The following article briefly discusses some of the proposed legislative tax changes 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 activity in the Legislature increases, we also wanted to note that Devine Millimet's Legislative and Governmental Affairs Practice Group, chaired by Bob Dunn, is available to assist our clients, accountants and tax practitioners in working with the state legislature and executive branch agencies. Teresa Rosenberger, President of Devine Strategies, also interacts with the State, Federal and local governments. Attorney Dunn can be reached at (603) 410-1704 or by e-mail at firstname.lastname@example.org and Ms. Rosenberger can be reached at (603) 410-1702 or by e-mail at email@example.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, June and August. For more information on these seminars, please visit our website periodically to review a full list of seminars that our firm will be presenting this year. New seminars may be added throughout the year.
Learn more about Devine Millimet at www.devinemillimet.com. Our e-mail alerts are sent to clients and friends and may be considered advertising. Click here to unsubscribe.
Maurice P, Gilbert, CPA, MST
Director of State Taxation
This newsletter discusses the legislation being considered by the Legislature which may be pertinent to tax practitioners and their clients. 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 have been introduced or amendments to some of the bills discussed in this newsletter. We plan to provide an update on all the tax related bills by the end of April.
The proposed bills have been grouped below based on the tax or the general subject area that they relate to. The initial list only references the topic so that you can determine which bills you want to review. A brief summary of the bill will be included in later sections and you can go directly to the ones of interest by clicking on the link in the initial list.
Business Profits Tax ("BPT")
Business Enterprise Tax ("BET")
Real Transfer Tax ("RETT")
Interest & Dividends Tax ("I&D")
Meals & Rentals Tax ("M&R")
Medicaid Enhancement Tax ("MET")
Uniform Trust Act
Summary of Proposed Bills in the House of Representatives
Expanding the research & development credit against the BPT (HB 1475).
The proposed legislation would revise the research & development credit against the BPT to become a credit for qualified reinvestment expenditures. The bill has been tabled by the House and could be revisited at a future date.
Relative to establishing a legislative committee to review the department's tax expenditure report to determine the effectiveness of the various credits (HB 1531).
The proposed legislation would establish a joint legislative committee to review the Department of Revenue Administration's tax expenditure report to evaluate whether the tax expenditures should be continued, amended or repealed. A tax expenditure would include credits or exemptions that reduce the amount of tax owed other than to avoid double taxation of income. The term would also include the weighted apportionment factors in RSA 77-A:3, II(a). The House Ways & Means Committee held a public hearing on January 14th.
Allowing an adjustment under BET for business funds acquired by loan from financial institutions (HB 1596).
The proposed legislation would allow a deduction from the enterprise value tax base under the BET for funds the business acquired from a financial institution loan where the proceeds of the loan are used for compensation. The House Ways & Means Committee held a hearing on January 16th and subsequently determined that the bill needed additional study later in the year.
Establishing a commission to study the impact of the property tax on NH residents, businesses, municipalities and the economy (HB 1195).
The proposed legislation would establish a legislative commission to study the impacts of the property tax on New Hampshire's residents, businesses, municipalities and the economy. The Municipal & County Government Committee held an initial public hearing on February 13th.
Modification of the MET to require quarterly tax payment (HB 1613).
The proposed legislation would require that the tax be paid on a quarterly basis rather than a full payment in the first quarter of the tax year. The House Ways & Means Committee held a public hearing on January 14th and recommended that the House pass the proposed legislation.
Summary of Proposed Bills in the Senate
Relative to economic revitalization zone tax credits (SB 327).
The proposed legislation extends the availability of the economic revitalization credit under RSA 162-N against the BPT until 2020. It is currently set to expire in 2015. The Senate Ways & Means Committee held a public hearing on January 14th.
Establishing a credit against BPT for donations to a regional vocational education center (SB 335).
The proposed legislation would establish a BPT credit for charitable contributions of tangible personal property or apprenticeships and training services made to a regional vocational education center. The maximum aggregate credits available in a fiscal year would be $2 million. If taxpayers apply for more than the aggregate annual amount then the credits would be pro-rated amongst the taxpayers applying.
The annual credit to a business would be limited to 25% of their tax due before taking into account any credits under RSA 77-A:5. The Senate Ways & Means Committee held a hearing on January 21st.
Relative to the BET carry forward against the BPT & the use of examples in RETT administrative rules (SB 243).
