A. A taxpayer that pays for child care services in New Mexico for dependent children of an employee of the taxpayer during the employee's hours of employment may claim a credit against the corporate income tax imposed pursuant to the Corporate Income and Franchise Tax Act in an amount equal to thirty percent of the total expenses, net of any reimbursements, for child care services incurred and paid by the taxpayer in the taxable year.

B. A taxpayer that operates a child care facility in New Mexico used primarily by the dependent children of the taxpayer's employees may also claim a credit against the corporate income tax imposed pursuant to the Corporate Income and Franchise Tax Act in an amount equal to thirty percent of the net cost of operating the child care facility for the taxable year. If two or more taxpayers share in the cost of operating a child care facility primarily for the dependent children of the taxpayers' employees, each taxpayer shall be allowed a credit in relation to the taxpayer's share of the cost of operating the child care facility. Each taxpayer's share of the tax credit shall be determined by dividing the employer's share of the net cost of operating the child care facility by the number of children served and multiplying the result by the number of the taxpayer's employees' children served. The credit allowed pursuant to this subsection may be taken only if the child care facility is operated under the authority of a license issued pursuant to the Public Health Act [Chapter 24, Article 1 NMSA 1978] and is operated without profit by the taxpayer. For the purposes of this section, the term "net cost" means the cost of operating a child care facility less any amounts collected as fees for use of the facility, any federal tax credits with respect to the facility or its operation and any other payment or reimbursement from any other source other than the credit provided by this section.

C. For the purposes of this section, "dependent children" means children under twelve years of age.

D. The credits provided for by Subsections A and B of this section may only be deducted from the taxpayer's corporate income tax liability for the taxable year in which the expenditures occurred. The credit may not exceed thirty thousand dollars ($30,000) in any taxable year. If the credit amount exceeds the corporate income tax liability, the excess may be carried forward for three consecutive years; provided that in no event shall the annual credit amount exceed thirty thousand dollars ($30,000).

History: Laws 1983, ch. 218, § 1; 1986, ch. 20, § 52; 1995, ch. 11, § 8.

The 1995 amendment, effective June 16, 1995, inserted "net of any reimbursement" near the end of Subsection A; and, in Subsection B, rewrote the third sentence which read "The tax credit shall be determined by dividing the net operating cost paid by the employer by the number of children served and multiplying the result by the number of employees' children served", added the final sentence, and made stylistic changes.

Payments made under salary reduction payroll program. — Under an employer's salary reduction payroll program by which employees could shelter from income tax a portion of their salary and then use the tax sheltered salary to pay for dependent care expenses, the expenses were "incurred and paid" by the employer, rather than the employees, within the meaning of this section. Intel Corp. v. Taxation & Revenue Dep't, 1997-NMCA-005, 122 N.M. 760, 931 P.2d 754.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation § 549.

85 C.J.S. Taxation §§ 1719, 1756 to 1759, 1777 to 1778.