us-nm/stat
NMSA 1978, § 7-2E-1.1 — Tax credit; rural job tax credit
A.
The tax credit created by this section may be referred to as the "rural job tax
credit". Every eligible employer may apply for, and the taxation and revenue
department may approve, a tax credit for each qualifying job the employer creates. The
maximum tax credit amount with respect to each qualifying job is equal to:
(1) twenty-five percent of the first sixteen thousand dollars ($16,000) in wages
paid for the qualifying job if the job is performed or based at a location in a tier one area;
or
(2) twelve and one-half percent of the first sixteen thousand dollars ($16,000)
in wages paid if the qualifying job is performed or based at a location in a tier two area.
B.
The purpose of the rural job tax credit is to encourage businesses to start new
businesses or expand existing businesses in rural areas of the state.
C.
The amount of the rural job tax credit shall be six and one-fourth percent of the
first sixteen thousand dollars ($16,000) in wages paid for the qualifying job in a
qualifying period. The rural job tax credit may be claimed for each qualifying job for a
maximum of:
(1) four qualifying periods for each qualifying job performed or based at a
location in a tier one area; and
(2) two qualifying periods for each qualifying job performed or based at a
location in a tier two area.
D.
With respect to each qualifying job for which an eligible employer seeks the rural
job tax credit, the employer shall certify:
(1) the amount of wages paid to each eligible employee during each
qualifying period;
(2) the number of weeks during the qualifying period the position was
occupied;
(3) whether the qualifying job was in a tier one or tier two area;
(4) whether the application pertains to the first, second, third or fourth
qualifying period, depending on whether the taxpayer is in a tier one or tier two area;
(5) the total number of employees employed by the employer at the job
location on the day prior to the qualifying period and on the last day of the qualifying
period;
(6) whether the eligible employer is receiving or is eligible to receive
development training program assistance pursuant to Section 21-19-7 NMSA 1978; and
(7) whether the eligible employer has ceased business operations at any of its
business locations in New Mexico.
E.
The economic development department shall determine which employers are
eligible employers and shall report the listing of eligible employers to the taxation and
revenue department in a manner and at times the departments shall agree upon.
F.
To receive a rural job tax credit with respect to any qualifying period, an eligible
employer shall apply to the taxation and revenue department once per calendar year on
forms and in the manner the department may prescribe. The annual application shall
include a certification made pursuant to Subsection D of this section and contain all
qualifying periods that closed during the calendar year for which the application is
made. Any qualifying period that did not close in the calendar year for which the
application is made shall be denied by the department. The application for a calendar
year shall be filed no later than December 31 of the following calendar year. If a
taxpayer fails to file the annual application within the time limits provided in this section,
the department shall deny the application. If all the requirements of this section have
been complied with, the taxation and revenue department shall issue to the applicant a
certificate of eligibility for the appropriate qualifying period. The certificate of eligibility
shall be numbered for identification and declare its date of issuance and the amount of
rural job tax credit allowed for the respective jobs created. A certificate of eligibility may
be sold, exchanged or otherwise transferred to another taxpayer for the full value of the
credit. The parties to such a transaction to sell, exchange or transfer a rural job tax
credit shall notify the department of the transaction within ten days of the sale,
exchange or transfer.
G.
The person entitled to claim the credit may claim all or a portion of the rural job
tax credit against the person's modified combined tax liability, personal income tax
liability or corporate income tax liability. Any rural job tax credit that exceeds the
person's tax liability may be carried forward for up to three consecutive taxable years
from the date of issuance of the certificate of eligibility. No amount of rural job tax credit
may be applied against a gross receipts tax or compensating tax imposed by a
municipality or county.
H.
Notwithstanding the provisions of Section 7-1-8 NMSA 1978, the taxation and
revenue department may disclose to any person the balance of rural job tax credit
remaining on any tax credit certificate of eligibility and the balance of credit remaining
for any period.
I.
The secretary of economic development and the secretary of workforce solutions
or their designees shall annually evaluate the effectiveness of the rural job tax credit in
stimulating economic development in the rural areas of New Mexico and make a joint
report of their findings to each session of the legislature so long as the rural job tax
credit is in effect.
J.
