Revision: Jan. 5, 2010, midnight
SB 383-FN – AS INTRODUCED
2010 SESSION
09/01
SENATE BILL 383-FN
AN ACT relative to net operating loss carryovers under the business profits tax.
SPONSORS: Sen. Lasky, Dist 13; Sen. Bradley, Dist 3; Sen. Gilmour, Dist 12; Sen. Merrill, Dist 21; Sen. Bragdon, Dist 11; Sen. Gallus, Dist 1; Rep. Clemons, Hills 24; Rep. Sad, Ches 2; Rep. Hatch, Coos 3
This bill limits the amount of net operating loss generated in a tax year that may be carried forward under the business profits tax to $10,000,000.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
10-2711
09/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT relative to net operating loss carryovers under the business profits tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subparagraph; Business Profits Tax; Net Operating Loss Carryovers. Amend RSA 77-A:4, XIII by inserting after subparagraph (d) the following new subparagraph:
(e) On or after July 1, 2010, the amount of net operating loss generated in a tax year that may be carried forward may not exceed $10,000,000.
2 Effective Date. This act shall take effect July 1, 2010.
LBAO
10-2711
12/31/09
SB 383-FN - FISCAL NOTE
AN ACT relative to net operating loss carryovers under the business profits tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill will decrease state general fund and education trust fund revenue by an indeterminable amount in FY 2011 and each fiscal year thereafter. This bill will have no fiscal impact on state, county and local expenditures or county and local revenue.
METHODOLOGY:
The Department of Revenue Administration states this bill increases the limitation amount of net operating loss (NOL) generated in a tax year that may be carried forward under the business profits tax (BPT) from $1 million to $10 million. The Department states they cannot project the loss of revenue due to this expansion of the NOL deduction because the future BPT profits and losses are not known. The Department did, however, provide the following background of the NOL deduction: The NOL deduction is a provision of the BPT law added in 1988. The NOL provision was effective for losses incurred after January 1, 1989. On July 1, 2002, the law was revised to permit carry forward of NOLs for 10 years following the loss year instead of 5 years. The amount of NOL generated each year per entity was limited to $250,000. For taxable periods ending between July 1, 2003 and June 30, 2004, the NOL generated was limited to $500,000, between July 1, 2004 and June 30, 2005, limited to $750,000, and for taxable periods ending on or after July 1, 2005, limited to $1 million and the requirement to carry back losses prohibited. The chart below shows by calendar year, the BPT revenue reduction attributable to the NOL deduction.
FY |
BPT Loss |
FY |
BPT Loss | |
1991 |
4,607,000 |
2000 |
8,108,000 | |
1992 |
4,428,000 |
2001 |
9,029,000 | |
1993 |
7,297,000 |
2002 |
10,162,000 | |
1994 |
7,974,000 |
2003 |
12,518,000 | |
1995 |
7,751,000 |
2004 |
10,911,000 | |
1996 |
4,762,000 |
2005 |
12,681,000 | |
1997 |
7,514,000 |
2006 |
13,281,000 | |
1998 |
8,451,000 |
2007 |
16,695,000 | |
1999 |
8,715,000 |
2008 |
17,743,000 |
LBAO
10-2711
12/31/09
The Department further states that since the expansion of the deduction to $1 million in 2005, there has been an increased loss in BPT revenue of more that $5 million. While unknown, the Department indicates an increase in the NOL deduction to $10 million would result in a substantial loss in BPT revenue. The provisions of this bill can be administered within Department of Revenue Administration’s existing budget.