HB 628-FN-A – AS INTRODUCED
2009 SESSION
09/10
HOUSE BILL 628-FN-A
AN ACT establishing tangible personal property inventory and use taxes.
SPONSORS: Rep. Vachon, Straf 3
This bill establishes tangible personal property inventory and use taxes. Ten percent of revenues collected from the taxes are to be deposited in a special mass transit fund to be used to establish, improve, or expand public transportation services. The bill also repeals a prohibition on taxation of motor vehicles.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
09-0486
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nine
AN ACT establishing tangible personal property inventory and use taxes.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; Tangible Personal Property Retail Inventory and Use Taxes. Amend RSA by inserting after chapter 72-B the following new chapter:
CHAPTER 72-C
TANGIBLE PERSONAL PROPERTY
RETAIL INVENTORY AND USE TAXES
72-C:1 Short Title. This chapter shall be known and may be cited as the “New Hampshire tangible personal property retail inventory and use tax act.”
72-C:2 Definitions. In this chapter, unless the context clearly shows otherwise:
I. “Assessment date” for dealers and contractors means the last day of the third month of the taxable year, the last day of the sixth month of the taxable year, the last day of the ninth month of the taxable year, and the last day of the taxable year. For persons other than dealers and contractors, as defined in this chapter, the assessment date shall be the last day of the taxable year.
II. “Business” includes any activity engaged in by any person, or caused to be engaged in by any person, with the object to gain a benefit or advantage, either directly or indirectly.
III. “Commissioner” means the commissioner of the department of revenue administration.
IV. “Cost price” means the actual cost of acquiring an item or article of tangible personal property without any deductions therefrom on account of the cost of materials used, labor, or service costs, transportation charges, or any expenses whatsoever related thereto. Provided, however, that separately stated charges for services provided in connection with or incidental to the acquisition of tangible personal property, such as installation charges, shall not be considered in calculating the cost price of such property.
V. “Current market value” means the present value which may be realized in an arms length transaction between a willing buyer and a willing seller during the taxable period, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. Usually, current market value will be measured by the price at which bona fide sales have been consummated for items of tangible personal property of like type, quality, and quantity in a particular market during the most recent period for which sales information is available.
VI. “Department” means the department of revenue administration.
VII. “Distribution” means the transfer or delivery of tangible personal property for use or storage by the distributor, and the use or storage of tangible personal property by a person who has processed, manufactured, refined, or converted such property, but does not include any use or storage otherwise exempt under this chapter.
VIII. “Import” and “imported” are words applicable to tangible personal property imported into this state from other states as well as from foreign countries, and “export” and “exported” are words applicable to tangible personal property exported from this state to other states as well as to foreign countries.
IX. “In this state” or “in the state” means within the limits of the state of New Hampshire, and includes all territory within these limits owned by or ceded to the United States of America.
X. “Inventory” means any keeping or retention of tangible personal property for sale, distribution, lease, or rental at retail in the ordinary course of business.
XI. “Lease or rental” means the leasing or renting of tangible personal property and the possession or use thereof by lessee or renter for a consideration, without transfer of the title to such property. The term does not include the leasing or rental of tangible personal property by any person engaged in the business of short term lease or rental of such property.
XII. “Manufacturer” means every person engaged in the business of manufacturing, processing, refining, or conversion of items or articles of tangible personal property for resale in the state.
XIII. “Manufacturing, processing, refining, or conversion” includes the production line of the plant starting with the handling and storage of raw materials at the plant site and continuing through the last step of production where the product is finished or completed for sale and conveyed to a warehouse at the production site, and also includes equipment used for production line testing and quality control. The term “manufacturing” shall also include the necessary ancillary activities of newspaper and magazine printing when such activities are performed by the publisher of any newspaper or magazine for sale. The determination whether any manufacturing, processing, refining, or conversion activity is industrial in nature shall be made without regard to plant size, existence or size of finished product inventory; degree of mechanization; amount of capital investment; number of employees; or other factors relating principally to the size of the business.
XIV. “Person” includes any individual, firm, business corporation, limited liability company, partnership, cooperative, nonprofit corporation, joint venture, association, estate, trust, business trust, trustee in bankruptcy, receiver, auctioneer, syndicate, club, society, or other group or combination acting as a unit, body politic or political subdivision, whether public, private, or quasi-public, and the plural of such term shall mean the same as the singular.
XV. “Prefabricated building” means, but shall not be limited to, single and multifamily houses, apartment units, commercial buildings, and permanent additions thereof, comprised of one or more sections that are intended to become real property, primarily constructed at a location other than the permanent site, and shall include, but not be limited to, modular buildings as defined in RSA 205-C:1, XI, manufactured housing as defined in RSA 205-D:1, XI, and presite built housing as defined in RSA 674:31-a.
XVI. “Prefabricated building manufacturer” means a person or corporation who owns or operates a manufacturing facility and is engaged in the fabrication, construction, and assembling of building supplies and materials into prefabricated buildings as defined in this section, at a location other than at the site where the prefabricated building will be installed or assembled and installed at the building site and who may or may not be engaged in the process of installing at the building site.
XVII. “Prefabricated building retailer” means any person who purchases or acquires a prefabricated building from a prefabricated building manufacturer, or from another person, for subsequent sale to a customer residing within or outside of this state, with or without installation of the prefabricated building at the building site.
XVIII. “Resale” means the subsequent sale of tangible personal property by a person engaged in the business of making retail sales of such products to consumers for use in this state. All sales for resale must be made in strict compliance with rules adopted by the commissioner under this chapter. Any manufacturer, wholesaler or dealer making a sale for resale which is not in strict compliance with such rules shall be personally liable for payment of the inventory tax.
XIX. “Retail sale” or a “sale at retail” means a sale to any person for any purpose other than for resale in the form of tangible personal property taxable under this chapter, and shall include any such transaction as the commissioner upon investigation finds to be in lieu of a sale.
XX. “Retailer” means every person engaged in the business of making sales at retail, or for distribution, use, or storage of tangible personal property to be used in this state.
XXI. “Sale” means any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise in any manner or by any means whatsoever, of tangible personal property to consumers for use in this state.
