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On Monday, June 29, Gov. Michelle Lujan Grisham signed into law the Temporary Tax Waivers and Distributions bill, which the governor’s office called “a significant relief and support measure for individuals, businesses and local governments under financial strain during the COVID-19 pandemic.”
The act, House Bill 6, was introduced during the June special session of the New Mexico Legislature by state Sen. Peter Worth, D-Santa Fe; and state Reps. Christine Chandler, D-Los Alamos, Rio Arriba, Sandoval and Santa Fe; and Abbas Akhil and Javier Martinez, both D-Bernalillo. It passed the House 69-1, with state Rep. Rachel Black, R-Otero, the only no vote. It passed the Senate 42-0.
The bill includes three areas of relief, according to a news release from the governor’s office.
First, the bill temporarily waives interest and penalties on late tax payments so that individuals and businesses that have been unable to make timely payments will not fall further into tax debt. Taxpayers must still file their tax returns timely, but payment may follow at later date.
Second, the bill doubles state gross receipts tax distributions from online sales that municipalities and counties will receive in the coming fiscal year from $24 to $48 million. The distributions will be divided among counties and municipalities based on population. The state began taxing internet sales July 1, 2019, but local option taxes will not take effect on internet sales until July 1, 2021. In the meantime, these distributions allow local governments to share in the revenue from internet sales taxation.
The distributions may revert to the lower level if the federal government provides additional aid to local governments during the fiscal year.
Third, the bill exempts federal CARES Act payments to certain New Mexico healthcare providers from gross receipts taxes so more of that funding can be used for direct services to New Mexicans in need of healthcare, the news release said.
The bill also includes a technical change so that New Mexico’s treatment of corporate net operating losses will continue to follow the federal treatment prior to the CARES Act.