NMSA 1978, § 7-9-46 — 7-9-46

Deduction; gross receipts; governmental gross receipts;
sales to manufacturers and manufacturing service providers.

# A.

Receipts from selling tangible personal property may be deducted from gross
receipts or from governmental gross receipts if the sale is made to a person engaged in
the business of manufacturing who delivers a nontaxable transaction certificate to the
seller. The buyer must incorporate the tangible personal property as an ingredient or
component part of the product that the buyer is in the business of manufacturing.

# B.

Receipts from selling a manufacturing consumable to a manufacturer or a
manufacturing service provider may be deducted from gross receipts or from
governmental gross receipts if the buyer delivers a nontaxable transaction certificate to
the seller or provides alternative evidence pursuant to Section 7-9-43 NMSA 1978;
provided that if the seller is a utility company, an agreement with the department
pursuant to Section 7-1-21.1 NMSA 1978 and a nontaxable transaction certificate shall
be required.

# C.

Receipts from selling or leasing qualified equipment may be deducted from gross
receipts if the sale is made to, or the lease is entered into with, a person engaged in the
business of manufacturing or a manufacturing service provider who delivers a
nontaxable transaction certificate to the seller or provides alternative evidence pursuant
to Section 7-9-43 NMSA 1978; provided that a manufacturer or manufacturing service
provider delivering a nontaxable transaction certificate or alternative evidence with
respect to the qualified equipment shall not claim an investment credit pursuant to the
Investment Credit Act for that same equipment.

# D.

The purpose of the deductions provided in this section is to encourage
manufacturing businesses to locate in New Mexico and to reduce the tax burden,
including reducing pyramiding, on the tangible personal property that is consumed in the
manufacturing process and that is purchased by manufacturing businesses in New
Mexico.

# E.

A taxpayer allowed a deduction pursuant to this section shall report the amount
deducted separately for each deduction provided in this section and attribute the
amount of the deduction to the appropriate authorization provided in this section in a
manner required by the department.

# F.

The deductions 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 deductions.

# G.

As used in this section:
(1) "manufacturing consumable" means tangible personal property, other than
qualified equipment or an ingredient or component part of a manufactured product, that
is incorporated into, destroyed, depleted or transformed in the process of manufacturing
a product, including electricity, fuels, water, manufacturing aids and supplies, chemicals,
gases and other tangibles used to manufacture a product;
(2) "manufacturing operation" means a plant operated by a manufacturer or
manufacturing service provider that employs personnel to perform production tasks to
produce goods, in conjunction with machinery and equipment; and
(3) "qualified equipment" means machinery, equipment and tools, including
component, repair, replacement and spare parts thereof, that are used directly in the
manufacturing process of a manufacturing operation. "Qualified equipment" includes
computer hardware and software used directly in the manufacturing process of a
manufacturing operation but excludes any motor vehicle that is required to be registered
in this state pursuant to the Motor Vehicle Code [Articles 1 through 8 of Chapter 66
NMSA 1978, except 66-7-102.1 NMSA 1978]..