelry, except that a
work of art or a piece of jewelry may be a direct production
expenditure if: 1) it is used in the film production; and 2)
the expenditure is less than two thousand five hundred
dollars ($2,500);
(c) entertainment, amusement or
recreation;
(d) subcontracted goods or services
provided by a vendor when the subcontractors providing those
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goods or services to the vendor are not subject to state
taxation, such as equipment and locations provided by the
military, government and organizations that demonstrate to
the taxation and revenue department that they have been
granted exemption from the federal income tax by the United
States commissioner of internal revenue as organizations
described in Section 501(c)(3) of the United States Internal
Revenue Code of 1986, as amended or renumbered;
(e) subcontracted services provided by
a vendor when the subcontracted services are provided by a
person who is below-the-line crew and is not a New Mexico
resident;
(f) hidden or other indirect service
fees, costs, commissions or other remuneration received by
third parties and that are not directly paid by the film
production company or expressly enumerated on a film
production company's filing to claim a new film production
tax credit;
(g) wages for a person who is not a New
Mexico resident and who falsely claims to be a New Mexico
resident. The wages of such person shall not be considered
an eligible expense for two years from the date in which the
person is determined by the taxation and revenue department
as having made a false claim, regardless of whether the
person becomes a New Mexico resident within that time frame;
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or
(h) which the film production company
receives funding pursuant to Section 21-19-7.1 NMSA 1978;
F. "division" means the New Mexico film division
of the economic development department;
G. "federal new markets tax credit program" means
the tax credit program codified as Section 45D of the United
States Internal Revenue Code of 1986, as amended;
H. "film" means a single medium or multimedia
program, including television programs but excluding
advertising messages other than national or regional
advertising messages intended for exhibition, that:
(1) is fixed on film, a digital medium,
videotape, computer disc, laser disc or other similar
delivery medium;
(2) can be viewed or reproduced;
(3) is not intended to and does not violate
a provision of Chapter 30, Article 37 NMSA 1978; and
(4) is intended for reasonable commercial
exploitation for the delivery medium used;
I. "film production company" means a person that
produces one or more films or commercial audiovisual products
or any part of a film or commercial audiovisual product;
J. "fiscal year" means the state fiscal year
beginning on July 1;
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K. "New Mexico film partner" means a film
production company that has made a commitment to produce
films or commercial audiovisual products in New Mexico and
has purchased or executed a ten-year contract to lease a
qualified production facility;
L. "New Mexico film partner production" means a
film or commercial audiovisual product in New Mexico for
which a New Mexico film partner:
(1) owns at least fifty percent of the
production for which the budget is certified pursuant to
Subsection A of Section 7-2F-12 NMSA 1978 for at least one
year from the date of the last direct production expenditure
or postproduction expenditure in New Mexico;
(2) owns or controls underlying intellectual
property resulting from the production for at least five
years from the date of the last direct production expenditure
or postproduction expenditure in New Mexico; or
(3) has funded at least fifty percent of the
production budget certified pursuant to Subsection A of
Section 7-2F-12 NMSA 1978;
M. "New Mexico resident" means an individual who
is domiciled in this state during any part of the taxable
year or an individual who is physically present in this state
for one hundred eighty-five days or more during the taxable
year; but any individual, other than someone who was
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physically present in the state for one hundred eighty-five
days or more during the taxable year and who, on or before
the last day of the taxable year, changed the individual's
place of abode to a place without this state with the bona
fide intention of continuing actually to abide permanently
without this state is not a resident for the purposes of the
Film Production Tax Credit Act for periods after that change
of abode;
N. "performing artist" means an actor, on-camera
stuntperson, puppeteer, pilot who is a stuntperson or actor,
specialty foreground performer or narrator; and who speaks a
line of dialogue, is identified with the product or reacts to
narration as assigned. "Performing artist" does not include
a background artist;
O. "personal services business" means a business
organization, with or without physical presence, that
receives payments pursuant to the Film Production Tax Credit
Act for the services of a performing artist;
P. "physical presence" means a physical address in
New Mexico from which a vendor conducts business, stores
inventory or otherwise creates, assembles or offers for sale
the product purchased or leased by a film production company
and the vendor or an employee of the vendor is a resident;
Q. "postproduction expenditure" means an
expenditure, certified pursuant to Subsection A of Section
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7-2F-12 NMSA 1978, for editing, Foley recording, automatic
dialogue replacement, sound editing, special effects,
including computer-generated imagery or other effects,
scoring and music editing, beginning and end credits,
negative cutting, soundtrack production, dubbing, subtitling
or addition of sound or visual effects; but not including an
expenditure for advertising, marketing, distribution or
expense payments;
R. "principal photography" means the production of
a film during which the main visual elements are created;
S. "qualified production facility" means a
building, or complex of buildings, building improvements and
associated back-lot facilities in which films are or are
intended to be regularly produced and that contain at least
one:
(1) sound stage with contiguous floor space
of at least seven thousand square feet and a ceiling height
of no less than eighteen feet; or
(2) standing set that includes at least one
interior, and at least five exteriors, built or re-purposed
for film production use on a continual basis and is located
on at least fifty acres of contiguous space designated for
film production use; and
T. "vendor" means a person who sells or leases
goods or services that are related to standard industry craft
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inventory, who has a physical presence in New Mexico and is
subject to gross receipts tax pursuant to the Gross Receipts
and Compensating Tax Act or income tax pursuant to the Income
Tax Act or corporate income tax pursuant to the Corporate
Income and Franchise Tax Act but excludes a personal services
business and services provided by nonresidents hired or
subcontracted if the tasks and responsibilities are
associated with the standard industry job position of
director, writer or producer."