A qualifying job shall not be eligible for a rural job tax credit pursuant to this
section if:
(1) the job is created due to a business merger, acquisition or other change in
organization;
(2) the eligible employee was terminated from employment in New Mexico by
another employer involved in the merger, acquisition or other change in organization; or
(3) the job is performed by:
(a) the person who performed the job or its functional equivalent prior to the
business merger, acquisition or other change in organization; or
(b) a person replacing the person who performed the job or its functional
equivalent prior to the business merger, acquisition or other change in organization.
K.
A job shall not be eligible for a rural job tax credit pursuant to this section if the
job is created due to an eligible employer entering into a contract or becoming a
subcontractor to a contract with a governmental entity that replaces one or more entities
performing functionally equivalent services for the governmental entity in New Mexico
unless the job is a qualifying job that was not being performed by an employee of the
replaced entity.
L.
The credit provided by this section shall be included in the tax expenditure
budget pursuant to Section 7-1-84 NMSA 1978, including the annual aggregate cost of
the credit.
M.
As used in this section:
(1) "dependent" means "dependent" as defined in 26 U.S.C. 152(a), as that
section may be amended or renumbered;
(2) "eligible employee" means any individual other than an individual who:
(a) is a dependent of the employer;
(b) if the employer is an estate or trust, is a grantor, beneficiary or fiduciary of
the estate or trust or is a dependent of a grantor, beneficiary or fiduciary of the estate or
trust;
(c) if the employer is a corporation, is a dependent of an individual who owns,
directly or indirectly, more than fifty percent in value of the outstanding stock of the
corporation;
(d) if the employer is an entity other than a corporation, estate or trust, is a
dependent of an individual who owns, directly or indirectly, more than fifty percent of the
capital and profits interests in the entity; or
(e) is working or has worked as an employee or as an independent contractor
for an entity that, directly or indirectly, owns stock in a corporation of the eligible
employer or other interest of the eligible employer that represents fifty percent or more
of the total voting power of that entity or has a value equal to fifty percent or more of the
capital and profits interests in the entity;
(3) "eligible employer" means an employer who is eligible for in-plant training
assistance pursuant to Section 21-19-7 NMSA 1978;
(4) "metropolitan statistical area" means a metropolitan statistical area in New
Mexico as determined by the United States bureau of the census;
(5) "modified combined tax liability" means the total liability for the reporting
period for the gross receipts tax imposed by Section 7-9-4 NMSA 1978 together with
any tax collected at the same time and in the same manner as that gross receipts tax,
such as the compensating tax, the withholding tax, the interstate telecommunications
gross receipts tax, the surcharges imposed by Section 63-9D-5 NMSA 1978 and the
surcharge imposed by Section 63-9F-11 NMSA 1978, minus the amount of any credit
other than the rural job tax credit applied against any or all of these taxes or surcharges;
but "modified combined tax liability" excludes all amounts collected with respect to a
gross receipts tax or compensating tax imposed by a municipality or county;
(6) "new job" means a job that is occupied by an employee who has not been
employed in New Mexico by the eligible employer in the three years prior to the date of
hire;
(7) "qualifying job" means a new job that was created after July 1, 2000 and
that was not created due to a change in organizational structure established by the
employer that is occupied by an eligible employee for at least forty-four weeks of a
qualifying period;
(8) "qualifying period" means the period of twelve months beginning on the
day an eligible employee begins working in a qualifying job or the period of twelve
months beginning on the anniversary of the day an eligible employee began working in
a qualifying job;
(9) "rural area" means any part of the state other than:
(a) an H class county;
(b) the state fairgrounds;
(c) an incorporated municipality within a metropolitan statistical area if the
municipality's population is thirty thousand or more according to the most recent federal
decennial census; and
(d) any area within ten miles of the exterior boundaries of a municipality
described in Subparagraph (c) of this paragraph;
(10) "tier one area" means:
(a) any municipality within the rural area if the municipality's population
according to the most recent federal decennial census is fifteen thousand or less; or
(b) any part of the rural area that is not within the exterior boundaries of a
municipality;
(11) "tier two area" means any municipality within the rural area if the
municipality's population according to the most recent federal decennial census is more
than fifteen thousand; and
(12) "wages" means all compensation paid by an eligible employer to an
eligible employee through the employer's payroll system, including those wages the
employee elects to defer or redirect, such as the employee's contribution to 401(k) or
cafeteria plan programs, but not including benefits or the employer's share of payroll
taxes.
Source: official text