Citing the economic impacts of COVID-19 and fluctuations in oil and gas prices, as well as the ongoing impact of racism, Governor Michelle Lujan Grisham called the 54th Legislature of the State of New Mexico into Special Session. Her call included tax relief for individuals, loans for small businesses and local governments, public safety reform, and election changes, among other topics. Lawmakers were also asked to consider modifying the state budget that takes effect July 1. Convening at noon on Thursday, June 18, 2020, the Special Session closed June 22 when the House adjourned; the Senate had adjourned two days prior. The effective date of legislation that is not a general appropriations bill, a bill with an emergency clause, or any other specified effective date will take effect 90 days after the adjournment of the Legislature.
SB3 – Small Business Recovery Act of 2020 – Passed Both Houses
SB3 creates a loan pool of up to $400 million to provide low-interest loans for operating expenses to struggling small businesses that are owned or predominantly owned by New Mexico Residents. Eligible businesses must (i) have $5 million or less of annual gross income and (ii) demonstrate a loss of at least 30% of gross receipts during the months of April and May of 2020. Loans will be originated in amounts equal to 200% of the eligible business’s average monthly expenses up to $75,000, and have to be repaid over a six-year period with an initial interest rate of one-half of the Wall Street Journal prime rate.
The legislation also creates a ~$50 million loan pool for local governments experiencing at least a 10% decline in local option gross receipts tax revenue. Prospective small business and local government borrowers will need to contact the New Mexico Finance Authority or qualified lenders approved by the New Mexico Finance Authority.
Lastly, SB3 amends the calculation of employer contributions to the unemployment compensation trust fund. Employers’ unemployment claims data (including experience history, excess claims premiums, and excess claims rates) from March 1, 2020 through June 30, 2021 will be omitted and the employer’s 2019 computation date reserve factor will be used instead to calculate the employers’ tax rates. The substitution is expected to stabilize employers’ tax rates through June 30, 2021.
The Small Business Recovery Act became effective immediately upon the Governor’s signature on July 7, 2020.
HB6 – Temporary Tax Waivers and Distributions – Signed into Law June 29, 2020
HB6 makes three changes to the law in response to the economic impacts of COVID-19.
- First, the bill provides temporary relief for taxpayers in the form of deadline extensions, with interest and penalty relief, for payment of various taxes. Assuming the Governor signs the bill:
- the deadline for taxpayers to pay their 2019 personal income taxes free of interest and penalty will be extended to April 15, 2021;
- the deadline for taxpayers to pay withholding tax that became due March 25, 2020 through July 25, 2020, will be extended to April 25, 2021;
- the deadline for taxpayers to pay any gross receipts tax, including local option gross receipts taxes, and compensating tax liabilities for those taxes that became due March 25, 2020 through July 25, 2020, will be extended to April 25, 2021;
- taxpayers who were assessed tax as a result of a managed audit between September 3, 2019 and January 3, 2020, will have until December 31, 2020 to pay the assessment so long as payment is otherwise made pursuant to the terms of the managed audit agreement; and,
- taxpayers who have not paid their property taxes that became due April 10, 2020 will have until May 10, 2021 to pay such taxes.
- Second, the bill creates an exemption from the gross receipts tax, exempting receipts of health care providers, other than hospitals licensed by the Department of Health, from payments by the United States Department of Health and Human Services from the federal public health and social services emergency fund eligible to receive the payments pursuant to the CARES Act.
- Third, the bill makes temporary increases to the monthly gross receipts tax distribution to each municipality from $1.25 million to $2.5 million, and to each county from $750,000 to $1.5 million. Such increases, however, will cease in the event that the federal government provides money for each municipality or county in the state for revenue declines attributable to COVID-19.
The bill took effect immediately upon the Governor’s signature on June 29, 2020.