SECTION 7. Section 7-2F-12 NMSA 1978 (being Laws 2019,
Chapter 87, Section 6, as amended) is amended to read:
"7-2F-12. CREDIT CLAIMS--CERTIFICATION OF DIRECT
PRODUCTION AND POSTPRODUCTION EXPENDITURES--AGGREGATE AMOUNT
OF CLAIMS ALLOWED--EXCEPTION.--
A. The division shall certify a film production
company's budget for direct production expenditures and
postproduction expenditures during a preproduction meeting
with the division; provided that the division is prohibited
from certifying a film production company's budget if the
total expected claims in excess of the aggregate amount of
claims that may be authorized for payment pursuant to
Subsection B of this section would exceed one hundred million
dollars ($100,000,000) in any fiscal year; and provided
further that the limitation in this subsection shall not
apply to certification of a budget for a New Mexico film
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partner production.
B. The aggregate amount of claims for a credit
provided by the Film Production Tax Credit Act that may be
authorized in any fiscal year with respect to the direct
production expenditures or postproduction expenditures made
on film or commercial audiovisual products shall be in the
following amounts; provided that direct production
expenditures and postproduction expenditures made for a New
Mexico film partner production shall not be subject to the
aggregate amount of claims provided by this subsection:
(1) prior to fiscal year 2024, one hundred
ten million dollars ($110,000,000);
(2) from fiscal year 2024 through fiscal
year 2028, the amount provided in Paragraph (1) of this
subsection shall be increased by ten million dollars
($10,000,000) in each of those fiscal years; and
(3) for fiscal year 2029 and subsequent
fiscal years, one hundred sixty million dollars
($160,000,000).
C. If a film production company submits a claim to
the taxation and revenue department for a credit pursuant to
the Film Production Tax Credit Act and the aggregate amount
of claims pursuant to Subsection B of this section has been
met for the fiscal year, the claim shall be placed at the
front of a queue for payment in a subsequent fiscal year.
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Claims shall be placed in order of the date on which the
completed return in which the credit is claimed is filed.
Claims authorized for payment shall be paid pursuant to the
Tax Administration Act.
D. To provide guidance to film production
companies regarding the amount of credit capacity remaining
in the fiscal year, the taxation and revenue department shall
post monthly on that department's website the aggregate
amount of credits claimed and paid for the fiscal year. In
addition, the division shall post monthly on the division's
website the aggregate amount of claims certified pursuant to
Subsection A of this section for the fiscal year or any
subsequent fiscal year."
SECTION 8. Section 7-2F-13 NMSA 1978 (being Laws 2019,
Chapter 87, Section 7, as amended) is amended to read:
"7-2F-13. NEW FILM PRODUCTION TAX CREDIT.--
A. The tax credit created by this section may be
referred to as the "new film production tax credit".
B. A film production company that meets the
requirements of the Film Production Tax Credit Act may apply
for, and the taxation and revenue department may allow, a tax
credit in an amount equal to twenty-five percent of:
(1) direct production expenditures made in
New Mexico that:
(a) are directly attributable to the
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production in New Mexico of a film or commercial audiovisual
product;
(b) are subject to taxation by the
state of New Mexico;
(c) exclude direct production
expenditures for which another taxpayer claims the new film
production tax credit; and
(d) do not exceed the usual and
customary cost of the goods or services acquired when
purchased by unrelated parties. The secretary of taxation
and revenue may determine the value of the goods or services
for purposes of this section when the buyer and seller are
affiliated persons or the sale or purchase is not an arm's
length transaction; and
(2) postproduction expenditures made in New
Mexico that:
(a) are directly attributable to the
production of a commercial film or audiovisual product;
(b) are for services performed in New
Mexico;
(c) are subject to taxation by the
state of New Mexico;
(d) exclude postproduction expenditures
for which another taxpayer claims the new film production tax
credit; and
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(e) do not exceed the usual and
customary cost of the goods or services acquired when
purchased by unrelated parties. The secretary of taxation
and revenue may determine the value of the goods or services
for purposes of this section when the buyer and seller are
affiliated persons or the sale or purchase is not an arm's
length transaction.
