1. A. Corporations that are part of a unitary group shall file a return properly reporting and paying tax on taxable income as a worldwide combined group unless they properly elect to report and pay tax on taxable income as a water's-edge or consolidated group, pursuant to department rules and instructions, on the first original return required to be filed for taxable years beginning on or after January 1, 2020. Corporations electing to file a consolidated return must file on that same basis for federal income tax purposes. Once a unitary or consolidated group has properly made an election to file as a water's-edge or consolidated group, the group and any of the group's members shall file a return on that basis for at least seven consecutive years unless the secretary grants permission otherwise. Corporations that are part of a unitary group filing a return are jointly and severally liable for the tax imposed pursuant to the Corporate Income and Franchise Tax Act on taxable income.
2. B. Corporations required to file a return as part of a filing group pursuant to this section may designate a member of the group to act as the principal corporation to file the return, make any elections, claim tax credits or refunds or perform any other act on behalf of the group with respect to the corporate income tax; provided that the members of the group remain jointly and severally liable for the taxes due pursuant to Subsection A of this section.

History: 1978 Comp., § 7-2A-8.3, enacted by Laws 1983, ch. 213, § 12; 1986, ch. 20, § 43; 1993, ch. 307, § 4; 1993, ch. 309, § 2; 2013, ch. 160, § 4; 2019, ch. 270, § 19.

ANNOTATIONS

The 2019 amendment, effective January 1, 2020, completely rewrote the section; in the section heading, added "and consolidated"; and deleted former Subsections A through D and added new Subsections A and B.

Applicability. — Laws 2019, ch. 270, § 59 provided that the provisions of Sections 16 through 22 and 58 of Laws 2019, ch. 270 apply to taxable years beginning on or after January 1, 2020.

The 2013 amendment, effective July 1, 2013, required combined reporting for certain unitary corporations with a retail facility of more than thirty thousand square feet but that do not have nonretail facilities that employ at least seven hundred fifty employees; in the first sentence, after "combined net income were that of one corporation", added the remainder of the sentence; and added Subsection D.

The 1993 amendment, effective June 18, 1993, rewrote this section to the extent that a detailed comparison was impracticable.

Statutory definition of "unitary corporation" excludes foreign subsidiaries not engaged in trade or business in the United States. — Where the New Mexico taxation and revenue department (department) issued a notice of assessment of corporate income tax on the dividends paid to taxpayer, a publicly traded, multinational corporation engaged in the business of petroleum and natural gas exploration and production, by its foreign subsidiaries for the 2015 reporting period, and where taxpayer timely protested the notice of assessment, arguing that 7-2A-2(Q) NMSA 1978 excluded foreign corporations incorporated in a foreign country and not engaged in trade or business in the United States from the definition of "unitary corporation" for all purposes under the New Mexico Corporate Income and Franchise Tax Act (Act), and therefore its foreign source dividends were not unitary income apportionable to New Mexico, and where the administrative hearing officer concluded that taxpayer and its foreign subsidiaries amounted to a "unitary corporation" under 7-2A-2(Q) NMSA 1978 and that the dividends paid to taxpayer by its foreign subsidiaries were taxable under the Act, the administrative hearing officer erred in determining that the dividends paid to taxpayer by its foreign subsidiaries were subject to the Act, because the legislature excluded foreign corporations from the definition of "unitary corporations". If foreign subsidiaries are excluded from the definition of "unitary corporation," the dividends they pay to domestic parents cannot be included as taxable income. Apache Corp. v. N.M. Tax & Rev. Dep't, 2024-NMCA-080, cert. denied.