SB 5 — REDUCING RATES OF GROSS RECEIPTS TAX

= = 19 F.

A taxpayer may claim a new solar market a l i a e r 20 development income tax credit for the taxable year in which the a t m m 21 taxpayer purchases and installs a solar thermal or photovoltaic d r e 22 system.

To receive a new solar market development income tax c e s k 23 credit, a taxpayer shall apply to the department on forms and e a n b 24 in the manner prescribed by the department within twelve months u [ following the calendar year in which the system was installed.

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The application shall include a certification made pursuant to Subsection E of this section.

G.

That portion of a new solar market development income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the credit is claimed [may be carried forward for a maximum of five consecutive taxable years] shall be refunded to the taxpayer.

H.

Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the new solar market development income tax credit that would have been claimed on a joint return.

I.

A taxpayer may be allocated the right to claim a new solar market development income 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 e t 17 tax purposes as a partnership or limited liability company and w l n d 18 that business entity has met all of the requirements to be = = 19 eligible for the credit.

The total credit claimed by all a l i a e r 20 members of the partnership or limited liability company shall a t m m 21 not exceed the allowable credit pursuant to this section.

d r e 22 J.

A taxpayer allowed a tax credit pursuant to this c e s k 23 section shall report the amount of the credit to the taxation e a n b 24 and revenue department in a manner required by that department.

u [ K.

The taxation and revenue department shall .222531.3 - 5 - STBTC/SB 5, et al.

compile an annual report on the new solar market development income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the credit.

The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.

L.

As used in this section:

(1) "photovoltaic system" means an energy system that collects or absorbs sunlight for conversion into electricity;

and (2) "solar thermal system" means an energy system that collects or absorbs solar energy for conversion into heat for the purposes of space heating, space cooling or water heating." e t 17 SECTION 3.

Section 7-9-3 NMSA 1978 (being Laws 1978, w l n d 18 Chapter 46, Section 1, as amended by Laws 2021, Chapter 65, = = 19 Section 11 and by Laws 2021, Chapter 66, Section 1) is amended a l i a e r 20 to read:

a t m m 21 "7-9-3.

DEFINITIONS.--As used in the Gross Receipts and d r e 22 Compensating Tax Act:

c e s k 23 A.

"buying" or "selling" means a transfer of e a n b 24 property for consideration or the performance of service for u [ consideration;

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B.

"department" means the taxation and revenue department, the secretary of taxation and revenue or an employee of the department exercising authority lawfully delegated to that employee by the secretary;

C.

"financial corporation" means a savings and loan association or an incorporated savings and loan company, trust company, mortgage banking company, consumer finance e t 17 company or other financial corporation;

ew tl 17n d 18 [E.] F.

"initial use" or "initially used" means the w= l= n19 d 18 first employment for the intended purpose and does not include =a =l 19i a le r 20 the following activities:

i a et rm 20m 21 (1) observation of tests conducted by the ad tr me m22 21 performer of services;

dc r e 22s k 23 (2) participation in progress reviews, c e sa kn 23b 24 briefings, consultations and conferences conducted by the eu a[ n b 24 performer of services;

u.222531.3 [ (3) review of preliminary drafts, drawings and .221539.4GLG - 27 - otherSTBTC/SB materials5, preparedet byal. the performer of services;

(3) review of preliminary drafts, drawings and other materials prepared by the performer of services;

"local option gross receipts tax" means a tax authorized to be imposed by a county or municipality upon a taxpayer's gross receipts and required to be collected by the e t 17 department at the same time and in the same manner as the gross ew tl 17n d 18 receipts tax;

w= l= n19 d 18 [I.] J.

"manufactured home" means a movable or =a =l 19i a le r 20 portable housing structure for human occupancy that exceeds i a et rm 20m 21 either a width of eight feet or a length of forty feet ad tr me m22 21 constructed to be towed on its own chassis and designed to be dc r e 22s k 23 installed with or without a permanent foundation;

c e sa kn 23b 24 [J.] K.

