SB 1 — TAX CHANGES

u » r (2) a brother-sister controlled group as t h g e l i defined in Section 1563 of the Internal Revenue Code;

or h r i s (3) three or more corporations each of which h , e h is a member of a group of corporations described in Paragraph t u g e b l e e , gh (1) or (2) of this subsection, and one of which is:

n d d i = = o h (a) a common parent corporation included el e] 17b ,d i a º r in a group of corporations described in Paragraph (1) of this e r = t e nw d 18m a n o subsection;

and =d =m l: ] 19 (b) included in a group of corporations a l r i 20 described in Paragraph (2) of this subsection;

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 5 - e a tn F.e d r e l u [ A d (b) included in a group of corporations described in Paragraph (2) of this subsection;

"consolidatedF. group" means the group of entities m m 21 e d r e 22 properly filing a federal consolidated return under the c e r c 23 Internal Revenue Code for the taxable year;

e"consolidated group" means the group of entities properly filing a nfederal bconsolidated 24return G.under the Internal Revenue Code for the taxable year;

"corporation"G. means corporations, joint stock u [ companies, real estate trusts organized and operated under the .217849.10SA - 5 - Real Estate Trust Act, financial corporations and banks, other business associations and, for corporate income tax purposes, partnerships and limited liability companies taxed as corporations under the Internal Revenue Code;

"corporation" means corporations, joint stock companies, real estate trusts organized and operated under the Real Estate Trust Act, financial corporations and banks, other business associations and, for corporate income tax purposes, partnerships and limited liability companies taxed as corporations under the Internal Revenue Code;

"filing group" means a group of corporations h properly included in a return pursuant to Section 7-2A-8.3 NMSA u » r 1978 for a particular taxable year;

t h g e l i J.

"fiscal year" means any accounting period of h r i s twelve months ending on the last day of any month other than h , e h December;

t u g e b l e e , gh K.

"grandfathered net operating loss carryover" n d d i = = o h means:

el e] 17b ,d i a º r (1) the amount of net loss properly reported e r = t e nw d 18m a n o to New Mexico for taxable years beginning January 1, 2013 and =d = l ] 19 prior to January 1, 2020 as part of a timely filed original a l r i 20 return, or an amended return for those taxable years filed t e a t prior to January 1, 2020, to the extent such loss can be m m: 21 e d r e 22 attributed to one or more corporations that are properly c e r c 23 included in the taxpayer's return for the first taxable year e a n b 24 beginning on or after January 1, 2020;

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 6 - e a n e d r e l u [ (2)A reducedd by:prior to January 1, 2020 as part of a timely filed original return, or an amended return for those taxable years filed prior to January 1, 2020, to the extent such loss can be attributed to one or more corporations that are properly included in the taxpayer's return for the first taxable year beginning on or after January 1, 2020;

.217849.10SA(2) -reduced 6by: - (a) adding back deductions that were taken by the corporation or corporations for royalties or interest paid to one or more related corporations, but only to the extent that such adjustment would not create a net loss for such related corporations;

and(a) (b)adding theback amountdeductions ofthat netwere operating loss deductions taken priorby tothe Januarycorporation 1,or 2020corporations thatfor wouldroyalties beor chargedinterest againstpaid thoseto lossesone consistentor withmore therelated Internalcorporations, Revenuebut Codeonly andto provisions of the Corporateextent Incomethat andsuch Franchiseadjustment Taxwould Actnot applicablecreate toa thenet yearloss offor thesuch deduction;related corporations;

and (3)(b) apportionedthe toamount Newof Mexiconet usingoperating theloss apportionmentdeductions factorstaken thatprior canto properlyJanuary 1, 2020 that would be attributedcharged toagainst those losses consistent with the corporationInternal orRevenue corporationsCode forand provisions of the Corporate Income and Franchise Tax Act h applicable to the year of the netdeduction; loss;

L.and u » r (3) apportioned to New Mexico using the t h g e l i apportionment factors that can properly be attributed to the h r i s corporation or corporations for the year of the net loss;

