SB 217

                                1  SENATE BILL 217
                                2     57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Antoinette Sedillo Lopez and Shannon D. Pinto
                                5  and Joanne J. Ferrary and Cristina Parajón
                                6
                                7
                                8
                                9
                                10  AN ACT
                                11   RELATING TO TAXATION; AMENDING THE DISTRIBUTIONS OF THE LIQUOR
                                12   EXCISE TAX; AMENDING DEFINITIONS IN THE LIQUOR EXCISE TAX ACT;
                                13   IMPOSING A LIQUOR EXCISE SURTAX ON RETAILERS; DISTRIBUTING THE
                                14   REVENUE FROM THE SURTAX TO A NEW TRIBAL ALCOHOL HARMS
                                15   ALLEVIATION FUND; EXCLUDING THE TAXES IMPOSED BY THE LIQUOR
                                16   EXCISE TAX FROM THE DEFINITION OF "GROSS RECEIPTS" IN THE GROSS
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                                17   RECEIPTS AND COMPENSATING TAX ACT.
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                                18
                                19   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
                                20        SECTION 1.    Section 7-1-6.40 NMSA 1978 (being Laws 1997,
                                21   Chapter 182, Section 1, as amended) is amended to read:
                                22        "7-1-6.40.    DISTRIBUTION OF LIQUOR EXCISE TAX--LOCAL DWI
                                23   GRANT FUND--CERTAIN MUNICIPALITIES--DRUG COURT FUND.--
                                24  A.   A distribution pursuant to Section 7-1-6.1 NMSA
                                25   1978 in an amount equal to forty-five percent of the net
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                                1    receipts attributable to the liquor excise tax shall be made to
                                2    the local DWI grant fund.
                                3  B.   A distribution pursuant to Section 7-1-6.1 NMSA
                                4    1978 of twenty thousand seven hundred fifty dollars ($20,750)
                                5    monthly from the net receipts attributable to the liquor excise
                                6    tax shall be made to a municipality that is located in a class
                                7    A county and that has a population according to the most recent
                                8    federal decennial census of more than thirty thousand but less
                                9    than sixty thousand and shall be used by the municipality only
                                10   for the provision of alcohol treatment and rehabilitation
                                11   services for street inebriates.
                                12  C.   Beginning July 1, 2019, a distribution pursuant
                                13   to Section 7-1-6.1 NMSA 1978 in an amount equal to five percent
                                14   of the net receipts attributable to the liquor excise tax shall
                                15   be made to the drug court fund.
                                16  D.   A distribution pursuant to Section 7-1-6.1 NMSA
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                                17   1978 shall be made to the tribal alcohol harms alleviation fund
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                                18   in an amount equal to the net receipts attributable to the
                                19   liquor excise surtax."
                                20        SECTION 2.    Section 7-9-3.5 NMSA 1978 (being Laws 2003,
                                21   Chapter 272, Section 3, as amended) is amended to read:
                                22        "7-9-3.5.    DEFINITION--GROSS RECEIPTS.--
                                23  A.   As used in the Gross Receipts and Compensating
                                24   Tax Act:
                                25  (1)   "gross receipts" means the total amount of
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                                1    money or the value of other consideration received from selling
                                2    property in New Mexico, from leasing or licensing property
                                3    employed in New Mexico, from granting a right to use a
                                4    franchise employed in New Mexico, from selling services
                                5    performed outside New Mexico, the product of which is initially
                                6    used in New Mexico, or from performing services in New Mexico.