XXII. “Short term lease or rental” means the lease or rental of tangible personal property where the contract is renewable on a daily basis or at regular intervals less than one year each.
XXIII. “Storage” means any keeping or retention of tangible personal property for use, consumption or distribution in this state, or for any purpose other than sale at retail in the regular course of business.
XXIV. “Tangible personal property” means personal property which may be seen, weighed, measured, felt, or touched, in any other manner perceptible to the senses, and which has a cost price or current market value, as the case may be, of $10,000 or more at any point during the taxable year. The term “tangible personal property” shall not include stocks, bonds, notes, insurance, or other obligations or securities.
XXV. “Taxable year” or “taxable period” means calendar year.
XXVI. “Use” means the exercise of any right or power over tangible personal property incident to the ownership thereof, except that it does not include the sale at retail of that property in the regular course of business. The term “use” does not include the short term lease or rental of tangible personal property by any person when offered by an established business, or part of an established business, or the same is incidental or germane to such business.
XXVII. “Use tax” refers to the tax imposed upon the use and storage as described in this chapter.
XXVIII. “Used directly,” when used in relation to manufacturing, processing, refining, or conversion, refers to those activities which are an integral part of the production of a product, including all steps of an integrated manufacture process, but not including ancillary activities such as general maintenance or administration.
XXIX. “Wholesaler” means every person engaged in the business of making sales to retailers for purposes of resale to consumers for use in this state, and includes every person engaged in the business of acting as a middleman, such as a jobber.
72-C:3 Administration of Chapter.
I. The commissioner shall administer and enforce the assessment and collection of the taxes and penalties imposed by this chapter.
II. For purposes of evaluating the fiscal, economic, and policy impact of inventory and use tax exemptions, the commissioner may require from any person information relating to the evaluation of any claimed exemption. Such information shall be filed on forms prescribed by the commissioner.
72-C:4 Imposition of Inventory Tax.
I. There is hereby levied and imposed, in addition to all other taxes and fees of every kind now imposed by law, an annual license or privilege tax upon every person who engages in the business of selling at retail or distributing tangible personal property in this state, or who rents or furnishes any of the things taxable under this chapter, or who stores for use in this state any item or article of tangible personal property as defined in this chapter, or who leases or rents such property within this state, in the amount of 4 percent of the amount in excess of $9,999:
(a) Of the cost price of each item or article of tangible personal property acquired for its inventory and stored in this state for retail sale or distribution in this state during the tax year and prior to the assessment date. In tax years following the tax year of its acquisition for inventory, qualified tangible personal property shall be entitled to a credit as outlined in RSA 72-C:18.
(b) Of the cost price of each item or article of tangible personal property not stored in this state, when acquired for sale at retail or distribution in this state during the tax year and prior to the assessment date.
(c) Of the cost price of each item or article of tangible personal property not stored in this state when acquired for lease or rental within this state during the tax year and prior to the assessment date, where the lease or rental of such property is an established business, or part of an established business, or the same is incidental or germane to such business.
II. The tax imposed by this section shall be absorbed into the sales, distribution or rental price of each item or article of tangible personal property and no dealer shall be required to separately state the amount of the tax paid or due on such property to any retail customer. At the time of retail sale, distribution, or lease the dealer shall provide the retail customer a certification, on a form approved by the commissioner, stating the most recent tax year for which the item or article of tangible personal property was included in the dealer’s inventory pursuant to this section and for which the taxes levied by this section have been or will be paid. Such certification shall provide the retail customer with conclusive proof of payment of said inventory tax for purposes of avoiding double taxation under the use tax imposed by this chapter.
72-C:5 Imposition of Use Tax.
I. There is hereby levied and imposed, in addition to all other taxes and fees now imposed by law, an annual tax upon the use of tangible personal property in this state, or the storage of such property outside the state for use in this state, in the amount of 4 percent of the amount in excess of $9,999:
(a) Of the current market value of each item or article of tangible personal property used in this state. Tangible personal property which has been acquired for use outside this state and subsequently becomes subject to the tax imposed hereunder shall be taxed on the basis of the current market value of such property at the time of its use within this state.
(b) Of the current market value of each item or article of tangible personal property stored outside this state for use in this state.
II. Any item or article of tangible personal property taxed under RSA 72-C:4 for any given tax year shall not also be taxed under this section during the same tax year, nor shall the same property be taxed more than once under either section in any given tax year.
III. The use tax shall not apply with respect to the use of any article of tangible personal property brought into this state by a nonresident individual, visiting in New Hampshire, for his or her personal use, while within this state.
72-C:6 Use Tax On Motor Vehicles, Machinery, Tools And Equipment Brought into New Hampshire For Use in Performing Contracts.
I. In addition to the use tax levied pursuant to RSA 72-C:4 and RSA 72-C:5, an annual use tax is levied upon the storage or use of all motor vehicles, machines, machinery, tools, or other equipment brought, imported, or caused to be brought into this state for use in constructing, building, or repairing any building, highway, street, sidewalk, bridge, culvert, sewer or water system, drainage or dredging system, railway system, reservoir or dam, hydraulic or power plant, transmission line, tower, dock, wharf, excavation, grading, or other improvement or structure, or any part thereof. The rate of tax is 4 percent of the amount in excess of $9,999.
II. For purposes of this section, the words “motor vehicle” means any vehicle which is self-propelled and designed primarily for use upon the highways, and any vehicle designed to run upon the highways which is pulled by a self-propelled vehicle, but shall not include any implement of husbandry, farm tractor, road construction, or maintenance machinery or equipment, special mobile equipment, or any vehicle designed primarily for use in work off the highway.
III. The tax shall be computed on the basis of such proportion of the original purchase price of such property as the duration of time of use in this state bears to the total useful life thereof. For purposes of this section, the word “use” means use, storage, and “stand-by” time occasioned by weather conditions, controversy, or other causes. The tax shall be computed upon the basis of the relative time each item of equipment is in this state rather than upon the basis of actual use. In the absence of satisfactory evidence as to the period of use intended in this state, it shall be presumed that such property will remain in this state for the remainder of its useful life, which shall be determined in accordance with the experiences and practices of the building and construction trades.
