HB 518-FN-A – AS INTRODUCED
2011 SESSION
09/10
HOUSE BILL 518-FN-A
AN ACT increasing the research and development tax credit and establishing a commission to assess the effectiveness of the credit.
This bill increases the business profits tax research and development tax credit over a 5-year period and establishes a commission to meet biennially to assess the effectiveness of the credit.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0461
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT increasing the research and development tax credit and establishing a commission to assess the effectiveness of the credit.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Business Profits Tax; Research and Development Tax Credit Amount Increased; July 1, 2012. Amend 77-A:5, XIII(a)(1) and (2) to read as follows:
(1) The aggregate of tax credits issued by the commissioner to all taxpayers claiming the credit shall not exceed [$1,000,000] $5,000,000 for any fiscal year, except that any amount of the credit less than [$1,000,000] $5,000,000 that is not claimed in the fiscal year ending June 30, [2008] 2013 may be claimed in the fiscal year ending June 30, [2009] 2014.
(2) Each credit shall be used to offset the taxpayer’s tax liability within the subsequent 5 tax years. The amount of the credit shall be the lesser of:
(A) Ten percent of the excess of the qualified manufacturing research and development expenses for the taxable year over the base amount;
(B) The proportional share of the maximum aggregate credit amount allowed in subparagraph (1);
(C) [$50,000] $250,000.
2 Business Profits Tax; Research and Development Tax Credit Amount Increased; July 1, 2013. Amend 77-A:5, XIII(a)(1) and (2) to read as follows:
(1) The aggregate of tax credits issued by the commissioner to all taxpayers claiming the credit shall not exceed [$5,000,000] $25,000,000 for any fiscal year, except that any amount of the credit less than [$5,000,000] $25,000,000 that is not claimed in the fiscal year ending June 30, [2012] 2014 may be claimed in the fiscal year ending June 30, [2013] 2015.
(2) Each credit shall be used to offset the taxpayer’s tax liability within the subsequent 5 tax years. The amount of the credit shall be the lesser of:
(A) Ten percent of the excess of the qualified manufacturing research and development expenses for the taxable year over the base amount;
(B) The proportional share of the maximum aggregate credit amount allowed in subparagraph (1);
(C) [$250,000] $1,250,000.
3 Business Profits Tax; Research and Development Tax Credit Amount Increased; July 1, 2014. Amend 77-A:5, XIII(a)(1) and (2) to read as follows:
(1) The aggregate of tax credits issued by the commissioner to all taxpayers claiming the credit shall not exceed [$25,000,000] $50,000,000 for any fiscal year, except that any amount of the credit less than [$25,000,000] $50,000,000 that is not claimed in the fiscal year ending June 30, [2013] 2015 may be claimed in the fiscal year ending June 30, [2014] 2016.
(2) Each credit shall be used to offset the taxpayer’s tax liability within the subsequent 5 tax years. The amount of the credit shall be the lesser of:
(A) Ten percent of the excess of the qualified manufacturing research and development expenses for the taxable year over the base amount;
(B) The proportional share of the maximum aggregate credit amount allowed in subparagraph (1);
(C) [$1,250,000] $2,500,000.
4 Business Profits Tax; Research and Development Tax Credit Amount Increased; July 1, 2015. Amend 77-A:5, XIII(a)(1) and (2) to read as follows:
(1) The aggregate of tax credits issued by the commissioner to all taxpayers claiming the credit shall not exceed [$50,000,000] $75,000,000 for any fiscal year, except that any amount of the credit less than [$50,000,000] $75,000,000 that is not claimed in the fiscal year ending June 30, [2014] 2016 may be claimed in the fiscal year ending June 30, [2015] 2017.
(2) Each credit shall be used to offset the taxpayer’s tax liability within the subsequent 5 tax years. The amount of the credit shall be the lesser of:
(A) Ten percent of the excess of the qualified manufacturing research and development expenses for the taxable year over the base amount;
(B) The proportional share of the maximum aggregate credit amount allowed in subparagraph (1);
(C) [$2,500,000] $3,750,000.