                                7    In an exchange in which the money or other consideration
                                8    received does not represent the value of the property or
                                9    service exchanged, "gross receipts" means the reasonable value
                                10   of the property or service exchanged;
                                11  (2)   "gross receipts" includes:
                                12  (a)   any receipts from sales of tangible
                                13   personal property handled on consignment;
                                14  (b)   the total commissions or fees
                                15   derived from the business of buying, selling or promoting the
                                16   purchase, sale or lease, as an agent or broker on a commission
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                                17   or fee basis, of any property, service, stock, bond or
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                                18   security;
                                19  (c)   amounts paid by members of any
                                20   cooperative association or similar organization for sales or
                                21   leases of personal property or performance of services by such
                                22   organization;
                                23  (d)   amounts received from transmitting
                                24   messages or conversations by persons providing telephone or
                                25   telegraph services;
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                                1  (e)   amounts received by a New Mexico
                                2    florist from the sale of flowers, plants or other products that
                                3    are customarily sold by florists where the sale is made
                                4    pursuant to orders placed with the New Mexico florist that are
                                5    filled and delivered outside New Mexico by an out-of-state
                                6    florist;
                                7  (f)   the receipts of a home service
                                8    provider from providing mobile telecommunications services to
                                9    customers whose place of primary use is in New Mexico if:      1)
                                10   the mobile telecommunications services originate and terminate
                                11   in the same state, regardless of where the services originate,
                                12   terminate or pass through; and 2) the charges for mobile
                                13   telecommunications services are billed by or for a customer's
                                14   home service provider and are deemed provided by the home
                                15   service provider.   For the purposes of this section, "home
                                16   service provider", "mobile telecommunications services",
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                                17   "customer" and "place of primary use" have the meanings given
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                                18   in the federal Mobile Telecommunications Sourcing Act; and
                                19  (g)   receipts collected by a marketplace
                                20   provider engaging in business in the state from sales, leases
                                21   and licenses of tangible personal property, sales of licenses
                                22   and sales of services or licenses for use of real property that
                                23   are sourced to this state and are facilitated by the
                                24   marketplace provider on behalf of marketplace sellers,
                                25   regardless of whether the marketplace sellers are engaging in
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                                1    business in the state; and
                                2  (3)   "gross receipts" excludes:
                                3  (a)    cash discounts allowed and taken;
                                4  (b)    New Mexico gross receipts tax,
                                5    governmental gross receipts tax, leased vehicle gross receipts
                                6    tax, [and] cannabis excise tax and taxes imposed pursuant to
                                7    the Liquor Excise Tax Act payable on transactions for the
                                8    reporting period;
                                9  (c)    taxes imposed pursuant to the
                                10   provisions of any local option gross receipts tax that is
                                11   payable on transactions for the reporting period;
                                12  (d)    any gross receipts or sales taxes
                                13   imposed by an Indian nation, tribe or pueblo; provided that the
                                14   tax is approved, if approval is required by federal law or
                                15   regulation, by the secretary of the interior of the United
                                16   States; and provided further that the gross receipts or sales
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                                17   tax imposed by the Indian nation, tribe or pueblo provides a
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                                18   reciprocal exclusion for gross receipts, sales or gross
                                19   receipts-based excise taxes imposed by the state or its
                                20   political subdivisions;
                                21  (e)    any type of time-price differential;
                                22  (f)    amounts received solely on behalf of
                                23   another in a disclosed agency capacity; and
                                24  (g)    amounts received by a New Mexico
                                25   florist from the sale of flowers, plants or other products that
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                                1    are customarily sold by florists where the sale is made
                                2    pursuant to orders placed with an out-of-state florist for
                                3    filling and delivery in New Mexico by a New Mexico florist.
                                4  B.   When the sale of property or service is made
                                5    under any type of charge, conditional or time-sales contract or
                                6    the leasing of property is made under a leasing contract, the
                                7    seller or lessor may elect to treat all receipts, excluding any
                                8    type of time-price differential, under such contracts as gross
                                9    receipts as and when the payments are actually received.       If
                                10   the seller or lessor transfers the seller's or lessor's
                                11   interest in any such contract to a third person, the seller or
                                12   lessor shall pay the gross receipts tax upon the full sale or
                                13   leasing contract amount, excluding any type of time-price
                                14   differential."
