exemptions, deductions and credits … 071612 item 0 deductions...revenue stabilization and tax...
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REVENUE STABILIZATION ANDTAX POLICY COMMITTEE
EXEMPTIONS, DEDUCTIONSAND CREDITS
Claimed against Gross Receipts andother Amounts
July 2012
RSTP StaffPamela Ray, Staff AttorneyDamian Lara, Staff AttorneyPam Stokes, Staff Attorney
REVENUE STABILIZATION ANDTAX POLICY COMMITTEE
Gross Receipts and Compensating TaxAct
Various ProvisionsSection 7-9-4
Section 7-9-4.3Section 7-9-7
July 2012
GROSS RECEIPTS AND COMPENSATING TAX ACT
Gross Receipts Tax, Compensating Tax andGovernmental Gross Receipts Tax
IMPOSITION AND DENOMINATION
7-9-4. Imposition and rate of tax; denomination as "gross receipts tax".A. For the privilege of engaging in business, an excise tax equal to five and one-eighth
percent of gross receipts is imposed on any person engaging in business in New Mexico.B. The tax imposed by this section shall be referred to as the "gross receipts tax".
7-9-4.3. Imposition and rate of tax; denomination as "governmental gross receipts tax".For the privilege of engaging in certain activities by governments, there is imposed on
every agency, institution, instrumentality or political subdivision of the state, except any schooldistrict and any entity licensed by the department of health that is principally engaged inproviding health care services, an excise tax of five percent of governmental gross receipts. Thetax imposed by this section shall be referred to as the "governmental gross receipts tax".
7-9-7. Imposition and rate of tax; denomination as "compensating tax".A. For the privilege of using tangible property in New Mexico, there is imposed on the
person using the property an excise tax equal to five and one-eighth percent of the value oftangible property that was:
(1) manufactured by the person using the property in the state;(2) acquired as the result of a transaction with a person located outside this state
that would have been subject to the gross receipts tax had the tangible personal property beenacquired from a person with nexus with New Mexico; or
(3) acquired as the result of a transaction that was not initially subject to thecompensating tax ... or the gross receipts tax but which transaction, because of the buyer'ssubsequent use of the property, should have been subject to the compensating tax ... or the grossreceipts tax....
REVENUE STABILIZATION ANDTAX POLICY COMMITTEE
Gross Receipts and Compensating TaxAct
EXEMPTIONS
July 2012
EXEMPTIONS
Gross Receipts Tax (GRT), Compensating Tax (Comp) and Governmental Gross Receipts Tax (GGRT)
Purpose Section Tax Content Comments
Preemption orin lieu of othertaxes
1. 7-9-13 GRT General federal preemption: receipts of U.S. or U.S. agency;of state of NM or subdivision; oftribe or on tribal land; and of aforeign nation. Not exempt arereceipts from local govt. utilityor municipal cable tv system
2. 7-9-13.2 GGRT Taxes imposed in lieu of GRT
3. 7-9-13.5 GRTGGRT
Municipal event center ifsurcharge imposed
4. 7-9-17 GRT Personal services: wages,salaries, employee compensation
5. 7-9-22 GRT Motor vehicle excise tax in lieuof GRT
6. 7-9-22.1 GRT Boat tax in lieu of GRT
7. 7-9-23 Comp Motor vehicle excise tax in lieuof Comp tax
8. 7-9-23.1 Comp Boat tax in lieu of Comp tax
9. 7-9-24 GRT Premium tax in lieu of GRT onpremiums of insurancecompanies
10. 7-9-25 GRT Income tax in lieu of GRT onreceipts from dividends, interestor capital gains
11. 7-9-26 GRT Gasoline, special fuels andalternative fuels taxes in lieu ofGRT
12. 7-9-33 Sub A
GRT Oil and gas sales or processing ifsubject to oil and gas emergencyschool tax, unless not for resale,then subject to both GRT and oiland gas emergency school tax
13. 7-9-34Sub A
GRT Receipts from natural gas salesor processing if natural gasprocessors tax imposed; storageof natural gas, except if naturalgas is not for resale then may besubject to both GRT and naturalgas processors tax
14. 7-9-35 Receipts from sales orprocessing of natural resources ifresources excise tax imposed
15. 7-9-38.1 GRT Receipts from sale of interstatetelecom services subject to theInterstate TelecommunicationsGross Receipts Tax Act