C. With respect to expenditures attributable to a
production for which the film production company receives a
tax credit pursuant to the federal new markets tax credit
program, the percentage to be applied in calculating the
amount of credit allowed pursuant to the Film Production Tax
Credit Act is twenty percent.
D. A claim for new film production tax credits
shall be filed as part of a return filed pursuant to the
Income Tax Act or the Corporate Income and Franchise Tax Act.
A credit that has been assigned pursuant to Section 7-2F-5
NMSA 1978 shall not be authorized for payment unless the
assignee files a return pursuant to the Income Tax Act or the
Corporate Income and Franchise Tax Act. If the assignee is a
pass-through entity with no New-Mexico-sourced income, the
taxation and revenue department may allow a credit to be
claimed on a pass-through entity return. The date a complete
credit claim is received by the taxation and revenue
department shall determine the order that a credit claim is
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authorized for payment by the department. The film
production company may apply all or a portion of the new film
production tax credit granted against personal income tax
liability or corporate income tax liability. If the amount
of the credit claimed exceeds the film production company's
tax liability for the taxable year in which the credit is
being claimed, the excess shall be refunded.
E. A taxpayer may be allocated the right to claim
a new film production tax credit in proportion to the
taxpayer's ownership interest if the taxpayer owns an
interest in a business entity that is taxed for federal
income tax purposes as a partnership and that business entity
has met all of the requirements to be eligible for the
credit. The total credit claimed by all members of that
entity shall not exceed the allowable credit pursuant to this
section.
F. A credit claim shall only be considered
received by the taxation and revenue department if the credit
claim is made on a complete return filed after the close of
the taxable year. A credit shall be claimed on the return
for the taxable year in which the direct production
expenditures or postproduction expenditures were incurred.
If a certificate of eligibility includes expenditures that
cross multiple taxable years, the taxpayer may elect to claim
the entire credit on the return for either taxable year. A
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credit claim shall not be divided and submitted with multiple
returns or in multiple years.
G. For purposes of determining the payment of
credit claims pursuant to this section, the secretary of
taxation and revenue may require that credit claims of
affiliated persons be combined into one claim if necessary to
accurately reflect closely integrated activities of
affiliated persons.
H. The new film production tax credit shall not be
claimed with respect to direct production expenditures or
postproduction expenditures for which the film production
company has delivered a nontaxable transaction certificate or
alternative evidence pursuant to Section 7-9-43 NMSA 1978.
I. A production for which the new film production
tax credit is claimed pursuant to Paragraph (1) of Subsection
B of this section shall contain an acknowledgment to the
state of New Mexico. Unless otherwise agreed upon in writing
by the film production company and the division, the
acknowledgment shall be in the end screen credits that the
production was filmed in New Mexico and a three-second static
or animated state logo provided by the division shall be
included and embedded in the following:
(1) end screen credits before the below-the-
line crew crawl for the life of the project of long-form
narrative film productions; and
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(2) body of the program for the life of
television episodes, the placement of which shall be:
(a) in the opening sequence;
(b) as a bumper into or out of a
commercial break; or
(c) in a prominent position in each
single project's end credits with no less than a half screen
exposure, but not covering content.
J. To be eligible for the new film production tax
credit, a film production company shall submit to the
division information required by the division to demonstrate
conformity with the requirements of the Film Production Tax
Credit Act, including production data deemed necessary by the
division and the economic development department to determine
the effectiveness of the credit, and a projection of the new
film production tax credit claim the film production company
plans to submit. In addition, the film production company
shall agree in writing:
(1) to pay all obligations the film
production company has incurred in New Mexico;
(2) to post a notice at completion of
principal photography on the website of the division that:
(a) contains production company
information, including the name of the production and contact
information that includes a working phone number and email
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address for both the local production office and the
permanent production office to notify the public of the need
to file creditor claims against the film production company;
and
(b) remains posted on the website until
all financial obligations incurred in the state by the film
production company have been paid;
(3) that outstanding obligations are not
waived should a creditor fail to file;
(4) to delay filing of a claim for the new
film production tax credit until the division delivers
written notification to the taxation and revenue department
that the film production company has fulfilled all
requirements for the credit; and
(5) to submit a completed application for
the new film production tax credit and supporting
documentation to the division within one year of incurring
the final qualified expenditures in New Mexico for the
registered project and that are included in the credit claim.