IV. Any item or article of tangible personal property taxed under RSA 72-C:4 or RSA 72-C:5 for any given tax year shall not also be taxed under this section during the same tax year, nor shall the same property be taxed more than once under any section in any given tax year.
V. Before any property subject to the use tax is brought into this state for use as provided in this section, the owner, or, if the property is leased, the lessee shall register with the commissioner. After registration, the taxpayer shall file quarterly reports on forms furnished by the commissioner reporting such property brought, imported, or caused to be brought into this state during the preceding quarter, together with remittance of the amount of tax due. Such reports are to be filed on or before the fifteenth of the month following the quarter in which such property was brought into or used in this state.
VI. The use tax imposed by this section shall not apply to any property brought into this state by a resident of another state, if such state does not impose a similar use tax on New Hampshire contractors, nor shall the tax apply to the use in this state of any motor vehicle, machine, or machinery previously purchased at retail for use in another state and actually placed into substantial use in another state before being brought, imported, or caused to be brought into this state by the owner thereof for use in constructing or repairing its own buildings, structures, or other property.
72-C:7 Tax Collectible From Dealers; Dealer Defined; Jurisdiction.
I. The tax levied by RSA 72-C:4 and RSA 72-C:5 shall be collectible from all persons who are dealers, as defined in this section, and who have sufficient contact with the state to qualify under paragraphs II and III.
II. The term “dealer,” as used in this chapter, shall include every person who:
(a) Manufactures or produces tangible personal property which such person offers at retail for sale, distribution, storage, or lease to be used in this state;
(b) Imports or causes to be imported into this state tangible personal property from any state or foreign country, for sale at retail, distribution or storage to be used in this state;
(c) Sells at retail, or who offers for sale at retail, or who has in his or her possession for sale at retail, distribution, or storage to be used in this state, tangible personal property;
(d) Has sold at retail, distributed or stored for use in this state, tangible personal property and who cannot prove that the tax levied by this chapter has been paid on such tangible personal property;
(e) Leases or rents tangible personal property for a consideration, permitting the use or possession of such proper without transferring title to such property;
(f) As a representative, agent, or solicitor, of an out-of-state principal, solicits, receives and accepts orders from persons in this state for future delivery and whose principal refuses to register as a dealer under RSA 72-C:8; or
(g) Becomes liable to and owes this state any amount of tax imposed by this chapter, whether he or she holds or is required to hold, a certificate of registration under RSA 72-C:8.
III. A dealer shall be deemed to have sufficient activity within the state to require registration under RSA 72-C:8 if he or she:
(a) Maintains or has within this state, directly or through an agent or subsidiary, an office, warehouse, or place of business of any nature;
(b) Solicits business in this state by employees, independent contractors, agents, or other representatives;
(c) Advertises in newspapers or other periodicals printed and published within this state, on billboard or posters located in this state, or through materials distributed in this state by means other than the United States mail;
(d) Makes regular deliveries of tangible personal property within this state by means other than common carrier. A person shall be deemed to be making regular deliveries under this subparagraph if vehicles other than those operated as a common carrier enter this state more than 12 times during a calendar year to deliver goods sold;
(e) Solicits business in this state on a continuous, regular, seasonal, or systematic basis by means of advertising that is broadcast or relayed from a transmitter within this state or distributed from a location within this state;
(f) Solicits business in this state by mail, if the solicitations are continuous, regular, seasonal, or systematic and if the dealer benefits from any banking, financing, debt collection, or marketing activities that occur in this state or benefits from the location in this state of authorized installation, servicing, or repair facilities;
(g) Is owned or controlled by the same interests which owns or controls a business located within this state;
(h) Has a franchisee or licensee operating under the same trade name in this state, if the franchisee or licensee is required to obtain a certificate of registration under RSA 72-C:8; or
(i) Owns tangible personal property that is rented or leased to a consumer in this state, including short term rental or leases of such property, or offers tangible personal property, on approval, to consumers in this state.
IV. In addition to the jurisdictional standards contained in paragraph III, nothing contained in this section shall limit any authority which this state may enjoy under the provisions of federal law or an opinion of the United States Supreme Court to require the collection of inventory and use taxes by the dealer who regularly or systematically solicits sales within this state.
72-C:8 Dealers’ Certificates of Registration.
I. Every person desiring to engage in or conduct business as a dealer in this state shall file with the commissioner an application for a certificate of registration for each place of business in this state. Every application for a certificate of registration shall set forth the name under which the applicant transacts or intends to transact business, the location of the applicant’s place or places of business, and such other information as the commissioner may require.
II. When the required application has been made, the commissioner shall issue to each applicant a separate certificate of registration for each place of business within this state. A certificate of registration is not assignable and is valid only for the person in whose name it is issued and for the transaction of business at the place designated in the certificate. The certificate of registration shall be at all times conspicuously displayed at the place for which it was issued.
III. Whenever any person fails to comply with any provision of this chapter or any rule adopted pursuant to this chapter, the commissioner, upon hearing after giving such person 10 days’ notice in writing, specifying the time and place of hearing and requiring him or her to show cause why his or her certificate of registration should not be revoked or suspended, may revoke or suspend any one or more of the certificates of registration held by such person. The notice may be personally served or served by registered mail directed to the last known address of such person.
IV. If any person engages in business as a dealer in this state without obtaining a certificate of registration, or after a certificate of registration has been suspended or revoked, the commissioner may assess a civil penalty of up to $1,000 against any such person, or each officer of any corporation which so engages in business. Each day’s continuance in business in violation of this section shall constitute a separate offense. Any person against whom a penalty has been so assessed may appeal the penalty pursuant to RSA 21-J:28-b.
V. If the holder of a certificate of registration ceases to conduct his or her business at the place specified in his or her certificate, the certificate shall thereupon expire and such holder shall inform the commissioner in writing within 30 days after he or she has ceased to conduct such business at such place that he or she has so ceased. If the holder of a certificate of registration desires to change his or her place of business to another place in this state, he or she shall so inform the commissioner in writing and his or her certificate shall be revised accordingly.
VI. This section shall also apply to:
(a) Any person who engages in the business of furnishing any of the things taxable under this chapter.
(b) Any person who is liable only for the collection of the use tax on inventory stored outside of this state for use within this state.