                                15        SECTION 3.     Section 7-17-2 NMSA 1978 (being Laws 1966,
                                16   Chapter 49, Section 2, as amended) is amended to read:
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                                17        "7-17-2.     DEFINITIONS.--As used in the Liquor Excise
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                                18   Tax Act:
                                19  A.   "alcoholic beverages" means distilled or
                                20   rectified spirits, potable alcohol, brandy, whiskey, rum, gin,
                                21   aromatic bitters or any similar beverage, including blended or
                                22   fermented beverages, dilutions or mixtures of one or more of
                                23   the foregoing containing more than one-half of one percent
                                24   alcohol by volume, but "alcoholic beverages" does not include
                                25   medicinal bitters;
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                                1  B.   "barrel" means the equivalent of thirty-one
                                2    gallons;
                                3  [B.] C.     "beer" means an alcoholic beverage obtained
                                4    by the fermentation of any infusion or decoction of barley,
                                5    malt and hops or other cereals in water and includes porter,
                                6    beer, ale and stout;
                                7  [C.] D.     "cider" means an alcoholic beverage made
                                8    from the normal alcoholic fermentation of the juice of sound,
                                9    ripe apples or pears that contains not less than one-half of
                                10   one percent of alcohol by volume and not more than eight and
                                11   one-half percent of alcohol by volume;
                                12  [D.] E.     "department" means the taxation and revenue
                                13   department, the secretary of taxation and revenue or any
                                14   employee of the department exercising authority lawfully
                                15   delegated to that employee by the secretary;
                                16  [E.] F.     "fortified wine" means wine containing more
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                                17   than fourteen percent alcohol by volume when bottled or
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                                18   packaged by the manufacturer, but "fortified wine" does not
                                19   include:
                                20  (1)    wine that is sealed or capped by cork
                                21   closure and aged two years or more;
                                22  (2)    wine that contains more than fourteen
                                23   percent alcohol by volume solely as a result of the natural
                                24   fermentation process and that has not been produced with the
                                25   addition of wine spirits, brandy or alcohol; or
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                                1  (3)    vermouth and sherry;
                                2  [F.] G.     "microbrewer" means a person who produces
                                3    less than two hundred thousand barrels of beer per year;
                                4  [G.] H.     "person" includes, to the extent permitted
                                5    by law, a federal, state or other governmental unit or
                                6    subdivision or an agency, department, institution or
                                7    instrumentality thereof;
                                8  I.   "retailer" means a person having a place of
                                9    business in New Mexico, excluding winegrowers, persons issued a
                                10   small brewer's license pursuant to Section 60-6A-26.1 NMSA 1978
                                11   and persons issued a craft distiller's license pursuant to
                                12   Section 60-6A-6.1 NMSA 1978, that sells alcoholic beverages in
                                13   New Mexico, offers alcoholic beverages for sale in New Mexico
                                14   or possesses for the purpose of selling alcoholic beverages in
                                15   New Mexico;
                                16  [H.] J.     "small winegrower" means a winegrower who
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                                17   produces less than one million five hundred thousand liters of
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                                18   wine in a year;
                                19  [I.] K.     "spirituous liquors" means alcoholic
                                20   beverages, except fermented beverages such as wine, beer, cider
                                21   and ale;
                                22  [J.] L.     "wholesaler" means a person holding a
                                23   license issued under Section 60-6A-1 NMSA 1978 or a person
                                24   selling alcoholic beverages that were not purchased from a
                                25   person holding a license issued under Section 60-6A-1 NMSA
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                                1    1978;
                                2  [K.] M.     "wine" means an alcoholic beverage other
                                3    than cider that is obtained by the fermentation of the natural
                                4    sugar contained in fruit or other agricultural products, with
                                5    or without the addition of sugar or other products, and that
                                6    does not contain more than twenty-one percent alcohol by
                                7    volume; and
                                8  [L.] N.     "winegrower" means a person licensed
                                9    pursuant to Section 60-6A-11 NMSA 1978."
