Revision: April 12, 2011, midnight
SB 58-FN-A – AS AMENDED BY THE SENATE
03/16/11 0686s
03/30/11 1181s
03/30/11 1276s
2011 SESSION
09/03
SENATE BILL 58-FN-A
AN ACT adding qualified community development entities to the definition of “qualified investment company” under the business profits tax and the business enterprise tax.
This bill adds qualified community development entities to the definition of “qualified investment company” under the business profits tax and the business enterprise tax. The bill also clarifies the a New Hampshire resident investor in a qualified investment company is only taxable on his or her proportionate share of interest and dividend income earned by the qualified investment company.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/16/11 0686s
03/30/11 1181s
03/30/11 1276s
11-0999
09/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT adding qualified community development entities to the definition of “qualified investment company” under the business profits tax and the business enterprise tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Purpose. The general court finds:
I. The New Hampshire business finance authority has been authorized by the United States Treasury Department to allocate federal New Markets Tax Credits to support economic development in certain eligible low-income areas of the state.
II. Under the federal New Markets Tax Credit Program, the business finance authority is required to establish certain “qualified community development entities” for purposes of facilitating investment by third parties to support economic development transactions.
III. This act ensures that “qualified community development entities" established by the business finance authority will not be subject to the business profits tax, the business enterprise tax, or the interest and dividends tax. The ultimate recipient of the investment funds, however, will continue to be subject to these taxes.
2 Business Profits Tax; Definitions; Qualified Investment Company. Amend RSA 77-A:1, XXI(a) to read as follows:
XXI.(a) “Qualified investment company” means:
(1) A regulated investment company as defined in section 851 of the United States Internal Revenue Code as defined in RSA 77-A:1, XX;
(2) An organization that is an investment company under the Investment Company Act of 1940 as amended; [or]
(3) An organization that would be an investment company under the Investment Company Act of 1940, as amended, but for the exception from investment company status provided by section 3(c)(1) or 3(c)(7) of said Investment Company Act[.]; or
(4) A qualified community development entity as defined in section 45D of the United States Internal Revenue Code.
3 Business Enterprise Tax; Definitions; Qualified Investment Company. Amend RSA 77-E:1, XIV(a) to read as follows:
XIV.(a) “Qualified investment company” means:
(1) A regulated investment company as defined in section 851 of the United States Internal Revenue Code as defined in RSA 77-E:1, XVII;
(2) An organization that is an investment company under the Investment Company Act of 1940, as amended; [or]
(3) An organization that would be an investment company under the Investment Company Act of 1940, as amended, but for the exception from investment company status provided by section 3(c)(1) or 3(c)(7) of said Investment Company Act[.]; or
(4) A qualified community development entity as defined in section 45D of the United States Internal Revenue Code, which entity is owned, controlled, or managed, directly or indirectly, by the business finance authority of the state of New Hampshire.
4 Taxation of Income; What Taxable. Amend RSA 77:4, V to read as follows:
V. For each holder of an ownership interest in a qualified investment company as defined in RSA 77-A:1, XXI [which is not a qualified investment capital company as defined in RSA 77-A:1, XXIV], which holder is subject to tax under RSA 77, the holder’s proportional share of the interest or dividend income taxable under this chapter, less any income attributable to United States government notes or bonds, [of] received by such qualified investment company shall be treated as a dividend taxable under this chapter to the holder; however, notwithstanding any other provision of RSA 77, no actual distribution made to such holder by such qualified investment company shall be taxable under RSA 77.
5 Applicability. Sections 1-3 of this act shall apply to taxable periods ending on or after December 31, 2010. Section 4 of this act shall apply with respect to all taxable periods subject to assessment of the tax and appealed pursuant to RSA 21-J:28-b.
6 Effective Date. This act shall take effect upon its passage.
LBAO
11-0999 Amended 04/12/11
SB 58 FISCAL NOTE
AN ACT adding qualified community development entities to the definition of “qualified investment company” under the business profits tax and the business enterprise tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill, as amended by the Senate (Amendments #2011-1181s and #2011-1276s), may 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 revenues.
METHODOLOGY:
The Department of Revenue Administration states this bill adds qualified community development entities to the definition of qualified investment company under the business profits tax (BPT), business enterprise tax (BET), and interest and dividends tax (I&D). The Department states it is not known if any current filers of Business tax or I&D tax returns would qualify as being tax exempt under these new provisions as the Department does not have any data to identify who may be affected by this bill. The Department states portions of this bill would apply to taxable periods ending on or after December 31, 2010, and a portion would apply with respect to all taxable periods subject to assessment of the tax and appealed pursuant to RSA 21-J:28-b. As a result this bill would have a retroactive application and apply to business activity already conducted in closed tax periods, possibly as far back as three years. The Department states this bill would allow certain businesses to file amended tax returns and receive refunds of their taxes paid, but are unable to determine the amount in refunds which would be requested or paid at this time.