Analysis

Synopsis:

 House Bill 98 (HB 98) makes comprehensive changes to tax statutes including credits, garnishment of wages, Gross Receipts Tax, and technical changes.

Analysis:

 House Bill 98 (HB 98) proposes changes to several taxes in New Mexico.

Spousal Relief from Tax Liability
If the Taxation and Revenue Department (TRD) determines it isn’t equitable to penalize a spouse for payment of unpaid tax, they can decide not to take action against the spouse or from the couple’s community property. TRD is empowered to decide if joint tax filings are a separate debt. Spousal relief aligns the state code with federal statutes.  

Tax Credits and Deduction Changes
HB 98 implements a residency credit for tax credits and deductions: unreimbursed or uncompensated medical care expenses of those over 65; Special Needs Child Tax Credit. 
Taxpayers must apply for the Rural Job Tax Credit within one year of it being earned. There must be an increase in number of jobs to qualify for the credit and additional reporting requirements to determine qualification.

Garnishment of Wages for Delinquent Taxes
HB 98 prohibits TRD from garnishing wages if the weekly wages are 80 times (currently 40) the federal minimum hourly wage rate. 

Technical Changes
Reference to annual income and semiannual Combined Reporting System was deleted.
TRD is given the grace period for receipt deposits for Corporate Income Tax (CIT) to match that of the grace period for Personal Income Tax.
TRD is permitted to search on websites for information about abandoned properties. The notice and publication of abandoned properties must contain contact information for TRD.

Gross Receipt Tax (GRT)
The terms lease or leasing are updated, and license or licensing is added the GRT Act. This clarifies licensing property and one leasing property. Long-term lease over 30 days is not subject to GRT. Short-term leases are subject to GRT. 
The ability for a taxpayer to provide alternative evidence to substantiate that the GRT deductions are permitted. This allows the taxpayer to find the information about alternative evidence with deductions in the tax code. Alternative evidence already exists in statute.
The GRT deduction from sale of food is expanded to include delivered groceries instead of only those sold at the store. 
GRT deduction for physician services extends to 501(c)(3)s, health maintenance organizations, hospitals, hospice, nursing home, and immediate care facilities.

Miscellaneous 
The minimum $5 late filing fee for CIT was removed.
The definition for volume (the quantity of product severed reported using oil in barrels and natural gas, hydrocarbons, and gases in thousand cubic feet (MCF)) in several oil and gas acts is added to clarify the different measures-barrel and MCF. HB 98 clarifies type of volume reported for the different types of energy products to accurately reflect the correct metrics to determine the severance tax rate.
This bill clarifies that the Insurance Premium Tax is collected by TRD.
TRD is permitted to collect payments electronically at its discretion in addition to electronic filing already in place. 

The effective dates for HB 98 are either the beginning of the Fiscal Year 2021 or Tax Year 2022.

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