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The following article briefly discusses some of the proposed legislative tax changes recently introduced by the New Hampshire Senate and House of Representatives. We will provide an update on the legislation about midway through this year's session as well as provide an analysis of the legislation actually enacted in July.
As Legislative activity increases, we also wanted to note that Devine Millimet & Branch's Legislative and Governmental Affairs Practice Group, chaired by Bob Dunn, is available to assist our clients in working with the state legislature and executive branch agencies. Attorney Dunn can be reached at (603) 410-1704 or by e-mail at rdunn@devinemillimet.com.
For your future planning, please note that the Tax Practice Group will be offering a number of New Hampshire tax seminars in the months of May and June. For more information on these seminars, please visit our Web site periodically to review a full list of seminars that our firm will be presenting this year. New seminars may be added throughout the year.
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Maurice
Maurice P. Gilbert, CPA, MST
This newsletter discusses a few of the more pertinent legislation to tax practitioners and their clients which are currently being considered by the Legislature. To stay current, we recommend that you periodically review the list of introduced bills on the Legislature's Web Page for new legislation that may be introduced or amendments to some of the bills discussed in this newsletter. As of January 30th, the New Hampshire House of Representatives and the Senate have introduced over 800 bills. We plan to provide an update on all of the tax bills by the middle of April.
LEGISLATION BEING CONSIDERED BY THE SENATE
LEGISLATIVE SUMMARIES (AS OF JANUARY 28, 2013)
CACR 1
A concurrent resolution¹ proposing a constitutional amendment providing that a 3/5th vote is required to impose or increase taxes…
The bill requires a change in the New Hampshire Constitution, if approved by a vote of New Hampshire residents at a future election, requiring an affirmative vote of three-fifths (3/5th) of the House of Representatives and Senate members present and voting to pass a new tax or increase any taxes in existence. The House Ways & Means held a hearing on January 23rd and the Committee recommended that the bill be determined Inexpedient to Legislate² during the February 6th House session.
**The House voted to kill the legislation for this year during its session on February 6th.**
CACR 2
A concurrent resolution proposing a constitutional amendment providing that taxes imposed by the State of New Hampshire may be graduated.
The bill requires a change in the New Hampshire Constitution, if approved by a vote of New Hampshire residents at a future election, removing the requirement that taxes be proportional and allow the Legislature to adopt graduated tax rates. This proposed legislation was referred to the House Ways & Means Committee. The House Ways & Means held a hearing on January 23rd and the Committee recommended that the bill be determined Inexpedient to Legislate during the February 6th House session.
HB 240
An Act repealing the prospective repeal date for the research & development tax credit.
The bill repeals the prospective repeal date for the legislation that was inserted in 2007 and extended in the 2012 session until fiscal year 2015. The effective date of the proposed legislation would be sixty (60) days after its passage. The House Ways & Means Committee held a hearing on this bill on January 23rd and a full Committee work session was scheduled to take place on January 30th.
HB 330
An Act allowing counties to adopt a county income tax administered by the Department of Revenue Administration.
The bill provides a county with the authority to enact an income tax at a rate of one percent (1%) on the New Hampshire gross income (defined as gross income for federal income tax purposes) of resident individuals and resident fiduciaries for a period of six (6) years. The legislation would sunset effective March 30, 2019. The effective date of the proposed legislation is July 1, 2013. The bill was assigned to the House Municipal & County Government Committee and a hearing is scheduled for February 5th.
HB 335
An Act relative to the tobacco tax.
The bill repeals the contingent tax increase on cigarettes and other tobacco products enacted during the 2011 legislative session. The effective date of the proposed legislation is July 1, 2013. The House Ways & Means Committee held a public hearing on January 29th.
HB 354
An Act reducing the rate of the business enterprise tax over 5 years and repealing the tax.
The bill gradually reduces the rate of the business enterprise tax over the next five (5) fiscal years and completely eliminates the tax by 2018. The bill also makes a number of required changes to various related provisions such as the penalty provisions under RSA 21-J. There are various effective dates for the proposed changes beginning in July 2014 through July 2018. The House Ways & Means Committee held a hearing on the bill on January 23rd and scheduled an executive session on February 5th to further discuss the bill.
HB 370
An Act repealing the education tax credit.
The bill repeals the education tax credit enacted into law during the 2012 legislative session. The repeal would be effective upon the passage of the new statute. The House Ways & Means Committee held a hearing on January 31st and scheduled an executive session on February 5th to further discuss the bill.
HB 427
An Act relative to the tobacco tax laws.
The bill clarifies the activities that constitute "unauthorized sales of tobacco products"; the potential application of criminal penalties under RSA 21-J:39; and some additional record-keeping requirements. The effective date of the proposed legislation is July 1, 2013. The House Ways & Means Committee scheduled a public hearing on this bill on February 5th.
HB 434
An Act renaming the business enterprise tax, capping the amount an employer is required to pay under the tax and annually reducing the rate of the tax.
The bill renames the tax as the business income tax and reduces the rate by .25% of the prior year's rate over the next twenty (20) tax years. The law also provides a cap for the business amounting to the lower of the amount calculated for the current year or the amount paid in the previous year. The effective date of the proposed legislation is July 1, 2013. The House Ways & Means Committee scheduled a public hearing on this bill on February 5th.
HB 490
An Act relative to the tax on tobacco products other than cigarettes and establishing a tobacco use prevention and cessation program fund.
The bill changes the rate of tax on tobacco products other than cigarettes from forty-eight percent (48%) of the wholesale price to a percentage rate that would be equivalent to the tax on cigarettes with fifty percent (50%) of such increase being deposited into a tobacco use prevention and cessation fund established under the Department of Health & Human Services. The effective date of the proposed legislation is July 1, 2013. The House Ways & Means Committee scheduled a public hearing on this bill on February 5th.
