SB 40 – AS AMENDED BY THE HOUSE
03/30/11 0362s
03/30/11 1308s
25May2011… 2163h
2011 SESSION
09/01
SENATE BILL 40
AN ACT making technical corrections to meals and rooms tax laws and reducing the tobacco tax.
AMENDED ANALYSIS
This bill makes technical corrections to meals and rooms tax laws. The bill also reduces the tobacco tax rate.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/30/11 0362s
03/30/11 1308s
25May2011… 2163h
11-0938
09/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT making technical corrections to meals and rooms tax laws and reducing the tobacco tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Suspension and Revocation of Licenses; Appeal. Amend RSA 78-A:5, II to read as follows:
II. Any operator aggrieved by a suspension, revocation or refusal of the commissioner may appeal from the ruling either by application to the board of tax and land appeals or by petition to the superior court in the county in which he or she resides or conducts his or her operation within 10 days after receiving written notice of the commissioner’s ruling in the manner prescribed in RSA 78-A:15. The board of tax and land appeals or the court, as the case may be, shall hear the appeal forthwith. If the appealing operator files a bond running to the state in an amount fixed by the board of tax and land appeals or the court, with a surety company authorized to do business in the state as surety, conditioned on the payment of taxes due and to become due during the pendency of the appeal, the ruling appealed from is inoperative if it is a ruling of suspension or revocation. If the ruling appealed from is a refusal to [issue a] renew an existing license, the [commissioner shall issue the license] existing license shall remain valid during the pendency of the appeal if the appeal bond is given.
2 Collection of Tax; Reference to Tax Rate Corrected. Amend RSA 78-A:7, I(a) to read as follows:
I.(a) The operator shall either state the amount of the tax to each occupant, purchaser of a meal, or renter, or state that the tax is included in the price of the occupancy, meal, or gross rental receipts received. If the amount of the gratuity is not separately stated, the purchaser’s or occupant’s contract or receipt shall include the following language:
“The [8] 9 percent tax on meals and rooms is included for the costs of meals and lodging only.”
3 Collection of Tax; Gender Neutral. Amend RSA 78-A:7, II to read as follows:
II. Each operator shall keep books and records in a form acceptable to the department showing the amount of all taxes collected. The operator shall pay the taxes over to the state as provided in this section. If the department believes that special action is necessary because payment of taxes collected may be in jeopardy, it may direct an operator to keep all taxes collected separate from any other funds. The department may require that the taxes be periodically deposited in a bank designated by the department, in an account in the name of the department. The department may withdraw these tax collections from the bank account and apply them to the payment of the taxes due from the operator. When an operator commingles tax money with money belonging to him or her, the claim of the state for the tax is traceable, is enforceable against all other claims and takes precedence over all other claims against the commingled funds. No taxes collected by an operator under this chapter may be sent outside the state without the written consent of the department.
4 Collection of Tax; Reference to Tax Rate Corrected. Amend RSA 78-A:7, IV to read as follows:
IV. In lieu of keeping detailed records of taxes collected, and in lieu of payment of the taxes collected under this chapter, an operator may, in writing, elect to compute the amount of taxes due at [8] 9 percent of the total taxable rent, charge for meals, or gross rental receipts received by it, or both, exclusive of the taxes collected on such rents, charges, and gross rental receipts. If this election is made, the operator may not change the method of computing taxes without the written consent of the department. Any balance of the tax remaining in possession of the operator may be retained by it.
5 New Paragraph; Collection of Tax; Separate Bank Account. Amend RSA 78-A:7 by inserting after paragraph IV the following new paragraph:
V. If an operator has failed to timely remit tax due under RSA 78-A:8 for at least 2 consecutive months, the commissioner may require an operator to maintain a separate bank account in a federally insured bank chartered under the laws of New Hampshire or the federal government, with a branch within the state for the deposit of meals and rooms tax. All meals and rooms tax collected by the operator shall be deposited at least weekly in the separate bank account for monthly remittance to the state under RSA 78-A:8. When an operator required by the commissioner to maintain a separate bank account has made timely payments under RSA 78-A:8 for a period of 24 consecutive months, the requirement to maintain a separate bank account shall cease.
6 Surety Bonds. Amend RSA 78-A:8-b to read as follows:
I. When the commissioner or his designee, in his or her discretion, deems it necessary to protect the revenues to be obtained under this chapter, he or she may, after notice and hearing, require any operator required to collect the tax imposed by RSA 78-A:6 to file with him or her a bond issued by a surety company authorized by the New Hampshire insurance department to do business in this state, in an amount fixed by the commissioner or his or her designee, to secure the payment of any tax, interest or penalties due, or which may become due. [The operator shall file a bond within 10 days after the department has issued and mailed such notice.] Surety bonds may be required in situations such as, but not limited to, failure to file returns, failure to make payments with returns at the time required by law, tender by an operator of checks returned for insufficient funds, failure to pay interest and penalties assessed, operators who are itinerant, transient, or temporary, and any other situation which, in the discretion of the commissioner or his or her designee, renders the collection of the tax in jeopardy. If, after a hearing, the commissioner or his or her designee issues an order requiring an operator to file a surety bond with the department, the operator shall file such bond within 10 days of the issuance of the order.