"Internalh Revenue, Code"e meansh theL. United States Internal Revenue Code of 1986, as amended;

M."Internal Revenue Code" means the United States t u g e b l e e , gh Internal Revenue Code of 1986, as amended;

n d d i = = o h M.

el e] 17b ,d i a º r (1) the base income of a corporation properly e r = t e nw d 18m a n o filing a tax return as a separate entity;

or =d = l ] 19 (2) the combined base income and losses of a l r i 20 corporations that are part of a filing group that is computed t e a t after eliminating intercompany income and expense in a manner m m: 21 e d r e 22 consistent with the consolidated filing requirements of the c e r c 23 Internal Revenue Code and the Corporate Income and Franchise e a n b 24 Tax Act;

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 7 - e a n e d r e l u [ N.A d (2) the combined base income and losses of corporations that are part of a filing group that is computed after eliminating intercompany income and expense in a manner consistent with the consolidated filing requirements of the Internal Revenue Code and the Corporate Income and Franchise Tax Act;

"netN. operating loss carryover" means the .217849.10SA - 7 - apportioned net loss properly reported on an original or amended tax return for taxable years beginning on or after January 1, 2020 by the taxpayer:

"net operating loss carryover" means the apportioned net loss properly reported on an original or amended tax return for taxable years beginning on or after January 1, 2020 by the taxpayer:

(a) the portion of an apportioned net loss properly reported to New Mexico for a taxable year beginning on or after January 1, 2020, on a separate year return, to the extent the taxpayer would have been entitled to include the portion of such apportioned net loss in the h taxpayer's consolidated net operating loss carryforward under u » r the Internal Revenue Code if the taxpayer filed a consolidated t h g e l i federal return;

and h r i s (b) the taxpayer's grandfathered net h , e h operating loss carryover;

and t u g e b l e e , gh (2) minus:

n d d i = = o h (a) the amount of the net operating loss el e] 17b ,d i a º r carryover attributed to an entity that has left the filing e r = t e nw d 18m a n o group, computed in a manner consistent with the consolidated =d =m l: ] 19 filing requirements of the Internal Revenue Code and applicable a l r i 20 regulations, as if the taxpayer were filing a consolidated t e a t return;

andb mr e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m 21e - 8 - e a n e d r e 22l (b)u the[ amountA ofd netfiling operatingrequirements lossof cthe eInternal rRevenue cCode 23and deductionsapplicable properlyregulations, takenas byif the taxpayer;taxpayer were filing a consolidated return;

eand a(b) nthe bamount 24of O.net operating loss deductions properly taken by the taxpayer;

"netO. operating loss deduction" means the portion u [ of the net operating loss carryover that may be deducted from .217849.10SA - 8 - the taxpayer's apportioned net income under the Internal Revenue Code as of January 1, 2018 for the taxable year in which the deduction is taken, including the eighty percent limitation of Section 172(a) of the Internal Revenue Code as of January 1, 2018 calculated on the basis of the taxpayer's 6 apportioned net income;

"net operating loss deduction" means the portion of the net operating loss carryover that may be deducted from the taxpayer's apportioned net income under the Internal Revenue Code as of January 1, 2018 for the taxable year in which the deduction is taken, including the eighty percent limitation of Section 172(a) of the Internal Revenue Code as of January 1, 2018 calculated on the basis of the taxpayer's apportioned net income;

"person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, joint venture, h syndicate or other association;

"person" also means, to the u » r extent permitted by law, any federal, state or other t h g e l i governmental unit or subdivision or agency, department or h r i s instrumentality thereof;

h , e h Q.

"real estate investment trust" has the meaning t u g e b l e e , gh ascribed to the term in Section 856 of the Internal Revenue n d d i = = o h Code, as that section may be amended or renumbered;

el e] 17b ,d i a º r R.