72-C:9 Tax Collectible From Contractors; Contractor Defined.
I. The use tax levied by RSA 72-C:5 shall be collectible from all persons who are contractors, as defined in this chapter.
II. A contractor is any person who contracts orally, in writing, or by purchase order, to perform construction, reconstruction, installation, repair, or any other service with respect to real estate or fixtures thereon located in this state, and who furnishes tangible personal property in connection therewith. The contractor shall be deemed to be the user of the tangible personal property so furnished and shall pay a use tax based on the cost price of each item or article of tangible personal property so used, unless an inventory or use tax has already been paid for such tangible personal property during the same tax year.
III. Any contractor who contracts to perform services in this state and is furnished tangible personal property for use under the contract by the person, or his or her agent or representative, for whom the contract is performed, and inventory or use tax has not been paid during the same tax year to this state by the person supplying the tangible personal property, shall be deemed to be the consumer of the tangible personal property so used, and shall pay a use tax based on the fair market value of the tangible personal property so used, irrespective of whether or not any right, title, or interest in the tangible personal property becomes vested in the contractor.
IV. This section shall not apply with respect to tangible personal property excluded from the taxes imposed by this chapter under the governmental exemptions set out at RSA 72-C:12; the agricultural exemptions set out at RSA 72-C:13; the commercial and industrial exemptions set out at RSA 72-C:14; or the miscellaneous exemptions set out at RSA 72-C:15.
V. Tangible personal property incorporated in real property construction which loses its identity as tangible personal property shall be deemed to be tangible personal property used within the meaning of this section. At the time of such incorporation, the contractor shall provide the real property owner a certification, on a form approved by the commissioner, stating the most recent tax year for which the taxes levied by this section on the item or article of tangible personal property have been or will be paid by the contractor. Such certification shall provide the real property owner with conclusive proof of payment of said use tax for purposes of avoiding double taxation under this chapter.
VI. Nothing in this section shall be construed to affect or limit the partial exclusion from taxation under this chapter of prefabricated buildings as set out at RSA 72-C:17.
72-C:10 Tax Collectible From Other Persons.
I. The use tax levied by RSA 72-C:5 shall be collectible from all persons who own or lease any item or article of tangible personal property for use in this state, unless such tax was paid by the dealer pursuant to RSA 72-C:7 or the contractor pursuant to RSA 72-C:9 for the same tax year.
II. The liability for the use tax levied by RSA 72-C:5 shall cease at the beginning of the taxable year following the taxable year in which any such property is incorporated into real property construction and thereby loses its identity as tangible personal property. Any fixture or other tangible personal property which is separated from real property, thereby renewing its identity as tangible personal property, shall be subject to the tax levied by RSA 72-C:5 beginning with the taxable year in which such separation occurs.
72-C:11 Moving Residence or Business Into State.
I. The use tax shall not apply to the period of out-of-state ownership or lease of tangible personal property purchased outside this state for use outside the state by a then nonresident natural person or a business entity not actually doing business within this state, who later brings such tangible personal property into this state in connection with the establishment of a permanent residence or business in this state, provided that such property was purchased or leased more than 6 months prior to the date it was first brought into this state or prior to the establishment of such residence or business, whichever first occurs.
72-C:12 Governmental Exemptions.
I. The tax imposed by this chapter shall not apply to tangible personal property otherwise exempt from taxation under RSA 72:23 as a governmental interest. This exemption shall not apply to tangible personal property which is acquired by the state or any of its political subdivisions and then transferred to private businesses for their use in a facility or real property improvement to be used by a private entity or for nongovernmental purposes.
II. The tax imposed by this chapter shall also not apply to the following governmental interests:
(a) Tangible personal property in use by the government of the United States of America. This exclusion shall not apply to tangible personal property owned or leased by privately, owned facilities and other privately, owned corporations chartered by the United States.
(b) Tangible personal property used in and about an air terminal under the supervision of the Pease development authority for handling cargo, merchandise, freight, and equipment. This exemption shall apply to agents, lessees, sub-lessees, or users of tangible personal property owned by or leased by the Pease development authority and to property acquired or used by the authority or by a non-stock, nonprofit corporation that operates an airport terminal or terminals on behalf of the authority.
(c) Tangible personal property that is owned or leased by a qualified transportation company that is owned operated, or controlled by any county, city, or town, or any combination thereof, that provides public transportation services, and/or tangible personal property that is owned or leased by any county, city, or town, or any combination thereof, that is transferred to a qualified transportation company that provides public transportation services.
72-C:13 Agricultural Exemptions. The tax imposed by this chapter shall not apply to the following agricultural enterprises:
I. Tangible personal property, except for structural construction materials to be affixed to real property owned or leased by a farmer, necessary for use in agricultural production for market and owned or leased by a farmer or contractor; and farm machinery provided the same are owned or leased by the farmer for use in agricultural production, which also includes beekeeping and fish, quail, rabbit, and worm farming for market.
II. Livestock and livestock products, poultry and poultry products, and farm and agricultural products, when owned, leased or produced by the farmer.
III. Machinery, tools, equipment, materials, or repair parts thereof or replacement thereof, and fishing boats, marine engines installed thereon, or outboard motors used thereon, and all replacement or repair parts in connection therewith; provided the same are owned or leased by watermen for use by them in extracting fish, bivalves, or crustaceans from waters for commercial purposes.
IV. Machinery or tools, or repair parts thereof, or replacements thereof used directly in making feed for sale or resale. Making of feed shall include the mixing of liquid ingredients.
V. Machinery or tools and repair parts thereof or replacements thereof used directly in the harvesting of forest products for sale or for use as a component part of a product to be sold. Harvesting of forest products shall include all operations prior to the transport of the harvested product necessary for:
(a) Removal of timber or other forest products from the harvesting site;
(b) Complying with environmental protection and safety requirements applicable to the harvesting of forest products;
(c) Obtaining access to the harvesting site; and
(d) Loading cut timber or other forest products onto highway vehicles for transportation to storage or processing facilities.