                                10  SECTION 4.     A new section of the Liquor Excise Tax Act,
                                11   Section 7-17-5.2 NMSA 1978, is enacted to read:
                                12  "7-17-5.2.    [NEW MATERIAL] IMPOSITION AND RATE OF LIQUOR
                                13   EXCISE SURTAX.--Beginning July 1, 2027, there is imposed on a
                                14   retailer that sells alcoholic beverages not for resale an
                                15   excise surtax, to be referred to as the "liquor excise surtax",
                                16   at the rate of three percent of the price paid for alcoholic
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                                17   beverages sold by the retailer."
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                                18  SECTION 5.     Section 7-17-6 NMSA 1978 (being Laws 1984,
                                19   Chapter 85, Section 4, as amended) is amended to read:
                                20  "7-17-6.     DEDUCTION--INTERSTATE SALES--WINEGROWER-TO-
                                21   WINEGROWER TRANSFERS.--
                                22  A.    A wholesaler may deduct the liters of spirituous
                                23   liquors, gallons of beer and liters of wine sold and shipped to
                                24   a person in another state from the units of alcoholic beverages
                                25   subject to the [tax] taxes imposed by the Liquor Excise Tax
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                                1    Act; provided that the department may require the wholesaler to
                                2    submit evidence satisfactory to the department that the units
                                3    have been sold and shipped to a person in another state.
                                4  B.   A winegrower may deduct the liters of wine
                                5    transferred to the winegrower from another winegrower for
                                6    processing, bottling or storage and subsequent return to the
                                7    transferor from the units of wine subject to the [liquor
                                8    excise tax] taxes imposed by the Liquor Excise Tax Act on the
                                9    licensed premises of the winegrower."
                                10        SECTION 6.     Section 7-17-9 NMSA 1978 (being Laws 1966,
                                11   Chapter 49, Section 7, as amended) is amended to read:
                                12        "7-17-9.     EXEMPTION--CERTAIN SALES TO OR BY
                                13   INSTRUMENTALITIES OF ARMED FORCES.--Exempted from the [tax]
                                14   taxes imposed by [Section 7-17-5 NMSA 1978] the Liquor Excise
                                15   Tax Act are alcoholic beverages sold to or by any
                                16   instrumentality of the armed forces of the United States
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                                17   engaged in resale activities."
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                                18        SECTION 7.     Section 7-17-10 NMSA 1978 (being Laws 1966,
                                19   Chapter 49, Section 8, as amended) is amended to read:
                                20        "7-17-10.     DATE PAYMENT DUE.--The [tax] taxes imposed by
                                21   the Liquor Excise Tax Act [is] are to be paid on or before the
                                22   twenty-fifth day of the month following the month in which the
                                23   taxable event occurs."
                                24        SECTION 8.     Section 7-17-11 NMSA 1978 (being Laws 1969,
                                25   Chapter 80, Section 1, as amended) is amended to read:
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                                1  "7-17-11.     REFUND OR CREDIT OF [TAX] TAXES.--The
                                2    department shall allow a claim for refund or credit as provided
                                3    in Sections 7-1-26 and 7-1-29 NMSA 1978 for the [tax] taxes
                                4    imposed by [Section 7-17-5 NMSA 1978] the Liquor Excise Tax Act
                                5    and paid on alcoholic beverages destroyed in shipment, spoiled
                                6    or otherwise damaged as to be unfit for sale or consumption
                                7    upon submission of proof satisfactory to the department of such
                                8    destruction, spoilage or damage."
                                9  SECTION 9.    Section 7-17-12 NMSA 1978 (being Laws 1984,
                                10   Chapter 85, Section 8, as amended) is amended to read:
                                11        "7-17-12.     INTERPRETATION OF ACT--ADMINISTRATION AND
                                12   ENFORCEMENT OF [TAX] TAXES.--
                                13  A.   The department shall interpret the provisions of
                                14   the Liquor Excise Tax Act.
                                15  B.   The department shall administer and enforce the
                                16   collection of the [liquor excise tax] taxes imposed by the
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                                17   Liquor Excise Tax Act, and the Tax Administration Act applies
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                                18   to the administration and enforcement of the [tax] taxes."