K. The division, in consultation with the taxation
and revenue department, shall determine the eligibility of
the film production company and shall report this information
to the taxation and revenue department in a manner and at
times the economic development department and the taxation
and revenue department shall agree upon. The division shall
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also post on its website all information provided by the film
production company that does not reveal revenue, income or
other information that may jeopardize the confidentiality of
income tax returns.
L. To receive a new film production tax credit, a
film production company shall apply to the taxation and
revenue department on forms and in the manner the taxation
and revenue department may prescribe. The application shall
include a certification of the amount of direct production
expenditures or postproduction expenditures made in New
Mexico with respect to the film production for which the film
production company is seeking the credit; provided that to
receive the credit, the application shall be submitted to the
division within one year of the date of the last direct
production expenditure in New Mexico or that the last
postproduction expenditure in New Mexico was incurred. If
the amount of the requested tax credit exceeds five million
dollars ($5,000,000), the application shall also include the
results of an audit, conducted by a certified public
accountant licensed or otherwise eligible to practice in New
Mexico, verifying that the expenditures have been made in
compliance with the requirements of this section. If the
requirements of this section have been complied with, the
taxation and revenue department shall approve the credit and
issue a dated certificate of eligibility to the taxpayer
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providing the amount of the credit that the taxpayer may
claim.
M. Except as provided in Subsection N of this
section, that amount of a new film production tax credit for
total payments as applied to direct production expenditures
for the services of performing artists shall not exceed five
million dollars ($5,000,000) for services rendered by
nonresident performing artists in a production. This
limitation shall not apply to the services of background
artists or resident performing artists cast in industry
standard feature performing roles.
N. In addition to the amount of payments allowed
pursuant to Subsection M of this section, that amount of a
new film production tax credit for total payments as applied
to direct production expenditures made for a New Mexico film
partner production for the services of nonresident performing
artists, directors, producers, screenwriters and editors
shall not exceed ten million dollars ($10,000,000) for
services rendered for each production; provided that the
total payments allowed pursuant to this subsection shall not
exceed an annual aggregate maximum of forty million dollars
($40,000,000) for all productions in a fiscal year. If the
aggregate amount of payments made in a fiscal year is less
than the annual aggregate maximum, then the difference in
that fiscal year shall be added to the annual aggregate
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maximum allowed in the following fiscal year."
SECTION 9. Section 7-2F-15 NMSA 1978 (being Laws 2019,
Chapter 87, Section 9, as amended) is amended to read:
"7-2F-15. NONRESIDENT BELOW-THE-LINE CREW CREDIT.--A
film production company may apply for, and the taxation and
revenue department may allow, a tax credit, which may be
referred to as the "nonresident below-the-line crew credit",
in an amount equal to fifteen percent of the payment of wages
for below-the-line crew who are not New Mexico residents,
that are directly attributable to the production in New
Mexico of a film or commercial audiovisual product for which
the film production company is claiming a new film production
tax credit; provided that:
A. the service for which payment is made is
rendered in New Mexico;
B. the payment of wages excludes payments:
(1) for below-the-line crew who are
producers, directors, screenwriters, cast and production
assistants; and
(2) made to a personal services business;
C. prior to July 1, 2028, for a New Mexico film
partner production, the total amount of wages applied toward
the additional credit allowed pursuant to this section may be
up to one hundred percent of the amount of wages of resident
below-the-line wages claimed; provided that the film
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production company provides a seventy-two-hour notice of the
opportunity to be hired to resident below-the-line crew,
which may be through a collective bargaining unit that
represents resident below-the-line crew; and
D. for a film or commercial audiovisual product
that is not a New Mexico film partner production and,
beginning July 1, 2028, for a New Mexico film partner
production:
(1) the total eligible wages for below-the-
line crew who are not New Mexico residents are not more than
fifteen percent of the production's total New Mexico budget
for below-the-line crew wages; and
(2) the film production company may claim
the nonresident below-the-line crew credit for employing up
to the following numbers of nonresident below-the-line crew
in New Mexico and shall be as calculated by the division upon
application for certification pursuant to Subsection A of
Section 7-2F-12 NMSA 1978; provided that the total number
shall not exceed twenty positions:
(a) five positions if the production's
final New Mexico budget is up to two million seven hundred
fifty thousand dollars ($2,750,000);
(b) ten positions if the production's
final New Mexico budget is greater than two million seven
hundred fifty thousand dollars ($2,750,000) and up to seven
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million five hundred thousand dollars ($7,500,000);
(c) fifteen positions if the
production's final New Mexico budget is greater than seven
million five hundred thousand dollars ($7,500,000) and up to
eleven million dollars ($11,000,000);
(d) one position in addition to the
number of positions provided in Subparagraph (c) of this
paragraph for every ten million dollars ($10,000,000) over
eleven million dollars ($11,000,000) of the production's
final New Mexico budget; and
(e) five positions in addition to the
number of positions provided in Subparagraphs (a) through (d)
of this paragraph for a television pilot episode that has
been ordered to series; provided that the film production
company certifies to the division that the series is intended
to be produced in New Mexico."