72-C:14 Commercial and Industrial Exemptions. The tax imposed by this chapter shall not apply to the following commercial and industrial operations:
I. Personal property purchased by a contractor which is used solely in another state or in a foreign country, which could be purchased by such contractor for such use free from sales, inventory or use tax in such other state or foreign country, and which is stored temporarily in New Hampshire pending shipment to such state or country.
II. Industrial materials for future processing, manufacturing, refining, or conversion into articles of tangible personal property for resale where such industrial materials either enter into the production of or become a component part of the finished product; and machinery or tools or repair parts thereof or replacements thereof, used directly in processing, manufacturing, refining, mining, or converting products for sale or resale. Machinery, tools, and equipment, or repair parts thereof or replacements thereof, shall be exempt if the preponderance of their use is directly in processing, manufacturing, refining, mining, or converting products for sale or resale.
III. Tangible personal property owned or leased by a business generating electric or other power, for use by such business directly in generating such power.
IV. Tangible personal property owned or leased by a business engaged as a common carrier of property or passengers, for use by such common carrier directly in the rendition of the service.
V. Ships or vessels, or repairs and alterations thereof, used exclusively or principally in intrastate, interstate or foreign commerce; or tangible personal property used directly in the building, conversion, or repair of the ships or vessels covered by this paragraph. This exemption shall include dredges, their supporting equipment, and attendant vessels.
VI. Tangible personal property purchased for use directly and exclusively in basic research or research and development in the experimental or laboratory sense.
VII. Tangible personal property including machinery and tools, repair parts or replacements thereof, and supplies or materials used directly in maintaining and preparing textile products for rental or leasing by an industrial process engaged in the commercial leasing or renting of laundered textile products.
VIII. Motor vehicles owned or leased by taxicab operators for use exclusively and directly in rendition of their services.
IX. Machinery owned or leased by persons engaged primarily in the printing or photocopying of products sale or resale, provided such machinery is used exclusively for such printing or photocopying of products for sale or resale.
X. Machinery or tools, repair parts thereof or replacements thereof, used exclusively and directly in the drilling of wells for the extraction of water.
XI. Raw materials, machinery or tools, repair parts thereof or replacements thereof, used directly in the drilling, extraction, or processing of natural gas, oil, and the reclamation of the well area. For the purposes of this section, “drilling,” “extraction,” and “processing” shall include production, inspection, testing, dewatering, dehydration, or distillation of raw natural gas into a usable condition consistent with commercial practices, and the gathering and transports of raw natural gas to a facility wherein the gas is converted into such a usable condition. Machinery, tools and equipment, or repair parts thereof or replacements thereof, shall be exempt if the preponderance of their use is directly in the drilling, extraction, refining, or processing of natural gas or oil for sale or resale, or in well area reclamation activities required by state or federal law.
XII. Broadcasting equipment and parts and accessories thereto and towers used by commercial radio or television companies, wired or land based wireless cable television systems, common carriers, or video programmers using an open video system or other video platform provided by telephone common carriers, or concerns which are under the regulation and supervision of the Federal Communications Commission and amplification, transmission, and distribution equipment used by wired or land based wireless cable television systems, or open video systems or other video systems provided by telephone common carriers.
72-C:15 Miscellaneous Exemptions. The tax imposed by this chapter shall not apply to the following:
I. Tangible personal property owned or leased for delivery outside the state and for use outside of the state. Delivery of goods destined for foreign export to a factor or export agent shall be deemed to be delivery of goods for use outside of the state.
II. Tangible personal property owned or leased for exclusive use in the performance of maintenance and repair services at Nuclear Regulatory Commission-licensed nuclear power plants.
III. Durable medical equipment and devices. Durable medical equipment is equipment that:
(a) Can withstand repeated use;
(b) Is primarily and customarily used to serve a medical purpose; and
(c) Generally is not useful to a person in the absence of an illness or injury.
IV. Special equipment installed on a motor vehicle when purchased by a handicapped person to enable such person to operate or access the motor vehicle.
V. Special typewriters and computers and related parts and supplies specifically designed for those products use by handicapped persons to communicate when such equipment is prescribed by a licensed physician.
VI. Tangible personal property withdrawn from inventory and donated to:
(a) An organization exempt from taxation under section 501(c)(3) of the Internal Revenue Code; or
(b) The state, any political subdivision of the state, or any school, agency, or instrumentality thereof.
VII. Tangible personal property otherwise exempt from taxation under RSA 72:23.
72-C:16 Reports to General Court on Tax Exemptions Studies. The commissioner shall determine the fiscal, economic, and policy impact of each exemption set out in RSA 72-C:12, RSA 72-C:13, RSA 72-C:14, and RSA 72-C:15, and report such findings to the chairs of the house and senate finance committees and ways and means committees no later than December 1 of each year, beginning December 1, 2010. Subgroups of the exemptions shall be reviewed in periodic cycles and reports issued on a rotating basis in accordance with a schedule determined by the commissioner. When such reports have been completed for all subgroups of the inventory and use tax exemptions, the commissioner shall repeat the process beginning with the subgroup of exemptions for which a report was made in 2010. No exemption subgroup shall be analyzed under the provisions of this section more frequently than once every 5 years.
72-C:17 Prefabricated Buildings. The tax authorized by this chapter on a prefabricated building, as defined by RSA 72-C:3, shall be calculated based upon 60 percent of the cost price and the tax shall be paid by the prefabricated building manufacturer or the prefabricated building retailer, whichever owns the prefabricated building or components thereof when offered for sale at retail during the taxable period.
72-C:18 Credits.
I. A credit shall be granted against the taxes imposed by this chapter with respect to a person’s use in this state of tangible personal property taxed to him or her in another state. The amount of the credit shall be equal to the tax paid by him or her to another state or political subdivision thereof by reason of the imposition of a similar tax on his or her purchase or use of the property during the taxable period. The amount of the credit shall not exceed the tax imposed by this chapter.
II. A credit shall be granted against the taxes imposed by this chapter with respect to municipal permit fees on tangible personal property registered as motor vehicles pursuant to RSA 261:153. The amount of the credit on the taxes due for such tangible personal property shall not exceed the actual amount of the municipal fee paid to register such motor vehicle during the tax year.