5 Business Profits Tax; Research and Development Tax Credit Amount Increased; July 1, 2016. Amend 77-A:5, XIII(a)(1) and (2) to read as follows:
(1) The aggregate of tax credits issued by the commissioner to all taxpayers claiming the credit shall not exceed [$75,000,000] $100,000,000 for any fiscal year, except that any amount of the credit less than [$75,000,000] $100,000,000 that is not claimed in the fiscal year ending June 30, [2015] 2017 may be claimed in the fiscal year ending June 30, [2016] 2018.
(2) Each credit shall be used to offset the taxpayer’s tax liability within the subsequent 5 tax years. The amount of the credit shall be the lesser of:
(A) Ten percent of the excess of the qualified manufacturing research and development expenses for the taxable year over the base amount;
(B) The proportional share of the maximum aggregate credit amount allowed in subparagraph (1);
(C) [$3,750,000] $5,000,000.
6 New Section; Commission to Assess Effectiveness of Business Profits Tax Research and Development Credit. Amend RSA 77-A by inserting after section 5-b the following new section:
77-A:5-c Commission to Assess Effectiveness of Business Profits Tax Research and Development Credit.
I.(a) There is established a commission which shall assess the effectiveness of the business profits tax research and development credit. The commission shall consist of:
(1) Three members of the house of representatives, appointed by the speaker of the house of representatives.
(2) Three members of the senate, appointed by the senate president.
(3) Five chief executive officers and/or founders of high technology businesses operating in New Hampshire, or their representatives, appointed by the governor upon recommendation by the commissioner of the department of resources and economic development.
(4) The commissioner of the department of revenue administration, or designee.
(b) Members of the commission shall serve without compensation, except that legislative members shall receive mileage at the legislative rate when attending to the duties of the commission.
II. The commission shall meet biennially to assess the effectiveness of the business profits tax research and development credit. The members of the commission shall elect a chairperson from among the members. The first meeting of the commission shall be called by the first-named house member. The first meeting of the commission shall be held within 45 days of the effective date of this section. Seven members of the commission shall constitute a quorum.
III. Report. The commission shall report its findings and any recommendations for proposed legislation to the speaker of the house of representatives, the president of the senate, the house clerk, the senate clerk, the governor, and the state library on or before November 1 of each year, beginning in 2013.
7 Applicability.
I. Section 1 of this act shall apply for tax periods ending on or after July 1, 2012.
II. Section 2 of this act shall apply for tax periods ending on or after July 1, 2013.
III. Section 3 of this act shall apply for tax periods ending on or after July 1, 2014.
IV. Section 4 of this act shall apply for tax periods ending on or after July 1, 2015.
V. Section 5 of this act shall apply for tax periods ending on or after July 1, 2016.
8 Effective Date.
I. Section 2 of this act shall take effect July 1, 2013.
II. Section 3 of this act shall take effect July 1, 2014.
III. Section 4 of this act shall take effect July 1, 2015.
IV. Section 5 of this act shall take effect July 1, 2016.
V. The remainder of this act shall take effect July 1, 2012.
LBAO
11-0461
Revised 01/31/11
HB 518 FISCAL NOTE
AN ACT increasing the research and development tax credit and establishing a commission to assess the effectiveness of the credit.
FISCAL IMPACT:
The Department of Revenue Administration states this bill may decrease state revenue by an indeterminable amount in FY 2014 and each 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 would increase the business profits tax research and development (R&D) tax credit over a 5-year period. The Department states the change in law would take effect July 1, 2012, and it appears the intent of the bill is to distribute $5,000,000 of such credit in FY 2013. Credits awarded in FY 2013 must be requested before the end of FY 2012, thus the Department states they would not be able to distribute the $5,000,000 in R&D tax credits in FY 2013. The Department states they are unable to administer the bill as written, and are unable to determine an exact fiscal impact at this time.