                                19        SECTION 10.    [NEW MATERIAL] TRIBAL ALCOHOL HARMS
                                20   ALLEVIATION FUND.--The "tribal alcohol harms alleviation fund"
                                21   is created as a nonreverting fund in the state treasury.       The
                                22   fund consists of distributions, appropriations, gifts, grants,
                                23   donations and income from investment of the fund.    The fund
                                24   shall be administered by the Indian affairs department, and
                                25   money in the fund is subject to appropriation by the
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                                1    legislature for alcohol and substance use harms prevention,
                                2    treatment and recovery services to individuals.
                                3  SECTION 11.    Section 60-6A-11.1 NMSA 1978 (being Laws
                                4    2011, Chapter 109, Section 1) is amended to read:
                                5  "60-6A-11.1.       DIRECT WINE SHIPMENT PERMIT--
                                6    AUTHORIZATION--RESTRICTIONS.--
                                7  A.   A licensee with a winegrower's license or a
                                8    person licensed in a state other than New Mexico that holds a
                                9    winery license may apply to the director for and the director
                                10   may issue to the applicant a direct wine shipment permit.      An
                                11   application for a direct wine shipment permit shall include:
                                12  (1)    contact information for the applicant in a
                                13   form required by the department;
                                14  (2)    an annual application fee of fifty dollars
                                15   ($50.00) if the applicant does not hold a winegrower's license;
                                16  (3)    the number of the applicant's winegrower's
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                                17   license if the applicant is located in New Mexico or a copy of
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                                18   the applicant's winery license if the applicant is located in a
                                19   state other than New Mexico; and
                                20  (4)    any other information or documents
                                21   required by the director.      Upon approval of an applicant for a
                                22   permit, the director shall forward to the taxation and revenue
                                23   department the name of each permittee and the contact
                                24   information for the permittee.
                                25  B.   A direct wine shipment permit shall be valid for
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                                1    a permit year.    A permittee shall renew a direct wine shipment
                                2    permit annually as required by the department to continue
                                3    making direct shipments of wine to New Mexico residents.
                                4  C.   A permittee may ship:
                                5  (1)   not more than two nine-liter cases of wine
                                6    monthly to a New Mexico resident who is twenty-one years of age
                                7    or older for the recipient's personal consumption or use, but
                                8    not for resale; and
                                9  (2)   wine directly to a New Mexico resident
                                10   only in containers that are conspicuously labeled with the
                                11   words:
                                12  "CONTAINS ALCOHOL
                                13  SIGNATURE OF PERSON 21 YEARS OR OLDER REQUIRED
                                14  FOR DELIVERY".
                                15  D.   A permittee shall:
                                16  (1)   register with the taxation and revenue
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                                17   department for the payment of the liquor excise tax, liquor
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                                18   excise surtax and gross receipts taxes due on the sales of wine
                                19   pursuant to the permittee's activities in New Mexico;
                                20  (2)   submit to the jurisdiction of New Mexico
                                21   courts to resolve legal actions that arise from the shipping by
                                22   the permittee of wine into New Mexico to New Mexico residents;
                                23  (3)   monthly, by the twenty-fifth day of each
                                24   month following the month in which the permittee was issued a
                                25   direct wine shipment permit, pay to the taxation and revenue
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                                1    department the liquor excise tax, [due] liquor excise surtax
                                2    and [the] gross receipts tax due; and
                                3  (4)   submit to an audit by an agent of the
                                4    taxation and revenue department of the permittee's records of
                                5    the wine shipped pursuant to this section to New Mexico
                                6    residents upon notice and during usual business hours.
                                7  E.   As used in this section:
                                8  (1)   "permit year" means the period between
                                9    July 1 and June 30 of a year; and
                                10  (2)   "permittee" means a person that is the
                                11   holder of a direct wine shipment permit."
                                12        SECTION 12.    EFFECTIVE DATE.--The effective date of the
                                13   provisions of this act is July 1, 2026.
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