16. 7-9-41.1 GRTGGRT
Receipts of a university from anathletic facility surchargepursuant to the UniversityAthletic Facility Funding Act
Basecomponent ofGRT
17. 7-9-3.3 GRT "Engaging in business" meanscarrying on or causing to becarried on any activity with thepurpose of direct or indirectbenefit
Does not include:third-partycontent providerto a web site ifsite ofadministrator isin NM or third-party provider ofcall centerservices islocated in NM
18. 7-9-7.1 Comp Department barred fromcollecting Comp tax on first useof tangibles purchased out ofstate by NM individual that isnot a business
19. 7-9-13.1 GRT Services performed out of stateand used in state
20. 7-9-14 Comp Comp tax exemptions for U.S.,state and political subdivisions
21. 7-9-27 Personal effects moved to NM
Anti-pyramiding
22. 7-9-18 GRTGGRT
Receipts from sale of agproducts: livestock, produce orother crops, poultry, hides, pelts;not dairy products
23. 7-9-19 GRT Receipts from service ofpasturing, feeding, training orpenning livestock
24. 7-9-30 Comp Use of railroad equipment,aircraft and spacecraft
25. 7-9-33Sub B
GRT Receipts from storing oil, naturalgas or liquid hydrocarbons foruse in operation of productionunit
26. 7-9-34Sub B
GRTComp
Receipts from storing or usingcrude oil, natural gas or liquidhydrocarbons by refiners orprocessors
27. 7-9-36 GRT Receipts from sale of oil, naturalgas or liquified hydrocarbonsused in transport of oil or gas inpipeline
28. 7-9-37 Comp Use of oil, natural gas orliquified hydrocarbons intransport of oil or gas in apipeline
29. 7-9-38 Comp Use of electricity in productionof electricity
30. 7-9-41.2 GRT Locomotive fuel Should berepealed - neverimplemented -superseded by §§ 7-9-110.1through 7-9-110.3
Public good
31. 7-9-15 Comp 501(c)(3) organizations
32. 7-9-16 GRT Nonprofit housing for elderly
33. 7-9-18.1 GRT Food stamp purchases
34. 7-9-39 GRT Receipts from dues andregistration fees of nonprofitsocial, fraternal, political, trade,labor or professionalorganizations or businessleagues
35. 7-9-41 GRT Receipts of a minister from areligious organization with501(c)(3) designation forreligious services performed
36. 7-9-41.3 GRT Receipts from sales by disabledstreet vendors
Policy
37. 7-9-13.3 GRTGGRT
Isotopes: concessions, sales andother activities
Should be avendor deduction
38. 7-9-13.4 GGRT Student books from state univ. book store
Deduction moreappropriate?
39. 7-9-20 GRT Homeowners association dues Doing business?
40. 7-9-26.1 GRTComp
Spaceport fuel, GRT and Compexemptions
41. 7-9-28 GRT Yard sale proceeds and lawnmowing
42. 7-9-29 GRT 501(c)(3) & 501(c)(6)organization income notunrelated business income
43. 7-9-31 GRTComp
Armed forces - sales of tangiblesor use of tangibles
44. 7-9-32 GRT Oil and gas sale or leasing orproperty interest transfer
45. 7-9-40 GRT Receipts of jockeys, horsemen,trainers from purses from NMhorse racetracks; amountsretained by a horse racetrackpursuant to §60-1-10
§60-1-10 nolonger exists,provisions in§60-1A-10
46. 7-9-41.4 GRT Receipts of referee, umpire,scorekeeper or other officiatingofficer at New Mexico ActivitiesAssociation school events
REVENUE STABILIZATION ANDTAX POLICY COMMITTEE
Gross Receipts and Compensating TaxAct
DEDUCTIONS
July 2012
DEDUCTIONSGross Receipts Tax, Compensating Tax and Governmental Gross Receipts Tax
Purpose Section Amountto WhichDeductionApplied
Content Comments
Preemption orin lieu of othertaxes
1 7-9-55 GRGGR
Receipts from transactions ininterstate commerce may bededucted to the extentpreempted by U.S.Constitution; receipts fromtransmitting messages orconversations by radio toout-of-state locations;receipts for radio or tvbroadcast time when used todeliver national or regionaladvertisement
In-state advertisingcommissions notdeductible;interstate commerceissues
2 7-9-56 GR Receipts from transportingpersons or property ininterstate or foreigncommerce; receipts fromhandling, storage, drayage,packing or moving ininterstate commerce,including accessorialservices on same contract; receipts from providingtelephone and telegraphservices used by others toprovide those services
Interstate commerceissues
3 7-9-70 GR Receipts from vehiclesrented or leased for use ininterstate commerce