SECTION 10. Section 7-9-40 NMSA 1978 (being Laws 1970,
Chapter 60, Section 2, as amended) is amended to read:
"7-9-40. EXEMPTION--GROSS RECEIPTS TAX--PURSES AND
JOCKEY REMUNERATION AT NEW MEXICO RACETRACKS--RECEIPTS FROM
GROSS AMOUNTS WAGERED.--
A. Exempted from the gross receipts tax are the
receipts of horsemen, jockeys and trainers from race purses
at New Mexico horse racetracks subject to the jurisdiction of
the state racing commission.
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B. Exempted from the gross receipts tax are the
receipts of a racetrack from the commissions and other
amounts authorized by Section 60-1A-19 NMSA 1978 to be
retained by a racetrack conducting horse races under the
authority of a license from the state racing commission."
SECTION 11. Section 7-9F-3 NMSA 1978 (being Laws 2000
(2nd S.S.), Chapter 22, Section 3, as amended by Laws 2019,
Chapter 270, Section 38 and by Laws 2019, Chapter 274,
Section 12) is amended to read:
"7-9F-3. DEFINITIONS.--As used in the Technology Jobs
and Research and Development Tax Credit Act:
A. "affiliate" means a person who directly or
indirectly owns or controls, is owned or controlled by or is
under common ownership or control with another person through
ownership of voting securities or other ownership interests
representing a majority of the total voting power of the
entity;
B. "annual payroll expense" means the wages paid
or payable to employees in the state by the taxpayer in the
taxable year for which the taxpayer applies for an additional
credit pursuant to the Technology Jobs and Research and
Development Tax Credit Act;
C. "base payroll expense" means the wages paid or
payable by the taxpayer in the taxable year prior to the
taxable year for which the taxpayer applies for an additional
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credit pursuant to the Technology Jobs and Research and
Development Tax Credit Act, adjusted for any increase from
the preceding taxable year in the consumer price index for
the United States for all items as published by the United
States department of labor in the taxable year for which the
additional credit is claimed. In a taxable year during which
a taxpayer has been part of a business merger or acquisition
or other change in business organization, the taxpayer's base
payroll expense shall include the payroll expense of all
entities included in the reorganization for all positions
that are included in the business entity resulting from the
reorganization;
D. "department" means the taxation and revenue
department, the secretary of taxation and revenue or any
employee of the department exercising authority lawfully
delegated to that employee by the secretary;
E. "facility" means a factory, mill, plant,
refinery, warehouse, dairy, feedlot, building or complex of
buildings located within the state, including the land on
which it is located and all machinery, equipment and other
real and tangible personal property located at or within it
and used in connection with its operation;
F. "local option gross receipts tax" means a tax
authorized to be imposed by a county or municipality upon a
taxpayer's gross receipts, as that term is defined in the
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Gross Receipts and Compensating Tax Act, and required to be
collected by the department at the same time and in the same
manner as the gross receipts tax;
G. "qualified expenditure" means an expenditure or
an allocated portion of an expenditure by a taxpayer in
direct connection with qualified research, essential for
conducting qualified research at a qualified facility,
including expenditures for depletable land and rent paid or
incurred for land, improvements, the allowable amount paid or
incurred to operate or maintain a facility, buildings,
equipment, computer software, computer software upgrades,
consultants and contractors performing work in New Mexico,
wages paid for employees conducting qualified research in New
Mexico at a qualified facility, technical books and manuals
and test materials, but not including any expenditure on
property that is owned by a municipality or county in
connection with an industrial revenue bond project, property
for which the taxpayer has received any credit pursuant to
the Investment Credit Act, property that was owned by the
taxpayer or an affiliate before July 3, 2000 or research and
development expenditures reimbursed by a person who is not an
affiliate of the taxpayer. If a "qualified expenditure" is
an allocation of an expenditure, the cost accounting
methodology used for the allocation of the expenditure shall
be the same cost accounting methodology used by the taxpayer
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in its other business activities;
H. "qualified facility" means a facility in New
Mexico at which qualified research is conducted other than a
facility operated by a taxpayer for the United States or any
agency, department or instrumentality thereof;
I. "qualified research" means research:
(1) that is undertaken for the purpose of
discovering information:
(a) that is technological in nature;
and
(b) the application of which is
intended to be useful in the development of a new or improved
business component of the taxpayer; and
(2) substantially all of the activities of
which constitute elements of a process of experimentation
related to a new or improved function, performance,
reliability or quality, but not related to style, taste or
cosmetic or seasonal design factors;
J. "qualified research and development small
