HB 1618-FN-A – AS INTRODUCED
2010 SESSION
09/10
HOUSE BILL 1618-FN-A
AN ACT exempting certain federally tax-exempt transactions from the business profits tax.
SPONSORS: Rep. McGuire, Merr 8
This bill exempts federally tax-exempt transactions by certain entities from the business profits 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
10-2198
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT exempting certain federally tax-exempt transactions from the business profits tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Business Profits Tax; Definition of Business Organization. Amend RSA 77-A:1, I to read as follows:
I. “Business organization” means any enterprise, whether corporation, partnership, limited liability company, proprietorship, association, business trust, real estate trust or other form of organization; organized for gain or profit, carrying on any business activity within the state, except such enterprises as are expressly made exempt from income taxation under the United States Internal Revenue Code as defined in RSA 77-A: 1, XX. Each enterprise under this definition shall be subject to taxation under RSA 77-A:2 as a separate entity, unless specifically authorized by this chapter to be treated otherwise, such as, but not limited to, combined reporting. Trusts treated as grantor trusts under section 671 of the United States Internal Revenue Code shall be included in the return of their owners, and such owners shall be subject to the tax thereon to the extent such owners would be considered a business organization hereunder notwithstanding the existence of the trust. The use of consolidated returns as defined in the United States Internal Revenue Code as defined in RSA 77-A:1, XX is not permitted. Notwithstanding any other provision of this paragraph, an enterprise shall not be characterized as a business organization and shall be excluded from taxation at the entity level if it elects to be treated as a qualified investment company as defined in RSA 77-A:1, XXI. A partnership, limited liability company, estate, trust except grantor trusts pursuant to section 671 of the United States Internal Revenue Code, “S” corporation, real estate investment trust, or any other such entity, other than an organization electing to be treated as a qualified investment company as defined in RSA 77-A:1, XXI whose net income is reportable by the true owners either directly or indirectly shall be subject to tax at the entity level, and no part of such earnings or loss shall be included in the calculation of the gross business profits of the owners of such entity. If an entity such as a revocable trust, single member limited liability company, or other entity which is not a business organization under this paragraph, engages in a transaction which is exempt from federal taxation, the department shall not characterize such entity as a business organization in order to impose the tax under this chapter on earnings resulting from such transaction.
2 Effective Date. This act shall take effect July 1, 2010.
LBAO
10-2198
12/11/09
HB 1618-FN-A - FISCAL NOTE
AN ACT exempting certain federally tax-exempt transactions from the business profits tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill would decrease state revenue by an indeterminable amount in FY 2011 and each year thereafter. This bill would have no fiscal impact on state, county, and local expenditures, or county and local revenue.
METHODOLOGY:
The Department of Revenue Administration states this bill would exempt federally tax-exempt transactions by certain entities from the business profits tax (BPT). The Department states it is not clear which taxable periods the proposed change would apply, and does not have the specific data to determine the loss in revenue that would occur. The exact fiscal impact cannot be determined at this time.