III. A credit shall be granted against the taxes imposed by this chapter for any item of tangible personal property in taxable years following the taxable year of acquisition for the actual inventory taxes paid in the year of acquisition for any item or article of tangible personal property that remains in inventory or storage in subsequent taxable years and which is specifically identifiable by serial number, model number, color, size and the like, provided that such item or article of tangible personal property is not actually in use by the owner or lessee thereof, including any of its agents, representatives, employees, family members and the like.
72-C:19 Returns by Dealers and Contractors; Payment to Accompany Return.
I. For purposes of the taxes imposed by RSA 72-C:4 and RSA 72-C:5, every dealer and contractor required to pay the inventory or use tax shall, on or before the fifteenth day of the month following the calendar quarter in which the tax shall become effective, transmit to the commissioner a return showing the total cost price arising from all items of tangible personal property taxable under this chapter during the preceding calendar quarter, and thereafter a like return shall be prepared and transmitted to the commissioner by every such dealer and contractor on or before the fifteenth day of each month following the close of a calendar quarter, for the preceding calendar quarter. Returns made under this chapter shall be made under the penalty of perjury.
II. Notwithstanding any other provision of this chapter, a dealer or contractor may be required by the commissioner to file an inventory or use tax return on an accounting period less frequent than quarterly when, in the opinion of the commissioner, the administration of the taxes imposed by this chapter would be enhanced. If a dealer is required file other than quarterly, each such return shall be due on or before the fifteenth day of the month following the close of the period. Each such return shall contain all information required for quarterly returns.
III. An inventory or use tax return shall be filed by each registered dealer even though the dealer is not liable to remit to the commissioner any tax for the period covered by the return.
IV. At the time of transmitting the returns required under this section, the dealer or contractor shall remit to the commissioner the amount of tax due. The taxes imposed by this chapter shall for each period become delinquent on the twenty-first day of the succeeding month if not paid.
V. Except with respect to fraudulent returns, failure to make a timely payment or full payment of the inventory and use tax liability as provided in this section shall subject the dealer or contractor to a penalty of 6 percent of the amount of tax underpayment that should have been properly paid to the commissioner. Interest shall accrue as provided in RSA 21-J:28. The penalty and interest payments required by this section shall become delinquent on the first day following the due date set forth in this section if not paid
72-C:20 Returns and Declarations by Persons Other Than Dealers and Contractors; Payment of Tax.
I. For purposes of the taxes imposed by RSA 72-C:5, every person other than a dealer and contractor required to pay the use tax shall, on or before the fifteenth day of the fourth month following the calendar year in which the tax shall become effective, file with the commissioner a return showing the market value as of the assessment date for all items of tangible personal property taxable under this chapter during the preceding calendar year, and thereafter a like return shall be prepared and filed with the commissioner by every such person other than a dealer and contractor on or before the fifteenth day of the fourth month following the expiration of each subsequent taxable year for which a use tax is due. Returns made under this chapter shall be made under the penalty of perjury.
II. At the same time the return is filed, as required in paragraph I of this section, every person required to file such a return shall, in addition, file a declaration of its estimated tax for its subsequent taxable period; provided, however, that if the estimated tax is less than $500, a declaration need not be filed; and provided further that a declaration shall be filed at the end of any quarter thereafter in which the annualized estimated tax exceeds $500.
III. One quarter of the estimated tax for the subsequent taxable period is due and payable on the fifteenth day of the fourth month of the subsequent taxable year; ¼ is due and payable on the fifteenth day of the sixth month of the subsequent taxable year; ¼ is due and payable on the fifteenth day of the ninth month of the subsequent taxable year; and ¼ is due and payable on the fifteenth day of the twelfth day of the twelfth month of the subsequent taxable year, unless the taxpayer is a calendar year taxpayer in which case the final ¼ is due and payable on the fifteenth day of January next following the tax year.
IV. If the return required by paragraph I shows an additional amount to be due, such additional amount is due and payable on the original statutory due date. The taxes imposed by this chapter shall for each period become delinquent on the twenty-first day of the succeeding month if not paid. If such return shows an overpayment of the tax due, the commissioner shall refund or credit the overpayment to the taxpayer in accordance with RSA 21-J:28-a.
V. Except with respect to fraudulent returns, failure to make a timely payment or full payment of the inventory and use tax liability as provided in this section shall subject the taxpayer to a penalty of 6 percent of the amount of tax underpayment that should have been properly paid to the commissioner. Interest shall accrue as provided in RSA 21-J:28. The penalty and interest payments required by this section shall become delinquent on the first day following the due date set forth in this section if not paid.
72-C:21 Extensions. The commissioner for good cause may grant an extension upon written application thereof to the end of the calendar month in which any tax return is due hereunder, or for a period not exceeding 30 days, and no interest penalty shall be charged, assessed or collected by reason of the granting of any such extension. Where any such extension is granted beyond the end of the calendar month in which any tax return is due hereunder, interest on the tax at a rate determined in accordance with RSA 21-J:28 shall be charged.
72-C:22 Assessment Based on Estimate.
I. If any dealer, contractor, or other person fails to make a return as provided by this chapter, or makes a return that is false or fraudulent, it shall be the duty of the commissioner to make an estimate for the taxable period of the inventory or use tax that is due, and assess the tax, plus such penalties as are provided in this chapter. The commissioner shall give such dealer, contractor, or other person 10 days’ notice, in writing, requiring such dealer, contractor, or other person to appear before him or her with such books, records, and papers as he or she may require relating to the taxable activities of such dealer, contractor, or other person for such taxable period. The commissioner may require such dealer, contractor, or other person, or the agents and employees of such dealer, contractor, or other person, to give testimony or to answer interrogatories under oath administered by the commissioner respecting such taxable activities, or the failure to make a return thereof as provided in this chapter. If any such dealer, contractor, or other person fails to make any such return or refuses to permit an examination of his or her books, records, or papers, or appear and answer questions within the scope of such investigation, the commissioner may make the assessment based upon such information as may be available to him or her and to enforce a lien under RSA 72-C:27 for the collection of any such taxes and penalties so found to be due. This assessment shall be deemed prima facie correct.