HB 540
An Act establishing a business profits tax credit for motion picture production expenditures incurred in New Hampshire.
The bill would enact a new refundable credit under the business profits tax for producing movies in the State of New Hampshire. The credit would be for the employment of persons within the State and be equal to twenty-five percent (25%) of the total aggregate payroll paid by a motion picture production company that constitutes New Hampshire source income when the total production costs incurred in New Hampshire exceed $50,000 during a taxable period. An additional credit would be available equal to twenty-five percent (25%) of the production expenses, not including payroll, when the total production expenses in New Hampshire exceed fifty percent (50%) of the total production expenses of the motion picture or at least fifty percent (50%) of the total photography days take place in New Hampshire or in excess of $500,000 of production expenses are incurred in New Hampshire. The effective date of the proposed legislation is July 1, 2013. The House Ways & Means Committee scheduled a public hearing on this bill on February 5th.
 HB 590
An Act relative to the unauthorized practice of law.
This bill allows persons who are not licensed by the New Hampshire Supreme Court as attorneys to be the personal representative of persons or entities no more than ten (10 times within a calendar year. The appearance may be for any purpose. It is unclear from our initial reading of the language whether or not a tax practitioner could represent a taxpayer before the Board of Tax and Land Appeals or the Superior Court. This may be legislation that practitioners may want to follow although it is not a tax statute. The effective date of the proposed legislation would be sixty (60) days after its passage. The bill has been assigned to the House Judiciary Committee and a hearing was scheduled for February 5th.
HB 598
An Act relative to the reasonable compensation deduction under the business profits tax.
The bill increases the $50,000 record keeping safe harbor to $75,000 in total compensation. The proposed legislation is effective on July 1, 2013. The bill has been assigned to the House Ways & Means Committee and no hearing date was scheduled as of February 4th.
HB 637
An Act transferring the licensing of retail tobacco sales from the New Hampshire Liquor Commission to the Department of Revenue Administration.
The bill repeals all of RSA 78:2 and returns all of the duties and responsibilities associated with the licensing of retail tobacco sales to the Department of Revenue Administration (the "DRA"). The bill also makes necessary changes to RSA 178 dealing with the Liquor Commission authority. The change from the DRA to the Liquor Commission occurred in 2009. The effective date of the proposed legislation is July 1, 2013. The bill was assigned to the House Executive Departments & Administration Committee and a hearing was scheduled for February 7th.
HB 659
An Act increasing the tobacco tax.
The bill increases the tax on cigarettes from $1.68 per pack to $1.88 per pack of twenty (20) cigarettes and proportionally for packs containing more or less than twenty (20) cigarettes. It also increases the tax on other tobacco products from forty-eight percent (48%) of the wholesale price to a percentage rate that would be equivalent to the tax on cigarettes. The bill is effective on July 1, 2013. The bill has been assigned to the House Ways & Means Committee and no hearing date has been scheduled to date.
HB 662
An Act requiring the Department of Revenue Administration to collect and make available data regarding the amount of meals & rental tax revenue generated in each municipality of the State.
The bill requires that the DRA begin collecting and making available the amount of meals and rental tax revenue generated in each municipality on a monthly basis. The effective date of the proposed legislation is upon its passage. The bill has been assigned to the House Ways & Means Committee and no hearing date has been scheduled to date.
HB 676
An Act extending and expanding the Coos County jobs credit.
The bill expands the coverage of the credit to fifteen percent (15%) of the municipalities outside of Coos County that have the highest unemployment rates in the state over the past three (3) years as certified by the Commissioner of the Department of Resources and Economic Development in conjunction with the Commissioners of the DRA and the Department of Employment Security. The bill also extends the period of time the credit is available to December 31, 2018. The proposed legislation is effective July 1, 2013. The bill has been assigned to the House Ways & Means Committee and no hearing date has been scheduled to date.
SB 1
An Act increasing the research and development credit against the business profits tax.
The bill increases the credit from $1 million to $2 million and eliminates the prospective repeal date. The effective date of the proposed legislation is July 1, 2013. The bill was assigned to the Senate Ways & Means Committee. The Committee held a hearing on January 22nd and it has recommended that the Senate pass the bill.
SB 30
An Act making technical corrections to various tax laws.
The bill makes technical provisions to RSA 21-J regarding confidentiality, the abatement authority of the Commissioner of the DRA and the refund of taxes. The bill also modifies RSA 77-A:10 regarding the reporting of changes made by the Internal Revenue Service. The proposed legislation is effective sixty (60) days after its passage. The bill was assigned to the Senate Ways & Means Committee. The Committee held a hearing on January 22nd.
SB 118
An Act increasing the annual limit on the new investment tax credit.
The bill increases the Community Development Finance Authority credit from $5 million annually to $8 million annually. The effective date of the proposed legislation is July 1, 2013. The bill was assigned to Senate Ways & Means Committee. The Committee scheduled a hearing for February 5th.
Our Tax Practice Group can assist you or your clients in reviewing these statutory provisions to determine how they may be applicable to businesses operating in New Hampshire. Members of our group can assist practitioners and their clients with tax planning or tax representation matters before the Internal Revenue Services or the various States' Departments of Revenue.
¹A concurrent resolution is one which is the same as a resolution in the other representative body. In this case, the House Bill is the same resolution as that proposed in the Senate.
²Inexpedient to Legislate is a committee recommendation which if adopted by the House or Senate kills a bill for the session.
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© Copyright 2013 Devine Millimet & Branch, Professional Association
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