HB 618-FN-A – AS INTRODUCED
2007 SESSION
09/04
HOUSE BILL 618-FN-A
AN ACT establishing a research and development credit against the business profits tax and the business enterprise tax.
SPONSORS: Rep. Hinkle, Hills 19; Rep. Carson, Rock 3; Rep. Stepanek, Hills 6
This bill establishes a research and development credit for qualified manufacturing research and development expenditures 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
07-0316
09/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seven
AN ACT establishing a research and development credit against the business profits tax and the business enterprise tax.
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 for qualified manufacturing research and development expenditures made or incurred during the fiscal year, as follows:
(1) For the first taxable year following the effective date of this paragraph, 3.75 percent of qualified manufacturing research and development expenditures.
(2) For the second taxable year following the effective date of this paragraph, 7.5 percent of qualified manufacturing research and development expenditures.
(3) For the third taxable year following the effective date of this paragraph, 11.25 percent of qualified manufacturing research and development expenditures.
(4) For the fourth taxable year and each taxable year thereafter, 15 percent of qualified manufacturing research and development expenditures.
(b) For purposes of this paragraph:
(1) 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:
(A) Such wages may be treated as research and development expenditures under section 174 of the United States Internal Revenue Code; and
(B) 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.
(2) “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, 2007.
LBAO
07-0316
Revised 03/15/07
HB 618 FISCAL NOTE
AN ACT establishing a research and development credit against the business profits tax and the business enterprise tax.
FISCAL IMPACT:
The Department of Revenue Administration indicates this bill will decrease state revenue by an indeterminable amount in FY 2008 and each year thereafter. There will be no fiscal impact on county and local revenue or state, county, and local expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill will establish a research and development credit for qualified manufacturing research and development expenditures against the business profits tax (BPT) and the business enterprise tax (BET). Though the Department has used the BPT to determine fiscal impact for similar bills in the past, they have determined using the BET better reflects the fiscal impact. The Department assumed the research and development credit would be used to offset the BET loss, additionally there would be a minimal BPT loss when compared to BET. The Department used data for taxpayers who paid BET in excess of $20,000 for tax year 2005, which resulted in 955 taxpayers who collectively paid $81,739,602. The Department then developed a range of potential loss by multiplying the taxpayers’ apportioned New Hampshire wages by 0.5% and 1.0%. The lesser amount of each calculation of the BET paid by the taxpayer was selected to demonstrate a potential state revenue loss ranging between $42,525,000 and $70,922,392.