business" means a taxpayer that:
(1) employed no more than fifty employees as
determined by the number of employees for which the taxpayer
was liable for unemployment insurance coverage in the taxable
year for which an additional credit is claimed;
(2) had total qualified expenditures of no
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more than five million dollars ($5,000,000) in the taxable
year for which an additional credit is claimed; and
(3) did not have more than fifty percent of
its voting securities or other equity interest with the right
to designate or elect the board of directors or other
governing body of the business owned directly or indirectly
by another business;
K. "rural area" means any area of the state other
than the state fairgrounds, an incorporated municipality with
a population of thirty thousand or more according to the most
recent federal decennial census and any area within three
miles of the external boundaries of an incorporated
municipality with a population of thirty thousand or more
according to the most recent federal decennial census;
L. "taxpayer" means any of the following persons,
other than a federal, state or other governmental unit or
subdivision or an agency, department, institution or
instrumentality thereof:
(1) a person liable for payment of any tax;
(2) a person responsible for withholding and
payment or collection and payment of any tax;
(3) a person to whom an assessment has been
made if the assessment remains unabated or the assessed
amount has not been paid; or
(4) for purposes of the additional credit
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against the taxpayer's income tax pursuant to the Technology
Jobs and Research and Development Tax Credit Act and to the
extent of their respective interest in that entity, the
shareholders, members, partners or other owners of:
(a) a small business corporation that
has elected to be treated as an S corporation for federal
income tax purposes; or
(b) an entity treated as a partnership
or disregarded entity for federal income tax purposes; and
M. "wages" means remuneration for services
performed by an employee in New Mexico for an employer, not
to exceed a maximum annual wage of five hundred thousand
dollars ($500,000) per employee."
SECTION 12. Section 7-12A-2 NMSA 1978 (being Laws 1986,
Chapter 112, Section 3, as amended) is amended to read:
"7-12A-2. DEFINITIONS.--As used in the Tobacco Products
Tax Act:
A. "department" means the taxation and revenue
department, the secretary or any employee of the department
exercising authority lawfully delegated to that employee by
the secretary;
B. "cigar" means a roll for smoking made wholly or
in part of tobacco and weighing greater than four and one-
half pounds per thousand;
C. "distribute" means to sell or to give;
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D. "closed system cartridge" means a single-use,
pre-filled disposable cartridge containing e-liquid for use
in an e-cigarette;
E. "e-cigarette" means any electronic oral device,
whether composed of a heating element and battery or an
electronic circuit, that provides a vapor of nicotine or any
other substance the use or inhalation of which simulates
smoking and includes any such device, or any part thereof,
whether manufactured, distributed, marketed or sold as an
e-cigarette, e-cigar, e-pipe or any other product, name or
descriptor. "E-cigarette" does not include any product
regulated as a drug or device by the United States food and
drug administration under the Federal Food, Drug, and
Cosmetic Act;
F. "e-liquid" means liquid or other substance
intended for use in an e-cigarette, not including any
substance containing cannabis or oil derived from cannabis;
G. "engaging in business" means carrying on or
causing to be carried on any activity with the purpose of
direct or indirect benefit;
H. "first purchaser" means a person engaging in
business in New Mexico that manufactures tobacco products or
that purchases or receives on consignment tobacco products
from any person outside of New Mexico, which tobacco products
are to be distributed in New Mexico in the ordinary course of
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business;
I. "little cigar" means a roll for smoking made
wholly or in part of tobacco, using an integrated cellulose
acetate or other similar filter, and weighing not more than
four and one-half pounds per thousand;
J. "person" means any individual, estate, trust,
receiver, cooperative association, club, corporation,
company, firm, partnership, joint venture, syndicate, limited
liability company, limited liability partnership, other
association or gas, water or electric utility owned or
operated by a county or municipality or other entity of the
state; "person" also means, to the extent permitted by law, a
federal, state or other governmental unit or subdivision or
an agency, department or instrumentality;
K. "product value" means the amount paid, net of
any discounts taken and allowed, for tobacco products or, in
the case of tobacco products received on consignment, the
value of the tobacco products received or, in the case of
tobacco products manufactured and sold in New Mexico, the
proceeds from the sale by the manufacturer of the tobacco
products; and
L. "tobacco product" means:
(1) any product, other than cigarettes,
cigars and little cigars, made from or containing tobacco;
(2) e-liquid;
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(3) e-cigarettes; and
(4) closed system cartridges."
