Revision: June 14, 2010, midnight
SB 383-FN – VERSION ADOPTED BY BOTH BODIES
03/10/10 0891s
05May2010… 1491h
06/02/10 2221CofC
06/02/10 2416eba
2010 SESSION
09/01
SENATE BILL 383-FN
AN ACT relative to economic revitalization zone tax credits.
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
The bill extends the availability of economic revitalization zone tax credits for 4 years and makes certain changes regarding the eligibility for and determination of the eligible amounts for the credits.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/10/10 0891s
05May2010… 1491h
06/02/10 2221CofC
06/02/10 2416eba
10-2711
09/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT relative to economic revitalization zone tax credits.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Effective Date of Prospective Repeal of Economic Revitalization Zone Tax Credits. Amend 2007, 263:176, X to read as follows:
X. Section 123 of this act shall take effect July 1, [2011] 2015.
2 Designation of Economic Revitalization Zone. Amend RSA 162-N:2, I(b) to read as follows:
(b) The median household income in the census tract or tracts in which the zone is located is less than [$40,500] 70 percent of the state median household income according to the [most recent] federal [decennial] census bureau’s American Community Survey as it has been reported every 5 years beginning with 2010.
3 Economic Revitalization Zone Tax Credit Agreement. Amend RSA 162-N:4, II to read as follows:
II. A certified copy of each agreement signed by the commissioner of resources and economic development and the taxpayer and a certified copy of each determination of the final amount of the credit awarded under the agreement shall be provided to the commissioner of revenue administration and the taxpayer claiming the credit no later than March 10 of each year.
4 Limit on Total Economic Revitalization Zone Credits. RSA 162-N:5 is repealed and reenacted to read as follows.
162-N:5 Limit on Total Economic Revitalization Zone Credits. The aggregate of tax credits issued by the commissioner of resources and economic development to all taxpayers claiming the credit shall not exceed $825,000 for any calendar year. Amounts carried forward pursuant to RSA 162-N:7 shall not be counted against this limit in any year in which they are applied. Notwithstanding RSA 162-N:6, the maximum credit which may be utilized by a taxpayer in any calendar year shall not exceed $40,000. In the case in which the aggregate credits requested during the calendar year exceed $825,000, each taxpayer shall receive a credit for the proportional share of the maximum aggregate credit amount.
5 Determination of Economic Revitalization Zone Tax Credits Eligible Amount. RSA 162-N:6, II is repealed and reenacted to read as follows:
II. The sum of the following:
(a) 4 percent of the salary for each new job created in the calendar year with a wage less than or equal to 1.75 times the then current state minimum wage.
(b) 5 percent of the salary for each new job created in the calendar year with a wage greater than 1.75 times the then current state minimum wage and less than or equal to 2.5 times the then current state minimum wage.
(c) 6 percent of the salary for each new job created in the calendar year with a wage greater than 2.5 times the then current state minimum wage.
(d) 4 percent of the lesser of the following:
(1) The actual cost incurred in the calendar year of creating a new facility or renovating an existing facility, and expenditures for machinery, equipment, or other materials, except inventory.
(2) $20,000 for each new job created in the calendar year.
6 Applicability. This act shall apply for taxable periods ending on or after January 1, 2010.
7 Effective Date. This act shall take effect upon its passage.
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.