Interstate commerceissues
4 7-9-77.1 GR Receipts from payments byUnited States for medicalservices
Tax cannot be passedon to end user; enduser is the fed gov.;
similar to §7-9-93
5 7-9-89 GR Sales to diplomats andforeign missions when treatyrequires forbearance
Basecomponent ofGRT
6 7-9-54 GRGGR
Receipts from sales oftangibles to U.S., NM oragencies of those govts. or totribal governments for use onthe tribe's land
Receipts that cannotbe deducted: fromsale of metalliferousmineral ores;construction material;inputs for metroredevelopmentproject; receipts fromtangibles that areincluded in orproduced by theservice provided
7 7-9-57 GR Sale of services to an out-of-state buyer who delivers anNTTC or other evidence ofplace of initial use
8 7-9-57.1 GR Receipts of sales of servicesor tangibles through a website to a person with an out-of-state billing address
9 7-9-67 GRGGR
Receipts from refunds andallowances made to buyers;amounts written off thebooks as uncollectible
Subsequent paymentof debts written offbooks are subject toGRT and GGRT
10 7-9-68 GR Receipts of a dealer fromfurnishing goods or servicesto the purchaser of tangiblepersonal property to fulfill awarranty
11 7-9-76.1 GR Receipts from the resale of amfd home that was subject to
the GR, Comp or MVexupon its initial sale or use inNew Mexico
12 7-9-101 GR Receipts from sellingequipment to RETA for anelectric transmission orstorage facility
13 7-9-102 Comp Value of equipment for anelectric transmission orstorage facility acquired byRETA
14 7-9-103 GR Receipts from sellingservices to RETA for theplanning, installation, repair,maintenance or operation ofan electric transmission orstorage facility
Anti-pyramiding
15 7-9-46 GR GGR
Receipts from sale ofconsumables in mfg process
16 7-9-47 GRGGR
Receipts from sellingtangible personal property orlicenses if made to a personwho delivers an NTTC whois reselling the tangiblepersonal property or licensein the ordinary course ofbusiness
17 7-9-48 GRGGR
Receipts from the resale ofservices
18 7-9-49 GR Receipts from sellingtangible personal property orlicenses for leasing
Does not apply toreceipts from sales offurniture orappliances forleasing, coin-operated machines ormfd homes
19 7-9-50 GR Receipts from leasingtangible personal property orlicenses to a lessee whodelivers an NTTC
Not applicable tofurniture, appliances,coin-op machines ormfd homes
20 7-9-51 GR Receipts from selling orleasing construction materialto a person engaged inconstruction business if theperson delivers an NTTC
Must incorporate intoa construction projectto which GRT will apply uponcompletion or sale ora construction projecton tribal land
21 7-9-52 GR Receipts from selling orleasing a constructionservice to a person involvedin construction business whodelivers an NTTC
As above, servicemust be performedfor a constructionproject that becomestaxable uponcompletion or sale oris located on triballand
22 7-9-56.1 GR Receipts from providingleased telephone lines,telecom services, internet orcomputer services and otherservices that will be used toprovide internet access to afinal user if the final user issubject to GRT
23 7-9-58 GR Receipts from sales of feedand accessories or inputs to aperson engaged regularly infarming, ranching or raisinganimals for hides or pelts;receipts of auctioneers oflivestock or ag products
24 7-9-65 GR Receipts from sellingchemical agents to a mine,mill or oil company forprocessing ore or oil and gasin a mill, smelter or refinery
Receipts from sellingexplosives, blastingpowder or dynamiteare not deductible
25 7-9-66.1 GR Real estate commissions thatare proportionate to the real
estate sold on which GRT isnot due under §7-9-53
26 7-9-69 GR Receipts for administrative,managerial, accounting andcustomer service for anaffiliate at cost of the service
27 7-9-74 GR Receipts from sale of inputsto manufacture jewelry
28 7-9-75 GR Receipts from sale of serviceof combining or processingcomponents or materials to amfr with NTTC delivery
Mfr must have theservice performeddirectly on theproduct being mfd
29 7-9-76.2 GR Receipts of leasing orlicensing a theatrical or tvfilm or tape to a personengaged in the business ofproviding entertainment
