First, the bill temporarily waives interest and penalties on late tax payments so 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.
“The financial pain caused by COVID-19 is real. This bill will help New Mexicans who
through no fault of their own were unable to pay their taxes on time,” said Gov. Lujan
Grisham in a press release. “It will help local governments, and it will help small businesses, all of whom have been suffering the dreadful effects of this pandemic. I have said all along through this crisis: New Mexico will deliver for its people, for its workers, and for its families. And we will continue that work every single day, fighting to keep New Mexicans safe and to make them whole and see our state through this crisis.”
Secondly, 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 on 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.
“This bill will provide relief to cities and counties around New Mexico whose budgets
have been hard hit by the economic downturn caused by the COVID-19 pandemic and
that aren’t sharing in the revenues from increased online shopping,” said Taxation and
Revenue Secretary Stephanie Schardin Clarke in the same press release.
Third, the bill exempts federal CARES Act payments to certain New Mexico health care
providers from gross receipts tax so that more of that funding can be used for direct
services to New Mexicans in need of healthcare. The bill also 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.
“The sudden and drastic economic turn caused by the pandemic hit a lot of New
Mexicans hard,” said Senate Majority Leader Peter Wirth, a bill sponsor in the same press release. “The relief offered through this bill will give taxpayers an additional year to recover financially without having to worry about tax penalties and interest. And, given the massive fiscal hits to our local governments, distributing an additional $24 million to our cities and counties from internet sales is critical relief to help avoid massive cuts and layoffs.”
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