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New Mexico appellate court denies new tax credits for employees hired into existing job positions

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March 2021

Overview

A New Mexico appellate court found that the High-Wage Jobs Tax Credit qualification that a taxpayer create a “new job” was satisfied only when a new job position is created. Accordingly, the court denied the credit regarding employees that (1) filled vacancies left by employees who had previously held the same job positions and (2) were promoted into higher-paying positions.

The term “new job” was not statutorily defined during the 2011 to 2015 years at issue. A 2019 law change defined “new job” to mean “a job that is occupied by an employee who has not been employed in New Mexico by the eligible employer in the three years prior to the date of hire.”

Action: With the new law’s focus on an employee being new to the taxpayer rather than the job position, taxpayers should consider whether filling job vacancies with new employees would be deemed to satisfy the new statutory “new job” requirement.

The takeaway

The court viewed the 2019 law change as supporting its conclusion that a promoted employee does not qualify for the credit. The opinion, however, is silent regarding the new law’s relevance to new employees hired to fill vacant positions. With the new law’s focus on the individual employee being new to the taxpayer rather than the job position, taxpayers should consider whether filling job vacancies with new employees would be deemed to satisfy the new statutory “new job” requirement.

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Peter Michalowski

State and Local Tax Leader, PwC US

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