SECTION 13. Section 7-12A-3 NMSA 1978 (being Laws 1986,
Chapter 112, Section 4, as amended) is amended to read:
"7-12A-3. IMPOSITION AND RATES OF TAX--REDUCTION OF
RATE FOR CERTAIN TOBACCO PRODUCTS--DENOMINATION AS "TOBACCO
PRODUCTS TAX"--DATE PAYMENT OF TAX DUE.--
A. For the manufacture or acquisition of tobacco
products in New Mexico, not including cigars, little cigars,
e-liquid, e-cigarettes or closed system cartridges, to be
distributed in the ordinary course of business and for the
consumption of tobacco products in New Mexico, there is
imposed an excise tax at the rate of twenty-five percent of
the product value of the tobacco products.
B. For the manufacture or acquisition of cigars in
New Mexico to be distributed in the ordinary course of
business and for the consumption of cigars in New Mexico,
there is imposed an excise tax at a rate equal to twenty-five
percent of the product value of the cigar, not to exceed
fifty cents ($.50) per cigar.
C. For the manufacture or acquisition of little
cigars in New Mexico to be distributed in the ordinary course
of business and for the consumption of little cigars in New
Mexico, there is imposed an excise tax at a rate equal to the
rate imposed on cigarettes pursuant to Section 7-12-3 NMSA
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1978 per package of little cigars.
D. For the manufacture or acquisition of e-liquid
or closed system cartridges containing more than five
milliliters of e-liquid in New Mexico to be distributed in
the ordinary course of business and for the consumption of e-
liquid in New Mexico, there is imposed an excise tax at a
rate equal to twelve and one-half percent of the product
value of the e-liquid.
E. For the manufacture or acquisition of closed
system cartridges containing five milliliters or less of e-
liquid in New Mexico to be distributed in the ordinary course
of business, there is imposed an excise tax at a rate of
fifty cents ($.50) per closed system cartridge.
F. The taxes imposed by this section may be
referred to as the "tobacco products tax".
G. The tobacco products tax shall be paid by the
first purchaser on or before the twenty-fifth day of the
month following the month in which the taxable event occurs."
SECTION 14. Section 7-38-38 NMSA 1978 (being Laws 1973,
Chapter 258, Section 78, as amended) is amended to read:
"7-38-38. PAYMENT OF PROPERTY TAXES--INSTALLMENT DUE
DATES--REFUND IN CASES OF OVERPAYMENTS--ROUNDING.--
A. Unless otherwise provided in the Property Tax
Code, property taxes in the amount of ten dollars ($10.00) or
over are payable to the county treasurer in two equal
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installments due on November 10 of the year in which the tax
bill was prepared and mailed and on April 10 of the following
year. A board of county commissioners may, by ordinance,
provide that property taxes under ten dollars ($10.00) are
due and payable in a single payment on November 10 of the
year in which the tax bill was prepared and mailed. No
demand for payment of property taxes is necessary.
B. If a taxpayer remits an amount in payment of
the taxpayer's property taxes that exceeds the total property
tax liability shown on the property tax bill, together with
any applicable penalty and interest computed to the date
payment is received by the county treasurer, a refund of the
amount in excess shall be made to the taxpayer if either of
the following conditions are met:
(1) a written request for the refund is made
by the taxpayer and received by the county treasurer within
sixty days of the date the excess payment is received by the
county treasurer; or
(2) the county treasurer on the county
treasurer's own initiative determines by June 30 of the year
following the year for which taxes are imposed that an excess
payment has been made.
C. The secretary may by rule permit or require
rounding to the nearest five cents ($.05) of any amount due
pursuant to the Property Tax Code."
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SECTION 15. Section 7-38-71 NMSA 1978 (being Laws 1973,
Chapter 258, Section 111, as amended) is amended to read:
"7-38-71. DISTRIBUTION OF AMOUNTS RECEIVED FROM SALE OF
PROPERTY.--
A. Money received by the department from the sale
of real or personal property for delinquent property taxes
shall be deposited in a suspense fund and distributed as
follows in the order provided:
(1) first, that portion equal to the costs
shall be retained by the department for use, subject to
appropriation by the legislature, in administration of the
Property Tax Code;
(2) second, that portion equal to the
penalties and interest due shall be retained by the
department for use, subject to appropriation by the
legislature, by the department in administration of the
Property Tax Code;
(3) third, that portion equal to the
delinquent taxes due shall be remitted by the department to
the appropriate county treasurer for distribution by the
treasurer to the governmental units in accordance with the
law and the regulations of the department of finance and
administration;
(4) fourth, if the former owner of the
property sold is a delinquent taxpayer pursuant to Section
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7-1-16 NMSA 1978, that portion equal to any delinquent amount
for any tax program administered by the department pursuant
to Section 7-1-2 NMSA 1978 shall be retained by the
department to satisfy the delinquent amount; and
(5) fifth, the balance shall be paid to the
former owner of the property sold or to any other person
designated by order directed to the department by a court of
competent jurisdiction, provided that the department may
first apply all or any portion of the balance to be paid
against the amount of any property tax, including any penalty
and interest related thereto, owed by the person to whom the
balance would otherwise be paid.