The proposed legislation provides clarification about the carry forward period for BET credits. It also allows the Department of Revenue Administration to use examples in the drafting of the Real Estate Transfer Tax Administrative Rules. In addition, the proposed legislation makes changes to provisions in the confidentiality statute under RSA 21-J:14 and to the taxation of tobacco products. The bill is in the process of receiving final approval by the Senate.
Technical corrections to the disposition of M&R tax revenues (SB 265).
The proposed legislation would increase the amount of the M&R tax receipts that would be distributed by the State to the various municipalities. The Senate Ways & Means Committee held a public hearing on February 11 and has recommended that the proposed legislation be approved by the Senate.
Allowing municipalities to calculate and set their annual property tax rate (SB 300).
The proposed legislation would establish the standards under which a municipality could elect to set its own property tax rates rather than have the Department of Revenue Administration set the property tax rate for the particular municipality. The Senate Ways & Means Committee held a public hearing on February 4th.
Relative to abatements for prior years' property taxes (SB 286).
The proposed legislation would allow municipal officials for good cause to abate the prior years' property taxes. The Senate Ways & Means Committee held a hearing on February 4th.
Modification of the MET to exclude certain hospitals and require quarterly tax payments (SB 369).
The proposed legislation would exclude certain specialty hospitals from the MET and would require that the tax be paid on a quarterly basis rather than a full payment in the first quarter of the tax year. The Senate Ways & Means Committee has not scheduled a public hearing yet.
Relative to revising the uniform trust act and establishing validated wills (SB 289).
The proposed legislation makes various changes to the uniform trust act and establishes a validated will. The Senate Commerce Committee held a public hearing on the bill on January 21st and has since recommended that the Senate pass the proposed bill.
Summary of Proposed Bills that have been determined to be Inexpedient to Legislate¹.
Exempting proprietorships from the BPT (HB 1477).
The proposed legislation would have exempted all proprietorships from being subject to the BPT.
Requiring a refund of business profits & business enterprise taxes which exceed an annual revenue cap adopted by the Legislature (HB 1553).
The proposed legislation would have required that taxes collected by the State in excess of established annual revenue caps be refunded to taxpayers.
Establishing a job creation tax credit against the business profits and business enterprise taxes for small businesses increasing employment in NH (SB 312).
The proposed legislation would have established a job creation credit against the BPT & BET for small businesses increasing their employment within the State.
Relative to including non-profit charitable enterprises in the BET and lowering the rate of the tax (HB 1509).
The proposed legislation would have included IRC Section 501(c)(3) section charitable organizations with gross operating expenditures exceeding $1.5 million or an enterprise value tax base exceeding $750,000 as taxable businesses under the BET.
Exempting proprietorships from the BET (HB 1476).
The proposed legislation would have exempted all proprietorships from being subject to the BET.
Establishing an innovation business tax incentive program and credit against the I&D (SB 255).
The proposed legislation would have established an innovation tax incentive program administered by the Business Finance Authority and would have allowed a percentage of qualified investments to be a credit against the I&D tax.
Reducing the rate of the M&R (HB 1597).
The proposed legislation would have reduced the M&R tax rate on meals to 8% and retained the rental tax at 9%.
Repeal of the timber tax under RSA 79 (HB 1441).
The proposed legislation would have repealed the tax on the value of wood or timber that is cut.
¹Inexpedient to Legislate means that the proposed bill should not be enacted in law by the committee having jurisdiction and if the recommendation is approved by the House or Senate it will not be considered further during the legislative session.
Our Tax Practice Group can assist you and your clients in reviewing these proposed statutory changes 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 before the Internal Revenue Service or the various States' Departments of Revenue.
The Devine, Millimet & Branch Tax Group offers this free E-Mail Alert service to provide information on recent developments in tax law. If you have any questions about this e-mail, or if you know of anyone else who may be interested in receiving these alerts, please send us an email at firstname.lastname@example.org.
This E-Alert is provided for informational purposes only. It is not intended to serve as legal advice or legal opinion. Devine, Millimet & Branch, Profesional Association makes no representations that this is a complete or final description or procedure that would ensure legal compliance and does not intend that the reader should rely on it as such. Our attorneys are available to assist tax payers in their compliance efforts and to represent tax payers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Devine Millimet attorney or tax professional with whom you regularly work.
© Copyright 2014 Devine, Millimet & Branch, Professional Association