EXEMPTIONS, DEDUCTIONS AND CREDITS … 071612 Item 0 Deductions...REVENUE STABILIZATION AND TAX POLICY COMMITTEE EXEMPTIONS, DEDUCTIONS AND CREDITS Claimed against Gross Receipts and

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


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....



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



DEDUCTIONS

July 2012

DEDUCTIONSGross Receipts Tax, Compensating Tax and Governmental Gross Receipts Tax

Purpose Section Amountto WhichDeductionApplied

Content Comments


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



CREDITS

July 2012

CREDITS

Gross Receipts Tax, Compensating Tax and Governmental Gross Receipts Tax

Purpose Section Tax Content Comments


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


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

EXEMPTIONS, DEDUCTIONS AND CREDITS … 071612 Item 0 Deductions...REVENUE STABILIZATION AND TAX POLICY COMMITTEE EXEMPTIONS, DEDUCTIONS AND CREDITS Claimed against Gross Receipts and

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