By Asha Glover

Law360 (June 22, 2020, 9:06 PM EDT) -- The New Mexico Senate has advanced legislation to the governor's desk that would temporarily waive penalties and interest for tax liabilities in response to the coronavirus pandemic.

The state Senate on Saturday unanimously passed H.B. 6. The measure would temporarily waive penalties and interest for any income taxes, corporate income taxes and franchise taxes due April 15 through July 15, provided the payments are made in full by April 15, 2021.

Democratic Gov. Michelle Lujan Grisham on Wednesday called on state lawmakers to pass tax relief for small businesses and individuals impacted by the coronavirus pandemic, during a special session that started Thursday.

"My appreciation goes out to all the lawmakers who have come together, including by virtual means, to address these urgent issues," Lujan Grisham said in a statement Friday.

The bill next heads to her desk to be signed.

Under the measure, introduced by Rep. Christine Chandler, D-Los Alamos, the state government would allocate $2.5 million for municipalities and $1.5 million for counties. The amounts are to be distributed proportionally to each municipality and county based on population. The provision effectively doubles the temporary monthly distribution to municipalities and counties, according to the bill.

The tax penalties and interest for late payment of withholding taxes due March 25 through July 25 are waived, provided those taxes are paid in full on or before April 25, 2021, and that the failure to pay was made without intent to evade the tax. Penalties and interest for tax liabilities for oil and gas proceeds and pass-through entity withholding due April 15 to July 25 are also waived under the bill.

The bill also redefined the net operating loss deduction to conform with the Internal Revenue Code as of Jan. 1, 2018. A fiscal impact report said this was done to avoid changes under the federal Coronavirus Aid, Relief and Economic Security Act that would have decreased corporate income tax revenues.
 
The bill would waive late payment liabilities for gross receipts tax, local option gross receipts tax or compensating tax due between March 25 and July 25, provided that payment is made in full on or before April 25, 2021, according to the legislation. It would also waive tax liabilities assessed between Sept. 3, 2019, and Jan. 3, 2020, under a managed audit agreement, provided that the payments under the agreement terms are made by Dec. 31.

Additionally, interest and penalties will not be assessed for unpaid property taxes due April 10, provided that those taxes did not become delinquent due to an intent to defraud and that payment is made in full on or before May 10, 2021, according to the bill. To qualify for the relief, the property cannot have delinquent taxes from before May 10.

The state House passed the measure 69-1 Friday.

Chandler and representatives for Lujan Grisham did not immediately respond to requests for comment Monday.

--Editing by Robert Rudinger.

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