II. If the dealer or contractor has imported tangible personal property and fails to produce an invoice showing the cost price of the articles, or the invoice does not reflect the true or actual cost price as defined in this chapter, then the commissioner shall ascertain, in any manner feasible, the true cost price and assess and collect the tax, with penalties, to the extent such have accrued, on the true cost price as ascertained by him or her. This assessment shall be deemed prima facie correct.
72-C:23 Tangible Personal Property Presumed Subject To Tax; Tax Paid Certificates.
I. All tangible personal property as defined in this chapter is subject to the tax until the contrary is established. The burden of proving that an item or article of tangible personal property is not taxable is upon the dealer, contractor, or other person who owns or leases such property. Any taxpayer who holds a tax paid certificate from a dealer shall have conclusive proof of payment of the tax under this chapter for the taxable period stated on such certificate.
II. The tax paid certificate described in this section shall relieve the person who takes such certificate from any liability for the payment of the tax for the taxable period stated on such certificate. Such certificate shall be signed by and bear the name and address of the dealer; shall indicate the number of the certificate of registration, if any, issued to the dealer; shall specifically identify the item or article of tangible personal property and the taxable period for which inventory taxes have been or will be paid; and shall be substantially in such form as the commissioner may prescribe.
III. Whenever the commissioner determines that any dealer, contractor, or other person has misused a tax paid certificate, such dealer, contractor, or other person shall be liable for the full amount of tax, and any interest thereon, applicable to the item or article of tangible personal property for which taxes have not been paid in reliance of such tax paid certificate. In addition, the commissioner may assess a penalty of up to $1,000 for the misuse of a tax paid certificate by that person or by any other person who, with the consent or knowledge of the tax paid certificate holder, has misused the certificate. The penalty shall be assessed and collected as a part of the tax, and the person so assessed may appeal the penalty pursuant to the provisions of RSA 21-J:28-b.
72-C:24 Sale of Business. If any dealer or contractor liable for any tax, penalty, or interest levied hereunder sells out his or her business or stock of goods or quits the business, he or she shall make a final return and payment within 15 days after the date of selling or quitting the business. His or her successors or assigns, if any, shall withhold a sufficient amount of the purchase money to cover the amount of such taxes, penalties, and interest due and unpaid, until such former owner produces a receipt from the commissioner showing that they have been paid or a certificate stating that no taxes, penalties, or interest is due. If the purchaser of a business or stock of goods fails to withhold the purchase money as provided in this section, he or she shall be personally liable for the payment of the taxes, penalties, and interest due and unpaid on account of the operation of the business by any former owner.
72-C:25 Bond. The commissioner may, when in his or her judgment it is necessary and advisable so to do in order to secure the collection of the tax levied by this chapter, require any person subject to such tax to file with him or her a bond, with such surety as the commissioner determines is necessary to secure the payment of any tax, penalty, or interest due or which may become due from such person. In lieu of such bond, securities approved by the commissioner may be deposited with the state treasurer, which securities shall be kept in the custody of the state treasurer, and shall be sold by him or her, at the request of the commissioner, at public or private sale if it becomes necessary in order to recover any tax, penalty, or interest due the state under this chapter. Upon any such sale, the surplus, if any, above the amounts due under this chapter shall be returned to the person who deposited the securities.
72-C:26 Jeopardy Assessment. If the commissioner is of the opinion that the collection of any tax or any amount of tax required to be collected and paid under this chapter will be jeopardized by delay, he or she shall make an assessment of the tax or amount of tax required to be collected and shall mail or issue a notice of such assessment to the taxpayer together with a demand for immediate payment of the tax or of the deficiency in tax declared to be in jeopardy, including penalties. In the case of a tax for a current period, the commissioner may declare the taxable period of the taxpayer immediately terminated and shall cause notice of such finding and declaration to be mailed or issued to the taxpayer together with a demand for immediate payment of the tax based on the period declared terminated and such tax shall be immediately due and payable, whether or not the time otherwise allowed by law for filing a return and paying the tax has expired. Assessments provided for in this section shall become immediately due and payable, and if any tax, penalty or interest is not paid upon demand of the commissioner, he or she shall proceed to collect the same by legal process, or, in his or her discretion, he or she may require the taxpayer to file such bond as in his or her judgment may be sufficient to protect the interest of the state.
72-C:27 Liens. If any dealer, contractor, or other person required to pay a tax under this chapter neglects or fails to pay the same after demand, the amount, together with all penalties and interest provided for in this chapter and together with any costs of collection that may accrue in addition thereto, shall be a lien in favor of the state upon all property and rights to property, whether real or personal, belonging to such taxpayer. Such lien shall arise at the time demand is made by the commissioner and shall continue until the liability for such sum with interest and costs is satisfied or becomes unenforceable. No lien upon real estate for taxes imposed by this chapter shall be valid and binding against any person other than the taxpayer until notice of such lien has been filed and recorded at the registry of deeds in the county in which such real estate is located.
72-C:28 Records.
I. Every dealer, contractor, or other person required to make a return and pay any tax under this chapter shall keep and preserve suitable records of the tangible personal property taxable under this chapter, and such other books of account as may be necessary to determine the amount of tax due hereunder, and such other pertinent information as may be required by the commissioner.
II. In order to aid in the administration and enforcement of the provisions of this chapter, all manufacturers and wholesalers in this state shall keep a record of all transfers of tangible personal property, whether such transfers be for cash or on terms of credit. Such records shall include the name and address of the transferee, the number of the certificate of registration, if any, issued to the transferee, the date of the transfer, the article transferred, and the consideration for which the item or article is transferred. The commissioner may assess a civil penalty of up to $1,000 against any manufacturer or wholesaler failing to keep such records. Any person against whom a penalty has been so assessed may appeal the penalty pursuant to RSA 21-J:28-b. In addition, any person who is both a retailer and a manufacturer or wholesaler and who fails to keep proper records showing manufacturer or wholesale inventory and retail inventory separately shall pay the inventory tax as a retailer on both classes of his or her business.
