New Mexico HB 245: "CONSTRUCTION MATERIAL" IN GROSS RECEIPTS ACT

Bill Text

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AN ACT
RELATING TO TAXATION; CLARIFYING THE DEFINITION IN LAW OF
CONSTRUCTION MATERIAL, AS USED IN THE GROSS RECEIPTS AND
COMPENSATING TAX ACT; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-9-54 NMSA 1978 (being Laws 1969,
Chapter 144, Section 44, as amended by Laws 2003, Chapter
272, Section 6 and by Laws 2003, Chapter 330, Section 2) is
amended to read:
"7-9-54. DEDUCTION--GROSS RECEIPTS TAX--GOVERNMENTAL
GROSS RECEIPTS TAX--SALES TO GOVERNMENTAL AGENCIES.--
A. Receipts from selling tangible personal
property to the United States or New Mexico or a governmental
unit, subdivision, agency, department or instrumentality
thereof may be deducted from gross receipts or from
governmental gross receipts. Unless contrary to federal law,
the deduction provided by this subsection does not apply to:
(1) receipts from selling metalliferous
mineral ore;
(2) receipts from selling tangible personal
property that is or will be incorporated into a metropolitan
redevelopment project created under the Metropolitan
Redevelopment Code;
(3) receipts from selling construction

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material, excluding tangible personal property, whether
removable or non-removable, that is or would be classified
for depreciation purposes as three-year property, five-year
property, seven-year property or ten-year property, including
indirect costs related to the asset basis, by Section 168 of
the Internal Revenue Code of 1986, as that section may be
amended or renumbered; or
(4) that portion of the receipts from
performing a "service" that reflects the value of tangible
personal property utilized or produced in performance of such
service.
B. Receipts from selling tangible personal
property for any purpose to an Indian tribe, nation or pueblo
or a governmental unit, subdivision, agency, department or
instrumentality thereof for use on Indian reservations or
pueblo grants may be deducted from gross receipts or from
governmental gross receipts.
C. When a seller, in good faith, deducts receipts
for tangible personal property sold to the state or a
governmental unit, subdivision, agency, department or
instrumentality thereof, after receiving written assurances
from the buyer's representative that the property sold is not
construction material, the department shall not assert in a
later assessment or audit of the seller that the receipts are
not deductible pursuant to Paragraph (3) of Subsection A of

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this section."
SECTION 2. Section 7-9-60 NMSA 1978 (being Laws 1970,
Chapter 12, Section 4, as amended) is amended to read:
"7-9-60. DEDUCTION--GROSS RECEIPTS TAX--GOVERNMENTAL
GROSS RECEIPTS TAX--SALES TO CERTAIN ORGANIZATIONS.--
A. Except as provided otherwise in Subsection B of
this section, receipts from selling tangible personal
property to 501(c)(3) organizations may be deducted from
gross receipts or from governmental gross receipts if the
sale is made to an organization that delivers a nontaxable
transaction certificate to the seller. The buyer delivering
the nontaxable transaction certificate shall employ the
tangible personal property in the conduct of functions
described in Section 501(c)(3) and shall not employ the
tangible personal property in the conduct of an unrelated
trade or business as defined in Section 513 of the United
States Internal Revenue Code of 1986, as amended or
renumbered.
B. The deduction provided by this section does not
apply to receipts from selling construction material,
excluding tangible personal property, whether removable or
non-removable, that is or would be classified for
depreciation purposes as three-year property, five-year
property, seven-year property or ten-year property, including
indirect costs related to the asset basis, by Section 168 of

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the Internal Revenue Code of 1986, as that section may be
amended or renumbered, or from selling metalliferous mineral
ore; except that receipts from selling construction material
or from selling metalliferous mineral ore to a 501(c)(3)
organization that is organized for the purpose of providing
homeownership opportunities to low-income families may be
deducted from gross receipts. Receipts may be deducted under
this subsection only if the buyer delivers a nontaxable
transaction certificate to the seller. The buyer shall use
the property in the conduct of functions described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended,
and shall not employ the tangible personal property in the
conduct of an unrelated trade or business, as defined in
Section 513 of that code.
C. For the purposes of this section, "501(c)(3)
organization" means an organization that has been grante