NM
New Mexico House Bill HB504

New Mexico 2025 Regular Session

New Mexico House Bill HB504 Compare Versions

Only one version of the bill is available at this time.
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2828 HOUSE BILL 504
2929 57
3030 TH LEGISLATURE
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4545 2025
4646 INTRODUCED BY
4747 Cristina Parajón and Joseph Franklin Hernandez
4848 and Micaela Lara Cadena and Angel M. Charley
4949 AN ACT
5050 RELATING TO TAXATION; EXCLUDING RECEIPTS OF A PRIME CONTRACTOR
5151 THAT ARE DERIVED FROM OPERATING A FACILITY IN NEW MEXICO
5252 DESIGNATED AS A NATIONAL LABORATORY BY AN ACT OF CONGRESS OR
5353 FROM OPERATING A RESEARCH FACILITY IN NEW MEXICO THAT IS OWNED
5454 BY THE STATE FROM CERTAIN GROSS RECEIPTS TAX DEDUCTIONS FOR
5555 MANUFACTURERS.
5656 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
5757 SECTION 1. Section 7-9-46 NMSA 1978 (being Laws 1969,
5858 Chapter 144, Section 36, as amended) is amended to read:
5959 "7-9-46. DEDUCTION--GROSS RECEIPTS--GOVERNMENTAL GROSS
6060 RECEIPTS--SALES TO MANUFACTURERS AND MANUFACTURING SERVICE
6161 PROVIDERS.--
6262 A. Receipts from selling tangible personal property
6363 may be deducted from gross receipts or from governmental gross
6464 .230492.1 underscored material = new
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9191 receipts if the sale is made to a person engaged in the
9292 business of manufacturing who delivers a nontaxable transaction
9393 certificate to the seller or provides alternative evidence
9494 pursuant to Section 7-9-43 NMSA 1978. The buyer must
9595 incorporate the tangible personal property as an ingredient or
9696 component part of the product that the buyer is in the business
9797 of manufacturing.
9898 B. Receipts from selling a manufacturing consumable
9999 to a manufacturer or a manufacturing service provider may be
100100 deducted from gross receipts or from governmental gross
101101 receipts if the buyer delivers a nontaxable transaction
102102 certificate to the seller or provides alternative evidence
103103 pursuant to Section 7-9-43 NMSA 1978; provided that if the
104104 seller is a utility company, an agreement with the department
105105 pursuant to Section 7-1-21.1 NMSA 1978 and a nontaxable
106106 transaction certificate shall be required.
107107 C. Receipts from selling or leasing qualified
108108 equipment may be deducted from gross receipts if the sale is
109109 made to, or the lease is entered into with, a person engaged in
110110 the business of manufacturing or a manufacturing service
111111 provider who delivers a nontaxable transaction certificate to
112112 the seller or provides alternative evidence pursuant to Section
113113 7-9-43 NMSA 1978; provided that a manufacturer or manufacturing
114114 service provider delivering a nontaxable transaction
115115 certificate or alternative evidence with respect to the
116116 .230492.1
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144144 qualified equipment shall not claim an investment credit
145145 pursuant to the Investment Credit Act for that same equipment.
146146 D. The purpose of the deductions provided in this
147147 section is to encourage manufacturing businesses to locate in
148148 New Mexico and to reduce the tax burden, including reducing
149149 pyramiding, on the tangible personal property that is consumed
150150 in the manufacturing process and that is purchased by
151151 manufacturing businesses in New Mexico.
152152 E. This section does not apply to receipts of a
153153 prime contractor that are derived from operating a:
154154 (1) facility in New Mexico designated as a
155155 national laboratory by an act of congress; or
156156 (2) research facility in New Mexico that is
157157 owned by the state.
158158 [E.] F. The department shall annually report to the
159159 revenue stabilization and tax policy committee the aggregate
160160 amount of deductions taken pursuant to this section, the number
161161 of taxpayers claiming each of the deductions and any other
162162 information that is necessary to determine that the deductions
163163 are performing the purposes for which they are enacted.
164164 [F.] G. A taxpayer deducting gross receipts
165165 pursuant to this section shall report the amount deducted
166166 separately for each deduction provided in this section and
167167 attribute the amount of the deduction to the appropriate
168168 authorization provided in this section in a manner required by
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197197 the department that facilitates the evaluation by the
198198 legislature of the benefit to the state of these deductions.
199199 [G.] H. As used in this section:
200200 (1) "manufacturing consumable" means tangible
201201 personal property, other than qualified equipment or an
202202 ingredient or component part of a manufactured product, that is
203203 incorporated into, destroyed, depleted or transformed in the
204204 process of manufacturing a product, including electricity,
205205 fuels, water, manufacturing aids and supplies, chemicals, gases
206206 and other tangibles used to manufacture a product;
207207 (2) "manufacturing operation" means a plant
208208 operated by a manufacturer or manufacturing service provider
209209 that employs personnel to perform production tasks to produce
210210 goods, in conjunction with machinery and equipment; and
211211 (3) "qualified equipment" means machinery,
212212 equipment and tools, including component, repair, replacement
213213 and spare parts thereof, that are used directly in the
214214 manufacturing process of a manufacturing operation. "Qualified
215215 equipment" includes computer hardware and software used
216216 directly in the manufacturing process of a manufacturing
217217 operation but excludes any motor vehicle that is required to be
218218 registered in this state pursuant to the Motor Vehicle Code."
219219 SECTION 2. Section 7-9-46.1 NMSA 1978 (being Laws 2022,
220220 Chapter 47, Section 14) is amended to read:
221221 "7-9-46.1. DEDUCTION--GROSS RECEIPTS--GOVERNMENTAL GROSS
222222 .230492.1
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250250 RECEIPTS--SALES OF SERVICES TO MANUFACTURERS.--
251251 A. Receipts from selling professional services may
252252 be deducted from gross receipts or from governmental gross
253253 receipts if the sale is made to a person engaged in the