30 7-9-77 Comp 50% of the value of agimplements, farm tractors,aircraft not exempted under§7-9-30 or vehicles notrequired to be registered maybe deducted from the valueon which the Comp Tax iscomputed; portion of thevalue of tangible personalproperty on which anallowance was granted to thebuyer for a trade-in deductedfrom value on which CompTax is computed
Trade-in must besame type of tangiblepersonal property
31 7-9-78 Comp Value of tangible personalproperty held for lease orsale in ordinary course ofbusiness
Public good
32 7-9-53 GR Receipts from the sale orlease of real property and of
Does not include saleor lease of oil, natural
mfd homes; receipts fromthe rental of a mfd home forat least one month; receiptsattributable to lease or rentalof furniture or appliancesfurnished with a house,leased mfd home orapartment
gas or mineralinterests
33 7-9-60 GRGGR
Receipts of selling tangiblesto 501(c)(3) organizations,except for constructionmaterials or metal ores,unless to be used to providehomeownershipopportunities to low-incomeNM residents
34 7-9-61.1 GR Receipts from theorigination, making orassumption of a loan or forhandling loan payments
35 7-9-61.2 GR Receipts from sales to state-chartered credit unions to theextent allowed for federalcredit unions
Level playing fieldwith federal creditunions
36 7-9-87 GR Sales of lottery tickets
37 7-9-91 Comp Value of tangible personalproperty removed frominventory and contributed to501(c)(3) and governmentalunits
Normally receive atax deduction forcontributions
Policy
38 7-9-54.1 GR Sale of aerospace servicesfor resale with NTTCdelivery
Reporting notrequired; should be
39 7-9-54.2 GR Receipts from launching,operating or recoveringspace vehicles or payloads inNM; receipts from operating
Reporting notrequired; should be.The deduction cannotbe taken for
a payload; receipts fromoperating a spacecraft;receipts from services forr&d, testing and evaluation
constructionmaterials orconstruction servicesconsumed inlaunching, operatingor recoveringoperations or for r&d,testing andevaluation
40 7-9-54.3 GR Receipts from sales of windgeneration or solargeneration equipment to agovernment for installationof a wind or solar generationfacility
Cannot be claimed inconjunction withcredits from §§ 7-2-18.25, 7-2A-25or 7-9G-2; reportingneeded
41 7-9-54.4 Comp Value of space-relatedarticles used in NM may bededucted in calculatingComp Tax due; value ofequipment and materialsused in NM for research ortesting or for supportingresearch and testing ofspace-related test articlesmay be deducted incalculating Comp Tax due
Reporting needed
42 7-9-56.2 GR Receipts from hosting websites
43 7-9-56.3 GR Receipts from border tradesupport companies
Within 20 miles ofborder before July 1,2013
44 7-9-57.2 GR Receipts from softwaredevelopment companylocated in NM after June2002 outside of a metro areawith greater than 50,000population
45 7-9-59 GR Receipts from warehousing,threshing, harvesting,growing, cultivating,transporting and processing
ag products
46 7-9-62 GR 50% of receipts from sale ofag implements, aircraft, farmtractors, vehicles notrequired to be registered ifsale is to a person in thebusiness of farming orranching; receipts of aircraftmfr from selling aircraft,aircraft parts or aircraftservices
47 7-9-62.1 GR Receipts from maintaining,refurbishing, remodeling orotherwise modifying acommercial or militarycarrier over 10,000 pounds
48 7-9-63 GR Receipts from publishing anewspaper or magazine, butnot from sellingadvertisements; receiptsfrom selling magazines atretail are not deductible
49 7-9-64 GR Receipts from sellingnewspapers
Not for sales ofadvertising space
50 7-9-71 GR Portion of receipts of a sellerrepresented by a trade-in oftangible personal property ofthe same type or of trade-inof a mfd home
Must be of likeproperty, not justnonmonetary trade
51 7-9-73 GRGGR
Receipts from sale ofprosthetic devices withdelivery of NTTC bymedical practitionerpurchaser
Could be to preventpyramiding whereGRT could be paid,but also payor doesn'tinclude tax innegotiated payment;value of prostheticdevice must beincluded in NTTC
52 7-9-73.1 GR 50% of receipts of hospitalslicensed by the DOH only
Is this still needed?