II. The surety on such bond shall be discharged from the liability accruing on the bond after the expiration of 60 days from the date on which the surety shall have lodged with the department a written request to be so discharged; but such request shall not discharge such surety from any liability already accrued or which shall accrue before the expiration of said 60-day period. The duration of surety bonds shall be for one year only, unless the requirement is cancelled or revised by the commissioner or his or her designee before the expiration of the one-year period.
III. In lieu of a bond, cash in an amount prescribed by the commissioner or his or her designee may be deposited with the state treasurer who may, at any time, upon instructions from the commissioner or his or her designee and without notice to the depositor, apply the cash deposited to any tax or interest or penalties due. Cash deposited in lieu of a surety bond shall not earn interest.
IV. Failure to comply with the provisions of this section shall result in the suspension of the operator’s license, as provided in RSA 78-A:5.
7 Tobacco Tax Rate Reduced. Amend RSA 78:7 to read as follows:
78:7 Tax Imposed. A tax upon the retail consumer is hereby imposed at the rate of $[1.78] 1.68 for each package containing 20 cigarettes or at a rate proportional to such rate for packages containing more or less than 20 cigarettes, on all cigarettes sold at retail in this state. The payment of the tax shall be evidenced by affixing stamps to the smallest packages containing the cigarettes in which such products usually are sold at retail. The word ''package'' as used in this section shall not include individual cigarettes. No tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States.
8 Tobacco Products Other Than Cigarettes; Tax Rate Reduced. Amend RSA 78:7-c to read as follows:
78:7-c Tax Imposed on Tobacco Products Other Than Cigarettes. A tax upon the retail consumer is hereby imposed on tobacco products other than cigarettes at a rate of [65.03] 48 percent of the wholesale sales price. The tax under this section may be rounded to the nearest cent if the commissioner determines that the amount of tax would not thereby be made materially disproportionate. No such tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States. No such tax shall be imposed on premium cigars.
9 Applicability. Sections 7 and 8 of this act shall apply to all persons licensed under RSA 78:2. Such persons shall have 60 days to sell inventory in their possession at the tax rate in effect prior to the rate reduction. The department of revenue administration shall not issue a refund for the difference, if any, in the amount paid previously on such inventory and the tax rate established in sections 7 and 8 of this act.
10 Effective Date.
I. Section 9 of this act shall take effect upon its passage.
II. The remainder of this act shall take effect 60 days from its passage.
LBAO
11-0938
Amended 06/13/11
SB 40 FISCAL NOTE
AN ACT making technical corrections to meals and rooms tax laws and reducing the tobacco tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill, as amended by the House (Amendment #2011-2163h), will decrease state revenue by an indeterminable amount in FY 2012 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 states this bill will decrease the tobacco tax rates on cigarettes from $1.78 per pack to $1.68 per pack and decrease the tobacco tax on other tobacco products (OTP) from 65.03% to 48% of product’s wholesale price. The Department states they are unable to determine the exact fiscal impact at this time since the impact on state revenues will depend on its effect on sales. In FY 2010, cigarette stamp sales minus the floor tax revenues totaled $227,458,830, based on an estimate 127,785,860 cigarette packs sold. The Department estimates if sales in FY 2012 were consistent with those of FY 2010, this bill would decrease cigarette tax revenue by $12,778,586 ($0.10 X 127,785,860 packs). For other tobacco products, FY 2010 revenue totaled $7,835,027, based on a wholesale price base of $12,048,327. The Department estimates if sales in FY 2012 were consistent with FY 2010, this bill would decrease OTP revenue by $2,051,830 (17.03% X $12,048,327 tax base). Assuming no change in sales from FY 2010, the total revenue decrease is estimated at approximately $14,830,416 ($12,778,586 + $2,051,860) in FY 2012.
However, the Department states the proposed decrease in the tobacco tax rate may actually increase sales by 2.7026% for cigarettes and 23.0236% for OTP. Using these projected sales growth rates, the Department estimates this bill could result in cigarette tax revenue of $220,482,193 [(127,785,960 X 1.027026) X $1.68], a decrease of $6,976,637 ($227,458,830 –$220,482,193). The Department estimates an OTP sales growth of 23.0236%. As a result, this bill could result in OTP revenue of approximately $7,114,697 [(12,048,327 X 1.230236) X 48%], a decrease of $720,330 ($7,835,027 –$7,114,697). Assuming sales growth at the rates stated above, the total revenue decrease is estimated at approximately $7,696,967 ($6,976,637 + $720,330) in FY 2012.
Although the Department is unable to determine the exact fiscal impact of this bill, they estimate the decrease in state revenue could total anywhere between $7,696,967 and $14,830,416 in FY 2012. The Department did not provide a projection of this bill’s fiscal impact beyond FY 2012.