2023 New Mexico Statutes › Chapter 7 - Taxation › Article 9F - Technology Jobs and Research and Development Tax Credit › Section 7-9F-6 - Eligibility requirements.

A. A taxpayer conducting qualified research at a qualified facility and making qualified expenditures is eligible to claim the basic credit pursuant to the Technology Jobs and Research and Development Tax Credit Act.
B. A taxpayer conducting qualified research at a qualified facility and making qualified expenditures is eligible to claim the additional credit pursuant to the Technology Jobs and Research and Development Tax Credit Act if:
(1) the taxpayer increases the taxpayer's annual payroll expense at the qualified facility by at least seventy-five thousand dollars ($75,000) over the base payroll expense of the taxpayer;
(2) the increase in Paragraph (1) of this subsection has not previously been used to meet the requirements of this subsection; and
(3) there is at least a seventy-five-thousand-dollar ($75,000) increase in the taxpayer's annual payroll expense for every one million dollars ($1,000,000) in qualified expenditures claimed by the taxpayer in a taxable year in the same claim.
History:
Laws 2000 (2nd S.S.), ch. 22, § 6; 2015 (1st S.S.), ch. 2, § 15.
ANNOTATIONS
The 2015 (1st S.S.) amendment,
effective January 1, 2016, amended language to reflect the new title of the Technology Jobs and Research and Development Tax Credit Act; in Subsection A, after "Technology Jobs", added "and Research and Development"; and in the introductory sentence of Subsection B, after "Technology Jobs", added "and Research and Development".
Applicability.
— Laws 2015 (1st S.S.), ch. 2, § 25 provided that Laws 2015 (1st S.S.), ch. 2, § 15 apply to taxpayers that make a qualified expenditure beginning on or after January 1, 2015.
Temporary provisions.
— Laws 2015 (1st S.S.), ch. 2, § 22 provided that a taxpayer that becomes eligible for a research and development small business tax credit prior to January 1, 2016 but has not claimed the credit prior to January 1, 2016 may claim the credit in accordance with the provisions of the Research and Development Small Business Tax Credit Act in effect immediately prior to January 1, 2016. The taxation and revenue department shall approve claims submitted but not approved prior to January 1, 2016 if the claim meets the requirements of the Research and Development Small Business Tax Credit Act in effect immediately prior to January 1, 2016. Claiming the research and development small business tax credit pursuant to this section with respect to a reporting period renders the taxpayer ineligible to claim a credit for the same reporting period pursuant to the Technology Jobs and Research and Development Tax Credit Act.
Time to apply for tax credit.
— Because the provisions of this section, Sections 7-9F-3 and 7-9F-12 NMSA 1978 indicate a legislative concentration on annual reporting and annual payroll expense, these sections indicate no intention to provide a taxpayer an open-ended time to apply for a tax credit.
Team Specialty Prods., Inc v. Taxation & Revenue Dep't
., 2005-NMCA-020, 137 N.M. 50, 107 P.3d 4.
"Cost accounting methodology" construed.
— A "cost accounting method" as used in the definition of "qualified expenditure" NMSA 1978, § 7-9F-3(G), is a method for capturing a company's total cost of production by assessing the variable costs at each step in production.
Process Equip. & Serv. Co. v. N.M. Tax'n & Revenue
, 2023-NMCA-060.
Taxpayer met the requirements for a tax credit based on qualified expenditures.
— Where taxpayer, a designer and manufacturer of products used in the oil and gas industry, protested the taxation and revenue department's (department) denial of taxpayer's request for a state tax credit for the 2014 and 2016 tax years under the Technology Jobs and Research and Development Tax Credit Act (act), NMSA 1978, §§ 7-9F-1 through 7-9F-13, and where, following an independent administrative hearing, the hearing officer concluded that taxpayer met the requirements for a tax credit under the act for both years, and where, on appeal, the department claimed that taxpayer did not satisfy the statutory requirements for entitlement to the credit because taxpayer failed to use a cost accounting methodology to allocate wages, and failed to use the same cost accounting methodology in its other business activities, the hearing officer did not err in concluding that taxpayer used a cost accounting method, based on witness testimony that the method taxpayer used was designed to record and analyze taxpayer's labor costs incident to the research and development projects it was engaged in, and to that extent, it constituted a cost accounting method, and there was substantial evidence to support the hearing officer's finding that taxpayer used the same cost accounting method in its other business activities based on witness testimony that taxpayer used the same method when deciding whether a project will proceed or not.
Process Equip. & Serv. Co. v. N.M. Tax'n & Revenue
, 2023-NMCA-060.