"manufacturing" means combining or eu a[ n b 24 processing components or materials to increase their value for u.222531.3 [- sale8 in the ordinary course of business, but does not include .221539.4GLG - 3STBTC/SB -5, constructionet services;al.

sale in the ordinary course of business, but does not include construction services;

(1) listing or advertising the sale, lease or e t 17 license, by any means, whether physical or electronic, ew tl 17n d 18 including by catalog, internet website or television or radio w= l= n19 d 18 broadcast;

and =a =l 19i a le r 20 (2) either directly or indirectly, through i a et rm 20m 21 agreements or arrangements with third parties collecting ad tr me m22 21 payment from the customer and transmitting that payment to the dc r e 22s k 23 seller, regardless of whether the marketplace provider receives c e sa kn 23b 24 compensation or other consideration in exchange for the eu a[ n b 24 marketplace provider's services;

u.222531.3 [- [M.]9 N.- STBTC/SB 5, et al.

"marketplace[M.] seller"N. means a person who .221539.4GLG - 4 - sells, leases or licenses tangible personal property or services or who licenses the use of real property through a marketplace provider;

"marketplace seller" means a person who sells, leases or licenses tangible personal property or services or who licenses the use of real property through a marketplace provider;

e t 17 (1) real property;

ew tl 17n d 18 (2) tangible personal property, including w= l= n19 d 18 electricity and manufactured homes;

=a =l 19i a le r 20 (3) licenses, including licenses of digital i a et rm 20m 21 goods, but not including the licenses of copyrights, trademarks ad tr me m22 21 or patents;

and dc r e 22s k 23 (4) franchises;

c e sa kn 23b 24 [P.] Q.

"research and development services" means eu a[ n b 24 an activity engaged in for other persons for consideration, for u.222531.3 [- one10 or- moreSTBTC/SB of5, theet followingal. purposes:

.221539.4GLGone -or 5more - (1) advancing basic knowledge in a recognized field of naturalthe science;following purposes:

(1) advancing basic knowledge in a recognized field of natural science;

(5) developing analytical or survey activities incorporating technology review, application, trade-off study, e t 17 modeling, simulation, conceptual design or similar activities, ew tl 17n d 18 whether or not offered for sale, lease or other transfer;

or w= l= n19 d 18 (6) designing and developing prototypes or =a =l 19i a le r 20 integrating systems incorporating the advances, developments or i a et rm 20m 21 improvements included in Paragraphs (1) through (5) of this ad tr me m22 21 subsection;

dc r e 22s k 23 [Q.] R.

"secretary" means the secretary of taxation c e sa kn 23b 24 and revenue or the secretary's delegate;

eu a[ n b 24 [R.] S.

"service" means all activities engaged in u.222531.3 [ for other persons for a consideration, which activities involve .221539.4GLG - 611 - predominantlySTBTC/SB the5, performanceet ofal. a service as distinguished from selling or leasing property.

for other persons for a consideration, which activities involve predominantly the performance of a service as distinguished from selling or leasing property.

and e t 17 [S.] T.

"use" or "using" includes use, consumption ew tl 17n d 18 or storage other than storage for subsequent sale in the w= l= n19 d 18 ordinary course of business or for use solely outside this = = 19 a l state." i a e r 20 state." a t m m 21 SECTION 2.4.

Section 7-9-4 NMSA 1978 (being Laws 1966, ad tr me m22 21 Chapter 47, Section 4, as amended) is amended to read:

dc r e 22s k 23 "7-9-4.

IMPOSITION AND RATE OF TAX--DENOMINATION AS c e sa kn 23b 24 "GROSS RECEIPTS TAX".-- eu a[ n b 24 A.

For the privilege of engaging in business, an u.222531.3 [ excise tax equal to [five and one-eighth] four and .221539.4GLG - 712 - seven-eighthsSTBTC/SB percent5, ofet grossal. receipts is imposed on any person engaging in business in New Mexico.

excise tax equal to [five and one-eighth] four and seven- eighths percent, except as provided in Subsection C of this section, of gross receipts is imposed on any person engaging in business in New Mexico.

The tax imposed by this section shall be referred to as the "gross receipts tax"."tax". SECTION 3.

SectionC. 7-9-7 NMSA 1978 (being Laws 1966, Chapter 47, Section 7, as amended) is amended to read:

If, for a fiscal year occurring after fiscal year 2023 and prior to fiscal year 2028, gross receipts tax revenues are less than ninety-five percent of the gross receipts tax revenues for the previous fiscal year, as determined by the secretary of finance and administration, the rate of the gross receipts tax shall be five and one-eighth percent beginning on the July 1 following the determination made by the secretary of finance and administration.

D.

