HB 1641-FN – AS INTRODUCED
2012 SESSION
10/09
HOUSE BILL 1641-FN
AN ACT requiring the carry forward of certain net operating loss deductions to relate to creation of new jobs.
This bill adds requirements that the carry forward of certain net operating loss deductions be related to the creation of new jobs.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
12-2788
10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twelve
AN ACT requiring the carry forward of certain net operating loss deductions to relate to creation of new jobs.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Business Profits Tax. Net Operating Loss Carryovers; Reference Added. Amend RSA 77-A:4, XIII(d) to read as follows:
(d) On or after July 1, 2013, the amount of net operating loss generated in a tax year that may be carried forward may not exceed $10,000,000, and may be taken only to the extent the taxpayer meets the requirements of paragraph XIX.
2 New Paragraph; Net Operating Loss Carryovers; Requirements Added. Amend RSA 77-A:4 by inserting after paragraph XVIII the following new paragraph:
XIX. For any net operating loss carryover amount whenever generated, the amount in excess of $1,000,000 shall only be a deduction under this section as follows:
(a) Each new job created by the taxpayer during the tax year shall permit a deduction by the taxpayer of $10,000.
(b) Each new job created shall only permit a deduction in one tax year.
(c) The deduction for each new job created shall only be permitted if the job would not have been created but for the application of the $10,000 deduction per job created.
3 Effective Date. This act shall take effect 60 days after its passage.
LBAO
12-2788
Revised 12/01/11
HB 1641-FN - FISCAL NOTE
AN ACT requiring the carry forward of certain net operating loss deductions to relate to creation of new jobs.
FISCAL IMPACT:
The Department of Revenue Administration states this bill may have an indeterminable impact on state revenue in FY 2014 and each year thereafter. There will be no fiscal impact on state, county, and local expenditures, or county and local revenue.
METHODOLOGY:
The Department of Revenue Administration states this bill adds language to the increase in Net Operating Loss (NOL) carry forward from $1,000,000 to $10,000,000 that is scheduled to take effect on July 1, 2013. The bill states the NOL “may be taken only to the extent the taxpayer meets the requirements of paragraph XIX”. The new paragraph XIX would place three qualifying restrictions on $9,000,000 of the NOL –
• Each new job created by the taxpayer during the tax year shall permit a deduction by the taxpayer of $10,000;
• Each new job created shall only permit a deduction in one year; and
• The deduction for each new job created shall only be permitted if the job would not have been created but for the application of the $10,000 deduction per job created.
The Department states these qualifiers may be unconstitutional as they would classify and treat taxpayers differently based upon whether or not they had created new jobs. In addition, the Department states having an NOL carry forward does not necessarily equate with creating new jobs. The Department is unable to determine the possible fiscal impact this bill would have on a taxpayer (possible negative impact) or on the state (possible positive impact) as a result of the reduction in a taxpayer’s available NOL. The Department also has no information regarding new jobs that might be created by taxpayers who may also have NOLs in excess of $1,000,000. The exact fiscal impact cannot be determined at this time.
The Department states administration of this bill would require greater effort on the part of the Department auditors to ensure compliance with the law. Instead of doing an ordinary audit of the NOL deduction, under this new law, the auditors would require additional time to review how the taxpayer arrived at their NOL deduction if it is more than $1,000,000. The auditor will have to review taxpayer employment records to determine who was hired for a “new job”. In addition, the language of the bill would require the auditor to make a determination as to the taxpayer’s intent about hiring such a person and was the credit calculation contemplated when doing so. The Department states ensuring compliance with the proposed bill would be difficult due to the elimination of audit positions at the Department.