III. For the purpose of enforcing the collection of the tax levied by this chapter, the commissioner may examine the books, records, and other documents of all transportation companies, agencies, firms, or persons defined in this chapter that conduct their business by truck, rail, water, airplane, or otherwise, in order to determine whether dealers or contractors are importing or otherwise are shipping articles of tangible personal property which are liable for the tax imposed by this chapter. The commissioner may assess a civil penalty of up to $1,000 against any such transportation company, agency, firm, or person as defined in this chapter that refuses to permit such examination of its or his or her books, records, and other documents by the commissioner. Any person against whom a penalty has been so assessed may appeal the penalty pursuant to RSA 21-J:28-b. The commissioner may proceed by petitioning the appropriate superior court to require the transportation company, agency, firm, or person to show cause as to why such books, records, and other documents should not be examined pursuant to the injunction of the court, and as to why a bond should not be required with proper security in the amount of not more than $2,000, conditioned upon compliance with the provisions of this section for period of no more than one year.
72-C:29 Period of Limitations. The taxes imposed by this chapter shall be assessed within 3 years from the date on which such taxes became due and payable. In the case of a false or fraudulent return with intent to evade payment of the taxes imposed by this chapter, or a failure to file a return, the taxes may be assessed, or a proceeding in court for the collection of such taxes may be begun without assessment, at any time within 6 years from such date. The commissioner shall not examine any person’s records beyond the 3-year period of limitations unless he or she has reasonable evidence of fraud, or reasonable cause to believe that such person was required by law to file a return and failed to do so.
72-C:30 Failure to File Return; Fraudulent Return; Civil Penalties.
I. When any dealer, contractor, or other person fails to make any return and pay the full amount of the tax required by this chapter, there shall be imposed, in addition to other penalties provided herein, a specific penalty to be added to the tax in the amount of 6 percent if the failure is for not more than one month, with an additional 6 percent for each additional month or fraction thereof, during which the failure continues, not to exceed 30 percent in the aggregate. In no case, however, shall the penalty be less than $10 and such minimum penalty shall apply whether or not any tax is due for the period for which such return was required. If such failure is due to providential or other good cause shown to the satisfaction of the commissioner, such return with or without remittance may be accepted exclusive of penalties. In the case of a false or fraudulent return where willful intent exists to defraud the state of any tax due under this chapter, or in the case of a willful failure to file a return with the intent to defraud the state of any such tax, a specific penalty of 50 percent of the amount of the proper tax shall be assessed. All penalties and interest imposed by this chapter shall be payable by the dealer, contractor, or other person and collectible by the commissioner in the same manner as if they were a part of the tax imposed.
II. It shall be prima facie evidence of intent to defraud the state of any tax due under this chapter whenever any dealer, contractor, or other person reports his total cost price or current market value, as the case may be, for all taxable property on the return at 50 percent or less of the actual amount.
III. Interest at a rate determined in accordance with RSA 21-J:28 shall accrue on the tax until the same is paid.
72-C:31 Penalty for Failure to File Return or Making False Return.
I. The commissioner may assess a civil penalty of up to $1,000 against any dealer, contractor, or other person subject to the provisions of this chapter failing or refusing to file a return required to be made by this chapter, failing or refusing to file a supplemental return or other data required by the commissioner, or who makes a false or fraudulent return with intent to evade the tax hereby levied, or who gives or knowingly receives a false or fraudulent tax paid certificate, or who violates any other provision of this chapter, punishment for which is not otherwise herein provided. Any person against whom a penalty has been so assessed may appeal the penalty pursuant to RSA 21-J:28-b.
72-C:32 Bad Checks. If any check tendered for any amount due under this chapter is not paid by the bank on which it is drawn and such person fails to pay the commissioner the amount due the state within 14 days after the commissioner has given him or her written notice by registered or certified mail or in person by an agent that such check was returned unpaid, the person by whom such check was tendered shall be guilty of a violation of RSA 638:4.
72-C:33 Disposition of State Inventory and Use Tax Revenue; State Mass Transit Fund; Established.
I. Notwithstanding any other provision of law, 60 percent of the inventory and use taxes collected under this chapter shall be deposited as unrestricted revenue in the general fund, 30 percent shall be deposited in the highway fund, and 10 percent shall be deposited in the state mass transit fund established in paragraph II.
II. There is hereby established in the office of the state treasurer a special fund known as the state mass transit fund. The state mass transit fund shall consist of such moneys as are appropriated to it by the general court and of all donations, gifts, bequests, grants, endowments, and other moneys given, bequeathed, granted, or otherwise made available to the state mass transit fund. The fund shall be nonlapsing and continually appropriated to the department of transportation. Interest earned on funds within the state mass transit fund shall remain in and be credited to the state mass transit fund. Proceeds of the state mass transit fund shall be used to support the establishment, improvement, or expansion of public transportation services.
2 New Subparagraph; Application of Receipts. Amend RSA 6:12, I(b) by inserting after subparagraph (276) the following new subparagraph:
(277) Moneys deposited in the state mass transit fund under RSA 72-C:33.
3 Repeal. RSA 261:162, relative to taxation of motor vehicles, is hereby repealed.
4 Effective Date. This act shall take effect July 1, 2009.
LBAO
09-0486
Revised 02/19/09
HB 628 FISCAL NOTE
AN ACT establishing tangible personal property inventory and use taxes.
FISCAL IMPACT:
The Department of Revenue Administration states this bill will increase state revenues and expenditures by an indeterminable amount in FY 2010 and each year thereafter. This bill will have no fiscal impact on county and local revenues or expenditures.
METHODOLOGY:
This bill establishes tangible personal property and inventory taxes of which 10% of derived revenues shall be deposited into a special mass transit fund to be used to establish, improve, or expand public transportation services; 30% of derived revenues shall be allocated to the highway fund and the remaining 60% to be allocated to the general fund. This bill also repeals a prohibition on taxation of motor vehicles. The Department of Revenue Administration states that the implementation of this bill will require at least $15,000,000 in immediate additional funding to accommodate the staffing and facility expansion necessary to administer the proposed legislation. The Department is unable to estimate the increase in state revenue that would result from the passage of this bill as the Department does not have sufficient data to determine the relative tax base.
The Department of Transportation is unable to determine the fiscal impact to the Department of the proposed legislation as they are unable to determine the amount of revenue that would be generated by the tax.
The State Treasury states there are no incremental costs associated with the establishment and administration of the proposed State Mass Transit Fund.
This bill does not contain an appropriation.