"related corporation" means a corporation that e r = t e nw d 18m a n o is under common ownership with one or more corporations but =d =m l: ] 19 that is not included in the same tax return;

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 9 - e a ln e d r ie 20l S.u [ A d that is not included in the same tax return;

"return"S. means any tax or information return, t e a t including a water's-edge or worldwide combined return, a m m 21 e d r e 22 consolidated return, a declaration of estimated tax or a claim c e r c 23 for refund, including any amendments or supplements to the e a n b 24 return, required or permitted pursuant to a law subject to u [ administration and enforcement pursuant to the Tax .217849.10SA - 9 - Administration Act and filed with the department by or on behalf of any person;

"return" means any tax or information return, including a water's-edge or worldwide combined return, a consolidated return, a declaration of estimated tax or a claim for refund, including any amendments or supplements to the return, required or permitted pursuant to a law subject to administration and enforcement pursuant to the Tax Administration Act and filed with the department by or on behalf of any person;

h V.

"state" means any state of the United States, u » r the District of Columbia, the commonwealth of Puerto Rico, any t h g e l i territory or possession of the United States or political h r i s subdivision thereof or any political subdivision of a foreign h , e h country;

t u g e b l e e , gh W.

"state or local bond" means a bond issued by a n d d i = = o h state other than New Mexico or by a local government other than el e] 17b ,d i a º r one of New Mexico's political subdivisions, the interest from e r = t e nw d 18m a n o which is excluded from income for federal income tax purposes =d =m l: ] 19 under Section 103 of the Internal Revenue Code, as that section a l r i 20 may be amended or renumbered;

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 10 - e a tn X.e d r e l u [ A d under Section 103 of the Internal Revenue Code, as that section may be amended or renumbered;

"taxableX. income" means a taxpayer's apportioned m m 21 e d r e 22 net income minus the net operating loss deduction for the c e r c 23 taxable year;

e"taxable income" means a ntaxpayer's bapportioned 24net Y.income minus the net operating loss deduction for the taxable year;

"taxableY. year" means the calendar year or fiscal u [ year upon the basis of which the net income is computed under .217849.10SA - 10 - the Corporate Income and Franchise Tax Act and includes, in the case of the return made for a fractional part of a year under the provisions of that act, the period for which the return is made;

"taxable year" means the calendar year or fiscal year upon the basis of which the net income is computed under the Corporate Income and Franchise Tax Act and includes, in the case of the return made for a fractional part of a year under the provisions of that act, the period for which the return is made;

"taxpayer" means any corporation or group of corporations filing a return pursuant to Section 7-2A-8.3 NMSA 1978 subject to the taxes imposed by the Corporate Income and Franchise Tax Act;

"unitary group" means a group of two or more h corporations, including a captive real estate investment trust, u » r but not including an S corporation, an insurance company t h g e l i subject to the provisions of the New Mexico Insurance Code, an h r i s insurance company that would be subject to the New Mexico h , e h Insurance Code if the insurance company engaged in business in t u g e b l e e , gh this state or a real estate investment trust that is not a n d d i = = o h captive real estate investment trust, that are:

el e] 17b ,d i a º r (1) related through common ownership;

and e r = t e nw d 18m a n o (2) economically interdependent with one =d =m l: ] 19 another as demonstrated by the following factors:

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 11 - e a ln e d r ie 20l (a)u centralized[ management;A d another as demonstrated by the following factors:

t(a) ecentralized amanagement; t (b) functional integration;

and(b) mfunctional mintegration; 21 e d r e 22 (c) economies of scale;

cand e(c) reconomies cof 23scale; BB.

"water's-edgeBB. group" means all corporations e a n b 24 that are part of a unitary group, except:

u"water's-edge [group" (1)means all corporations that are exemptpart fromof .217849.10SAa -unitary 11group, -except: corporate income tax pursuant to Section 7-2A-4 NMSA 1978;

(1) corporations that are exempt from corporate income tax pursuant to Section 7-2A-4 NMSA 1978;

"worldwide combined group" means all members of a unitary group, except members that are exempt from corporate income tax pursuant to Section 7-2A-4 NMSA 1978, irrespective h of the country in which the corporations are incorporated or g o t hr conduct business activity." g e i k SCORCº SECTION 3.