after all other deductions aretaken and only to taxablereceipts
53 7-9-73.2 GRGGR
Receipts from the sale of Rx
2 2 drugs, O and O servicesprovided by a licensedMedicare durable medicalequipment provider
54 7-9-76 GR Receipts of travel agents'commissions paid bymaritime transportcompanies, interstateairlines, railroads andpassenger buses for booking,referral, reservation or ticketservices
Could be an interstatecommerce issue
55 7-9-78.1 Comp Value of equipment andparts used to enrich uraniumin a uranium enrichmentplant
56 7-9-83 GR 55% of receipts from sale ofjet fuel
After June 30, 2017:40%
57 7-9-84 Comp 55% of value of jet fuel After June 30, 2017:40%
58 7-9-85 GR Receipts from twofundraising events a year bya 501(c)(3) org.
59 7-9-86 GRGGR
Receipts from selling orleasing property andperforming services to andfor a film productioncompany for productioncosts
Film production taxcredit (§7-2F-1)
60 7-9-90 GR Receipts from sellinguranium hexafluoride andfrom providing the service ofenriching uranium
TRD required toreport annually;stated separately
61 7-9-92 GR Receipts from the sale offood at a retail food store not
Required to be statedseparately
otherwise exempt ordeductible
62 7-9-93 GR Receipts from payments bymanaged health careprovider for Medicare part Cservices to a health carepractitioner not otherwisedeductible
GRT passed on toend user; paymentsare set regardless ofGRT
63 7-9-94 GR Receipts from militarytransformational acquisitionprograms for r&d at bases
64 7-9-95 GR Receipts from certain saleson tax holiday
65 7-9-97 GR Receipts from sales to thestate paid from fundsobtained pursuant to NewMexico Mining Act or WaterQuality Act
66 7-9-98 Comp Value of biomass equipmentand materials
67 7-9-99 GR Receipts from sellingengineering, architectural orconstruction services to afoundation or nonprofit org.in constructing a solecommunity provider hospitalin a shortage area
68 7-9-100 GR Receipts from sellingconstruction equipment ormaterial to a foundation ornonprofit org. for use inconstruction of a solecommunity provider hospitalin a shortage area
69 7-9-104 GR Receipts from nonathleticspecial events at NMSU
70 7-9-106 GR Receipts from militaryconstruction services atCannon and Holloman Air
Force bases
71 7-9-107 GR Receipts from producing orstaging a professionalboxing, wrestling or martialarts contest
72 7-9-108 GR Receipts from fees receivedfor managing or advising amutual fund, hedge fund orreal estate investment trust
73 7-9-109 GR Receipts from sale ofveterinary services orsupplies used in treatingcattle to rancher orveterinarian
74 7-9-110.1 GR Receipts from sale oflocomotive fuel to acommon carrier
Reporting requiredby §7-9-110.3
75 7-9-110.2 Comp Value of locomotive fuelused by a common carrier
Reporting requiredby §7-9-110.3
76 7-9-111 GR Receipts from sale of visionand hearing aids nototherwise exempt ordeductible
77 7-9-112 GR Receipts from the sale andinstallation of solar energysystems
78 7-9-113 GR Receipts from selling specialfuel made from vegetable oilor animal fat
79 7-9-114 GRComp
Receipts from selling orleasing tangible property andservices for the developmentand construction of anelectric generating facility orrecycled energy project
80 7-9-103.1 GRComp
Electric conversiontechnology and ancillaryservices
81 7-9-103.2 GRComp
Market exchange forelectricity and ancillaryservices