On or before February 1 of each year, the secretary of finance and administration shall make a e t 17 determination for the purposes of Subsection C of this section.

w l n d 18 If the rate of tax is adjusted pursuant to that subsection, the = = 19 secretary shall certify to the secretary of taxation and a l i a e r 20 revenue that the rate of the gross receipts tax shall be five a t m m 21 and one-eighth percent, effective on the following July 1.

d r e 22 E.

As used in this section, "gross receipts tax c e s k 23 revenues" means the net receipts attributable to the gross e a n b 24 receipts tax and distributed to the general fund." u [ SECTION 5.

Section 7-9-7 NMSA 1978 (being Laws 1966, .222531.3 - 13 - STBTC/SB 5, et al.

Chapter 47, Section 7, as amended) is amended to read:

For the privilege of making taxable use of tangible personal property in New Mexico, there is imposed on the person using the property an excise tax equal to [five and one-eighth] four and seven-eighths percentpercent, except as provided in Subsection G of this section, of the value of tangible property that was:

or (2) acquired in a transaction for which the e t 17 seller's receipts were not subject to the gross receipts tax.

w l n d 18 B.

For the purpose of Subsection A of this section, = = 19 a l value of tangible personal property shall be the adjusted basis i a e r 20 of the property for federal income tax purposes determined as ae t m17 m 21 of the time of acquisition or introduction into this state or dw rl en 22d 18 of conversion of the property to taxable use, whichever is c= e= s19 k 23 later.

If no adjusted basis for federal income tax purposes is ea l i a ne br 2420 established for the property, a reasonable value of the ua [t m m 21 property shall be used.

.221539.4GLGd -r 8e -22 C.

For the privilege of making taxable use of a c e s k 23 license or franchise in New Mexico, there is imposed on the e a n b 24 person using the license or franchise an excise tax equal to u [ the rate provided in Subsection A ofor thisG section against the value of thethis licensesection, oras franchise.222531.3 in- its14 use- inSTBTC/SB this5, state.et al.

applicable, against the value of the license or franchise in its use in this state.

For the privilege of making taxable use of services in New Mexico, there is imposed on the person using the services an excise tax equal to the rate provided in Subsection A or G of this sectionsection, as applicable, against the value of the services e t 17 at the time the services were performed or the product of the w l n d 18 service was acquired.

For use of services to be a taxable use = = 19 a l pursuant to this subsection, the services shall have been i a e r 20 acquired in a transaction the receipts e t 17 from which were not a t m m 21 subject to the gross receipts tax.

dw rl en 22d 18 E.

For purposes of this section, receipts are not c= e= s19 k 23 subject to the gross receipts tax if the person responsible for ea l i a ne br 2420 the gross receipts tax on those receipts lacked nexus in New ua [t m m 21 Mexico or the receipts were exempt or allowed to be deducted .221539.4GLGd -r 9e -22 pursuant to the Gross Receipts and Compensating Tax Act.

c e s k 23 F.

The tax imposed by this section shall be e a n b 24 referred to as the "compensating tax".

u [ G.

AsIf used in this section, "taxable use" means use by a person who acquires tangible personal property, a license, a franchise or a service, and the usegross ofreceipts whichtax wouldis notincreased have qualified for an exemption or deduction pursuant to thefive Gross.222531.3 Receipts- and15 Compensating- TaxSTBTC/SB Act."5, SECTIONet 4.al.

EFFECTIVEand DATE.--Theone-eighth effectivepercent datepursuant ofto Section 7-9-4 NMSA 1978, the provisionsrate of thisthe actcompensating istax Julyshall 1,be 2022.five and one-eighth percent.

-[G.] 10H. - 13 15 e t 17 w l n d 18 = = 19 a l i a e r 20 a t m m 21 d r e 22 c e s k 23 e a n b 24 u [ .221539.4GLG

As used in this section, "taxable use" means use by a person who acquires tangible personal property, a license, a franchise or a service, and the use of which would not have qualified for an exemption or deduction pursuant to the Gross Receipts and Compensating Tax Act." SECTION 6.

APPLICABILITY.-- A.

The provisions of Section 1 of this act apply to taxable years beginning on or after January 1, 2022.

B.

The provisions of Section 2 of this act apply to the purchase and installation of a solar thermal system or a photovoltaic system in taxable years beginning on or after January 1, 2022.

SECTION 7.

EFFECTIVE DATE.--The effective date of the e t 17 provisions of this act is July 1, 2022.

w l n d 18 - 16 - = = 19 a l i a e r 20 a t m m 21 d r e 22 c e s k 23 e a n b 24 u [ .222531.3