SB 380-FN-A – AS AMENDED BY THE SENATE
03/22/06 1471s
2006 SESSION
09/04
SENATE BILL 380-FN-A
AN ACT establishing a research and development credit against business taxes.
This bill establishes a research and development tax credit against the business profits tax and the business enterprise tax.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/22/06 1471s
06-2837
09/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT establishing a research and development credit against business taxes.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Business Profits Tax; Research and Development Tax Credit. Amend RSA 77-A:5 by inserting after paragraph XII the following new paragraph:
XIII.(a) There shall be allowed a research and development tax credit equal to 15 percent of qualified manufacturing research and development expenditures made or incurred during the taxable period. For purposes of this paragraph the term “qualified manufacturing research and development expenditures” shall mean any wages paid or incurred to an employee of the business organization for services rendered by such employee within this state within the meaning of RSA 77-A:3, I(b), provided that:
(1) Such wages may be treated as research and development expenditures under section 174 of the United States Internal Revenue Code; and
(2) Such services are undertaken for the purpose of discovering information which constitutes qualified research and development as defined in section 41 of the United States Internal Revenue Code and which is limited to the development of a new or improved manufacturing process or business component of the business organization.
(3) In no event shall the credit allowed under this paragraph exceed 5 percent of the tax due under this chapter before any credits under RSA 77-A:5 are taken into account or exceed $100,000 for each taxpayer for each taxable period, or exceed a total amount of $1,000,000 for credits claimed under this paragraph by all taxpayers in a taxable period; and provided further that the credit allowed under this paragraph shall be limited so that no more than 50 percent of such credit shall be attributable to wages paid to an employee who is not an “eligible employee” as defined in RSA 77-A:1, XXIII. If the total amount for the credits claimed under this paragraph by all taxpayers in a taxable period exceeds $1,000,000, the commissioner shall prorate the amount of $1,000,000 among taxpayers claiming the credit.
(b) For purposes of this paragraph, “employee” shall mean “an employee” as defined in section 3401(c) of the United States Internal Revenue Code and who is an “eligible employee” as defined in RSA 77-A:1, XXIII.
2 New Section; Credit Against Business Enterprise Tax. Amend RSA 77-E by inserting after section 3-a the following new section:
77-E:3-b Research and Development Tax Credit. The research and development tax credit allowed under RSA 77-A:5, XIII may be applied to either the tax imposed under RSA 77-A or the tax imposed under this chapter.
3 Effective Date. This act shall take effect July 1, 2006.
LBAO
06-2837
Amended 4/4/06
SB 380 FISCAL NOTE
AN ACT establishing a research and development credit against business taxes.
FISCAL IMPACT:
The Department of Revenue Administration indicates this bill, as amended by the Senate (Amendment #2006-1471s), will decrease state unrestricted general fund revenue by $1,000,000 and increase state expenditures by an indeterminable amount in FY 2007 and each year thereafter. There is no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration (DRA) states that this bill reinstates the research and development credit that was repealed on July 1, 1995. The DRA assumes that this credit will be fully utilized each year. This bill also places certain caps on this credit; $100,000 credit per taxpayer per year and $1,000,000 total statewide per year. There is also a provision that if the credits claimed by all taxpayers in a taxable period exceed $1,000,000, the Commissioner must prorate the amount of the $1,000,000 among taxpayers claiming the credit. The DRA claims that this proration section of this bill cannot be administered. The increase in state expenditures to examine and adjust all applicable returns for this provision is indeterminable.