As used in the Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act:
A. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;
B. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended;
C. "net income" means, for any pass-through entity:
(1) in the case of an owner that is taxed as a corporation for federal income tax purposes, "net income" as defined in the Corporate Income and Franchise Tax Act [Chapter 7, Article 2A NMSA 1978]; and
(2) for all other owners, "net income" as defined in the Income Tax Act [Chapter 7, Article 2 NMSA 1978];
D. "oil and gas" means crude oil, natural gas, liquid hydrocarbons or any combination thereof, or carbon dioxide;
E. "oil and gas proceeds" means any amount derived from oil and gas production from any well located in New Mexico and payable as royalty interest, overriding royalty interest, production payment interest, working interest or any other obligation expressed as a right to a specified interest in the cash proceeds received from the sale of oil and gas production or in the cash value of that production, subject to all taxes withheld therefrom pursuant to law; "oil and gas proceeds" excludes "net profits interest" and other types of interest the extent of which cannot be determined with reference to a specified share of the oil and gas production and excludes any amounts deducted by the remitter from payments to interest owners or paid by interest owners to the remitter that are for expenses related to the production from the well or cessation of production from the well for which the interest owner is liable;
F. "owner" means a partner in a partnership not taxed as a corporation for federal income tax purposes for the taxable year, a shareholder of an S corporation or of a corporation other than an S corporation that is not taxed as a corporation for federal income tax purposes for the taxable year, a member of a limited liability company or any similar person holding an ownership interest in any pass-through entity. "Owner" also means a performing artist to whom payments are due from a personal services business;
G. "partnership" means a combination of persons, including a partnership, joint venture, common trust fund, association, pool or working agreement, or any other combination of persons that is treated as a partnership for federal income tax purposes;
H. "pass-through entity" means a personal services business or any other business association other than:
(1) a sole proprietorship;
(2) an estate or trust that does not distribute income to beneficiaries;
(3) a corporation, limited liability company, partnership or other entity not a sole proprietorship taxed as a corporation for federal income tax purposes for the taxable year;
(4) a partnership that is organized as an investment partnership in which the partners' income is derived solely from interest, dividends and sales of securities;
(5) a single member limited liability company that is treated as a disregarded entity for federal income tax purposes; or
(6) a publicly traded partnership as defined in Subsection (b) of Section 7704 of the Internal Revenue Code;
I. "person" means an individual, club, company, cooperative association, corporation, estate, firm, joint venture, partnership, receiver, syndicate, trust or other association, limited liability company, limited liability partnership or gas, water or electric utility owned or operated by a county or municipality and, to the extent permitted by law, a federal, state or other governmental unit or subdivision or an agency, a department or an instrumentality thereof;
J. "personal services business" means a business organization that receives payments for the services of a performing artist for purposes of the film production tax credit;
K. "remittee" means a person that is entitled to payment of oil and gas proceeds by a remitter; and
L. "remitter" means a person that pays oil and gas proceeds to any remittee.
History: 1978 Comp., § 7-3A-2, enacted by Laws 2003, ch. 86, § 5; 2010, ch. 53, § 9; 2011, ch. 177, § 5; 2012, ch. 40, § 1.
ANNOTATIONSCross references. — For Section 7704 of the Internal Revenue Code of 1986, see 26 U.S.C. § 7704.
The 2012 amendment, effective May 16, 2012, redefined "net income" as defined in New Mexico income tax acts rather than as "net income" for federal income tax purposes; and in Subsection C, deleted former language that defined "net income" as income reported for federal income tax purposes, and added Paragraphs (1) and (2).
Applicability. — Laws 2012, ch. 40, § 8 provided that the provisions of Laws 2012, ch. 40, §§ 1 through 7 are applicable to taxable years beginning on or after January 1, 2012.
The 2011 amendment, effective July 1, 2011, defined "owner" to include performing artists who are paid by a personal services business; defined "pass-through entity" to include personal services businesses; and added a definition of "personal services business".
The 2010 amendment, effective May 19, 2010, in the introductory sentence, added "and Pass-Through Entity"; added Subsections B and C; in Subsection E, after "a specified share of the oil and gas production", added the remainder of the sentence; added Subsections F, G and H; in Subsection I, after "trust or other association", added "limited liability company, limited liability partnership or gas, water, or electric utility owned or operated by a county or municipality"; and relettered subsections accordingly.
Temporary provisions. — Laws 2010, ch. 53, § 17 provided that for a taxable year beginning on or after January 1, 2011, but before January 1, 2012, no remitter or pass-through entity shall be subject to the penalty imposed pursuant to Section 7-1-69 NMSA 1978 for failure to comply with the provisions of the Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act.