Revision: Jan. 21, 2010, midnight
HB 601-FN – AS INTRODUCED
2005 SESSION
09/01
HOUSE BILL 601-FN
AN ACT allowing businesses to apply the investment tax credit to contributions made to scholarship funding organizations.
SPONSORS: Rep. Slocum, Hills 6; Rep. Hinkle, Hills 19; Rep. Ingbretson, Graf 5; Rep. Dorsett, Graf 8; Rep. Mooney, Hills 19
This bill allows businesses to apply the investment tax credit to contributions made to scholarship funding organizations.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05-0121
09/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT allowing businesses to apply the investment tax credit to contributions made to scholarship funding organizations.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Community Development Finance Authority; Definition; “Other Nonprofit Organizations and Municipal Governments Involved in Community Development.” Amend RSA 162-L:1, III to read as follows:
III. “Other nonprofit organizations and municipal governments involved in community development” means a nonprofit organization organized under the laws of the state or municipal government to carry out purposes related to community development, improvement, revitalization, or other activities consistent with the purposes of this chapter. “Other nonprofit organizations and municipal governments involved in community development” includes scholarship funding organizations.
2 New Subparagraph; Powers and Duties of the Community Development Finance Authority. Amend RSA 162-L:4, I by inserting after subparagraph (i) the following new subparagraph:
(ii) Verify that contributions made to scholarship funding organizations are qualified for the investment tax credit.
3 Section Heading; Verification of Contributions Added. Amend the section heading of RSA 162-L:5 to read as follows:
162-L:5 Technical Assistance; Grants; Verification of Contributions to Scholarship Funding Organizations.
4 New Paragraph; Verification of Contributions. Amend RSA 162-L:5 by inserting after paragraph II the following new paragraph:
III. The authority shall verify that contributions made to scholarship funding organizations are qualified for the investment tax credit. Contributions made by scholarship funding organizations shall be qualified for the investment tax credit only for the portion of each contribution per student which equals the amount of the adequate education grant minus $500.
5 Investment Tax Credit. Amend RSA 162-L:10 to read as follows:
162-L:10 New Investment Tax Credit.
I. An investment tax credit equal to 75 percent of the contribution made to the authority or verified by the authority under RSA 162-L:5, III during the contributor’s tax year shall be allowed against any of the following individually or in combination:
(a) Taxes imposed by RSA 77-A.
(b) Taxes imposed by RSA 400-A.
(c) Taxes imposed by RSA 77-E.
II. Credits provided by this section applied against the liabilities imposed by RSA 400-A and RSA 77-E shall be deemed to be taxes paid for the purpose of RSA 77-A:5, III and X, respectively.
III. The credit or any unused portion thereof may be carried forward for no more than 5 succeeding years, but shall not exceed $1,000,000 in any given tax year.
IV.(a) The credit provided by this section shall be available to contributors on or after contributions for which credit is to be taken are actually received or verified by the authority.
(b) Contributions received or verified by the authority for which credit is to be taken shall not exceed $5,000,000 in any state fiscal year. Contributions received or verified by the authority in excess of $5,000,000 in any state fiscal year shall not be eligible for credit in such fiscal year but may be carried forward to the next succeeding fiscal year or years and shall be given priority in determining the total contributions eligible for credit in such fiscal year.
V. Estimated tax payments under RSA 400-A:32 due and payable after the date of contribution to the authority or the date the contribution is verified by the authority may be reduced by the credit allowable under this section.
6 Effective Date. This act shall take effect July 1, 2005.
LBAO
05-0121
Revised 2/23/05
HB 601 FISCAL NOTE
AN ACT allowing businesses to apply the investment tax credit to contributions made to scholarship funding organizations.
FISCAL IMPACT:
The Department of Revenue Administration and Insurance Department state this bill will reduce state general fund revenue by an indeterminable amount in FY 2006 and each year thereafter. The Community Development Finance Authority states this bill may have an indeterminable fiscal impact on state revenue and expenditures in FY 2006 and each year thereafter. There will be no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill allows businesses to apply the investment tax credit to contributions made to scholarship funding organizations. The limitations placed on investment tax credits allowed under RSA 162-L for contributions to the Community Development Finance Authority (CDFA) do not decrease or increase under this bill. Contributions received or verified by CDFA for which the credit is to be taken shall not exceed $5,000,000 in any fiscal year. An investment tax credit equal to 75% of the contributions is allowed, thus the maximum credit allowed to be generated in each year is $3,750,000. In calendar year 2003, $2,705,000 in CDFA credit was used to offset the Business Profit Tax and/or Business Enterprise Tax. If contributions increased from this bill due to the allowance due to the expansion of who may receive contributions, the maximum state revenue decrease would be the $1,045,000 ($3,750,000 minus $2,705,000). The Department does not yet know the amount of CDFA credit taken in 2004. DRA does not know if expanding the use of this credit to include contributions to scholarship funding organizations will increase the use of the CDFA credit against the business taxes.
The Insurance Department states the investment tax credit is applied as a direct reduction of tax due, either on an estimated due date, or as an additional tax credit at the time of the annual filing. Based upon prior years utilization, it is estimated that one company will participate during calendar year 2005, two companies will participate during 2006, three companies in 2007, and four companies in 2008. As a result, state general fund revenue from taxes imposed pursuant to RSA 400-A will decrease by $100,000 in FY 2006, $250,000 in FY 2007, $300,000 in FY 2008, and by $400,000 in FY 2009.
The Community Development Finance Authority (CDFA) states this bill increases the category of contribution for which the CDFA can accept donations, but does not change the cap on the total amount of donations that can be accepted. Doing so may have other unpredictable effects on state revenue or expenses, but these cannot be determined at this time. The Authority states the program cannot now meet demand for tax credits in support of local community projects (in the most recent year there were approximately $11 million of applications for $4 million in available credits). Creating another category of eligible donations may cause a greater number of community projects to be unfunded, some of which may create demand on other state, local, or county resources.