B. As a condition precedent to payment of the
balance of the sale amount received to the former owner of
the property, the department may require any person claiming
to be entitled to that payment to present sufficient evidence
of proof of former ownership of the property to the
department. The department shall adopt regulations providing
for the procedures to be followed by persons claiming sale
proceeds as former owners in those instances where
conflicting claims exist or the department requires proof of
ownership.
C. If no person claims the balance of sale
proceeds as the former owner of the property within two years
of the date of the sale and after a reasonable search to
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determine the former owner is made by the department and no
former owner is found, the balance of the sale proceeds shall
be considered abandoned property and deposited in accordance
with the provisions of the Uniform Unclaimed Property Act
(1995).
D. If the balance of proceeds from the sale after
paying a higher priority claim under Subsection A of this
section is insufficient to pay all of the next priority
claim, then the complete balance shall be applied to that
next priority claim as partial payment."
SECTION 16. Section 9-11-12.1 NMSA 1978 (being Laws
1997, Chapter 64, Section 1, as amended) is amended to read:
"9-11-12.1. TRIBAL COOPERATIVE AGREEMENTS.--
A. The secretary may enter into cooperative
agreements with the Pueblos of Acoma, Cochiti, Jemez, Isleta,
Laguna, Nambe, Ohkay Owingeh, Picuris, Pojoaque, Sandia, San
Felipe, San Ildefonso, Santa Ana, Santa Clara, Santo Domingo,
Taos, Tesuque, Zia and Zuni; the Jicarilla Apache Nation; the
Navajo Nation; the Mescalero Apache Tribe; and the nineteen
pueblos acting collectively for the exchange of information
and the reciprocal, joint or common enforcement,
administration, collection, remittance and audit of gross
receipts tax and cannabis excise tax revenues of the party
jurisdictions.
B. Money collected by the department on behalf of
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a tribe in accordance with an agreement entered into pursuant
to this section is not money of this state and shall be
collected and disbursed in accordance with the terms of the
agreement, notwithstanding any other provision of law.
C. The secretary is empowered to promulgate such
rules and to establish such procedures as the secretary deems
appropriate for the collection and disbursement of funds due
a tribe and for the receipt of money collected by a tribe for
the account of this state under the terms of a cooperative
agreement entered into under the authority of this section,
including procedures for identification of taxpayers or
transactions that are subject only to the taxing authority of
the tribe, of this state and of both party jurisdictions.
D. Nothing in an agreement entered into pursuant
to this section shall be construed as authorizing this state
or a tribe to tax a person or transaction that federal law
prohibits that government from taxing, authorizing a state or
tribal court to assert jurisdiction over a person who is not
otherwise subject to that court's jurisdiction or affecting
any issue of the respective civil or criminal jurisdictions
of this state or the tribe. Nothing in an agreement entered
into pursuant to this section shall be construed as an
assertion or an admission by either this state or a tribe
that the taxes of one have precedence over the taxes of the
other when a person or transaction is subject to the taxing
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authority of both governments. An agreement entered into
pursuant to this section shall be construed solely as an
agreement between the two party governments and shall not
alter or affect the government-to-government relations
between this state and any other tribe.
E. Except as provided in Subsection F of this
section, any ordinance of a tribe imposing, amending or
repealing a tax administered by the department pursuant to
this section shall include an effective date of the first
July 1 after the expiration of at least three months from the
date that the adopted ordinance is mailed or delivered to the
secretary.
F. If the governor of New Mexico declares a state
of emergency, or if there is an unforeseen occurrence that
would cause an undue hardship for a tribe, an ordinance
changing the imposition of a tax shall become effective on
the first January 1 after the expiration of at least three
months after such a declaration or event and notification to
the department.
G. As used in this section:
(1) "tribal" means of or pertaining to a
tribe; and
(2) "tribe" means an Indian nation, tribe or
pueblo located entirely in New Mexico or the Navajo Nation."
SECTION 17. A new section of the Motor Vehicle Code,
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Section 66-2-19 NMSA 1978, is enacted to read:
"66-2-19. ROUNDING.--The secretary may by rule permit
or require rounding to the nearest five cents ($.05) of any
amount due pursuant to the Motor Vehicle Code."
SECTION 18. APPLICABILITY.--The provisions of Sections
6 through 9 of this act apply to taxable years beginning on
or after January 1, 2027.
SECTION 19. EFFECTIVE DATE.--
A. The effective date of the provisions of
Sections 1 through 5 and 10 through 17 of this act is July 1,
2026.
B. The effective date of the provisions of
Sections 6 through 9 of this act is January 1, 2027.