254254 business of manufacturing who delivers a nontaxable transaction
255255 certificate to the seller or provides alternative evidence
256256 pursuant to Section 7-9-43 NMSA 1978. The professional
257257 services shall be related to the product that the buyer is in
258258 the business of manufacturing.
259259 B. The purpose of the deductions provided in this
260260 section is to encourage manufacturing businesses to locate in
261261 New Mexico and to reduce the tax burden, including reducing
262262 pyramiding, on the professional services that are purchased by
263263 manufacturing businesses in New Mexico.
264264 C. This section does not apply to receipts of a
265265 prime contractor that are derived from operating a:
266266 (1) facility in New Mexico designated as a
267267 national laboratory by an act of congress; or
268268 (2) research facility in New Mexico that is
269269 owned by the state.
270270 [C.] D. A taxpayer allowed a deduction pursuant to
271271 this section shall report the amount of the deduction
272272 separately in a manner required by the department.
273273 [D.] E. The department shall compile an annual
274274 report on the deduction provided by this section that shall
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303303 include the number of taxpayers that claimed the deduction, the
304304 aggregate amount of deductions claimed and any other
305305 information necessary to evaluate the effectiveness of the
306306 deduction. The department shall compile and present the report
307307 to the revenue stabilization and tax policy committee and the
308308 legislative finance committee with an analysis of the cost of
309309 the deduction and whether the deduction is performing the
310310 purpose for which it was created.
311311 [E.] F. As used in this section:
312312 (1) "accounting services" means the systematic
313313 and comprehensive recording of financial transactions
314314 pertaining to a business entity and the process of summarizing,
315315 analyzing and reporting these transactions to oversight
316316 agencies or tax collection entities, including certified public
317317 auditing, attest services and preparing financial statements,
318318 bookkeeping, tax return preparation, advice and consulting and,
319319 where applicable, representing taxpayers before tax collection
320320 agencies. "Accounting services" does not include, except as
321321 provided with respect to financial management services,
322322 investment advice, wealth management advice or consulting or
323323 any tax return preparation, advice, counseling or
324324 representation for individuals, regardless of whether those
325325 individuals are owners of pass-through entities, such as
326326 partnerships, limited liability companies or S corporations;
327327 (2) "architectural services" means services
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356356 related to the art and science of designing and building
357357 structures for human habitation or use and includes planning,
358358 providing preliminary studies, designs, specifications and
359359 working drawings and providing for general administration of
360360 construction contracts;
361361 (3) "engineering services" means consultation,
362362 the production of a creative work, investigation, evaluation,
363363 planning and design, the performance of studies and reviewing
364364 planning documents when performed by, or under the supervision
365365 of, a licensed engineer, including the design, development and
366366 testing of mechanical, electrical, hydraulic, chemical,
367367 pneumatic or thermal machinery or equipment, industrial or
368368 commercial work systems or processes and military equipment.
369369 "Engineering services" does not include medical or medical
370370 laboratory services, any engineering performed in connection
371371 with a construction service or the design and installation of
372372 computer or computer network infrastructure;
373373 (4) "information technology services" means
374374 separately stated services for installing and maintaining a
375375 business's computers and computer network, including performing
376376 computer network design; installing, repairing, maintaining or
377377 restoring computer networks, hardware or software; and
378378 performing custom software programming or making custom
379379 modifications to existing software programming. "Information
380380 technology services" does not include:
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409409 (a) software maintenance and update
410410 agreements, unless made in conjunction with custom programming;
411411 (b) computers, servers, chilling
412412 equipment and pre-programmed software;
413413 (c) data processing services or the
414414 processing or storage of information to compile and produce
415415 records of transactions for retrieval or use, including data
416416 entry, data retrieval, data searches and information
417417 compilation; or
418418 (d) access to telecommunications or
419419 internet;
420420 (5) "legal services" means services performed
421421 by a licensed attorney or under the supervision of a licensed
422422 attorney for a client, regardless of the attorney's form of
423423 business entity or whether the services are prepaid, including
424424 legal representation before courts or administrative agencies;
425425 drafting legal documents, such as contracts or patent
426426 applications; legal research; advising and counseling;
427427 arbitration; mediation; and notary public and other ancillary
428428 legal services performed for a client in conjunction with and
429429 under the supervision of a licensed attorney. "Legal services"
430430 does not include lobbying or government relations services,
431431 title insurance agent services, licensing or selling legal
432432 software or legal document templates, insurance investigation
433433 services or any legal representation involving financial crimes
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462462 or tax evasion in New Mexico; and
463463 (6) "professional services" means accounting
464464 services, architectural services, engineering services,
465465 information technology services and legal services."
466466 SECTION 3. EFFECTIVE DATE.--The effective date of the
467467 provisions of this act is July 1, 2025.
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