A new section of the Gross Receipts and h r i s Compensating Tax Act is enacted to read:

h , t, "[NEW MATERIAL] EXEMPTION--GROSS RECEIPTS--CERTAIN HEALTH e u g e b l e e h CARE PROVIDERS FROM FEDERAL CORONAVIRUS AID, RELIEF, AND n d d i = = o h ECONOMIC SECURITY ACT PAYMENTS.--Exempted from the gross l ] b ,d i a º e receipts tax are receipts of health care providers, other than r i = r t e w d m a n o hospitals licensed by the department of health, from payments d m :

b e d s º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 12 - e a n e d r e l u [ A d by the United States department of health and human services from the federal public health and social services emergency fund to providers eligible to receive the payments pursuant to the federal Coronavirus Aid, Relief, and Economic Security Act."»SCORC SECTION SCORCº3»SCORC SCORCº4»SCORC.

e e 17 (1) tax liabilities pursuant to the Income Tax e e n d 18 Act or the Corporate Income and Franchise Tax Act for failure = = l ] 19 to pay the tax that became due April 15, 2020 through July 15, a l r i 20 2020;

provided that the failure to pay the tax was made without t e a t intent to evade or defeat the tax;

and provided further that m m 21 e d r e 22 payment for the unpaid payments is made in full on or before c e r c 23 April 15, 2021;

e a n b 24 (2) tax liabilities pursuant to the u [ Withholding Tax Act for failure to pay the tax that became due .217849.10SA - 12 - March 25, 2020 through July 25, 2020;

and provided further that h payment for the unpaid taxespayments is made in full on or before u » r April 25,15, 2021;

(3)t grossh receiptsg tax,e locall optioni gross(2) receipts tax orliabilities compensatingpursuant taxto liabilitiesthe h r i s Withholding Tax Act for failure to pay anythe oftax those taxes that became due h , e h March 25, 2020 through July 25, 2020;

provided that the failure t u g e b l e e , gh to pay the tax was made without intent to evade or defeat the n d d i = = o h tax;

and provided further that payment for the unpaid taxes is l ] b ,d i a º r made in full on or before April 25, 2021;

e r = t e w d m a n o (3) gross receipts tax, local option gross d m :

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 13 - e a n e d r e l u [ A d receipts tax or compensating tax liabilities for failure to pay any of those taxes that became due March 25, 2020 through July 25, 2020;

provided that payment for those liabilities is made pursuant to terms of the managed audit e e 17 agreement on or before December 31, 2020.

e e n d 18 B.

Notwithstanding Sections 7-38-49 and 7-38-50 = = l ] 19 NMSA 1978, no interest shall accrue and no penalty shall be a l r i 20 assessed to a property owner for unpaid property taxes that t e a t became due April 10, 2020 pursuant to Section 7-38-38 NMSA mh m 21 e d r e 22 1978;

cu e» r c 23 (1) the unpaid property taxes did not become et ah ng be 24l i delinquent because of an intent to defraud by the property uh [r i s owner;

.217849.10SAh -, 13e -h (2) payment for the unpaid property taxes is t u g e b l e e , gh made in full on or before May 10, 2021;

and n d d i = = o h (3) the subject property does not have l ] b ,d i a º r property taxes that became delinquent pursuant to Section e r = t e w d m a n o 7-38-46 NMSA 1978 prior to May 10, 2020.

SECTIONd 4.m :

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k m e - 14 - e a n e d r e l u [ A d SECTION SCORCº4»SCORC SCORCº5»SCORC.

- 1415 - 10» 12g 14o 16» er eh 17t ei ek nl di 18g =t =h ls ], 19e ah t l r i 20w tl eb al te me m, 21g en d rl eh 22= c= b , a l º d i a r e r c= 23, a t e d m a n bo 24d um [: .217849.10SA

b r e t º o t n = .217849.10SAAIC June 20, 2020 (1:52am) s k em e e a n e d r e l u [ A d