Key: ag = agriculturalComp = value used to calculate compensating taxDOH = Department of HealthGR = gross receiptsGGR = governmental gross receiptsGRT = gross receipts taxmfd = manufacturedmfg = manufacturingmfr = manufacturerMVex = motor vehicle excise taxNMSU = New Mexico State UniversityNTTC = nontaxable transaction certificater&d = research and developmentRETA = New Mexico Renewable Energy Transmission AuthorityTRD = Taxation and Revenue Department
REVENUE STABILIZATION ANDTAX POLICY COMMITTEE
Gross Receipts and Compensating TaxAct
CREDITS
July 2012
CREDITS
Gross Receipts Tax, Compensating Tax and Governmental Gross Receipts Tax
Purpose Section Tax Content Comments
Preemption orin lieu of othertaxes
7-9-79 Comp Similar tax levied by anotherstate or political subdivision ongoods bought outside NewMexico
7-9-79.1 GRT Similar tax levied by anotherstate or a political subdivision onservices performed outside NewMexico
7-9-88.2 GRT Similar tax levied by NavajoNation on receipts from sellingcoal severed from Navajo Nationland; 75%-25% share
Basecomponentof GRT
Anti-pyramiding
Public Good
Policy
7-79.2 GRT Comp
30% of purchase and 30% ofinstallation costs of a rackoperator to install biodieselequipment
7-9-96 GRTGGRT
10% of receipts from selling aservice for resale
7-9-96.1 GRT Hospital credit in an amountequal to 3.775% of taxable grossreceipts (§7-9-96.2)
7-9-96.2 GRT Licensed doctor or osteopathicphysician credit in an amountequal to the value of unpaidqualified health care services
7-9-105 GRT An amount equal to penalty paidfor incorrect reporting of fooddeduction or health carepractitioner services prior to2007
Key: Comp = compensating taxGGRT = governmental gross receipts taxGRT = gross receipts tax
REVENUE STABILIZATION ANDTAX POLICY COMMITTEE
Miscellaneous Tax Credits
MODIFIED COMBINED TAXLIABILITY CREDITS
andOTHER TAX CREDITSCLAIMED AGAINST
GROSS RECEIPTS TAX
July 2012
Modified Combined Tax Liability Creditsand
Other Credits Claimed Against Gross Receipts
Purpose Sections Tax LiabilitiesAgainst WhichCredit May BeClaimed
Content Comments
Economic Development
1 7-2E-1.1 MCTL, PIT, CIT Rural Jobs TaxCredit; employermust be eligible forin-plant trainingfunds, MCTL isGRT, Comp,Withholding and anyother tax reported onCRS
Report required;transferable;carry forward 3years
2 7-9A-1through7-9A-11
GRT, Comp,Withholding
Investment CreditAct for purchase ofequipment formanufacturing
Must meetemploymentrequirements
3 7-9F-1through7-9F-12
GRT, Comp orWithholding
Technology Jobs TaxCredit Act
Credit is doubledif technologybusiness locatesin rural area;recaptureprovision
4 7-9G-1 All tax liabilitiesreported on CRS
High-Wage Jobs TaxCredit
5 7-9G-2 GRT, Comp,Withholding, CITor PIT
Advanced EnergyCombined ReportingTax Credit
6 7-9H-1through 7-9H-6
Research andDevelopment SmallBusiness Tax CreditAct
7 7-9I-1through7-9I-6
GRT, Comp,Withholding andother tax liabilitiesreported on CRS
Affordable HousingTax Credit Act
8 7-9J-1through7-9J-8
GRT, Comp,Withholding andother taxesreported on CRS
Alternative EnergyProductManufacturers TaxCredit Act providestax credit not toexceed 5% ofexpenditures formanufacturingequipment
5-year carryforward; nothingin the act seemsto require thetaxpayer to be amanufacturer ofalternative energyproducts oralternative energyvehicles;recapturerequirement;employmentrequirement
9 7-9E-1through7-9E-11
GRT LaboratoryPartnership withSmall Business TaxCredit Act
Not a MCTLcredit, only GRT; has reportingrequirements