HB 1254-FN-LOCAL - AS INTRODUCED
2016 SESSION
\t16-2194
\t09/10
HOUSE BILL\t1254-FN-LOCAL
AN ACT\tproviding an exemption from the business profits tax and the business enterprise tax for certain manufacturing businesses.
SPONSORS:\tRep. McConnell, Ches. 12; Rep. Flanagan, Hills. 26; Rep. Rideout, Coos 7; Rep. Rappaport, Coos 1; Rep. Cordelli, Carr. 4; Rep. Avellani, Carr. 5; Rep. F. McCarthy, Carr. 2
COMMITTEE:\tWays and Means
-----------------------------------------------------------------
ANALYSIS
\tThis bill provides an exemption from the business profits tax and the business enterprise tax for qualifying manufacturing businesses that start up or relocate to Coos, Grafton, Carroll, Sullivan, or Cheshire county.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation:\tMatter added to current law appears in bold italics.
\t\tMatter removed from current law appears [in brackets and struckthrough.]
\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
\t16-2194
\t09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Sixteen
AN ACT\tproviding an exemption from the business profits tax and the business enterprise tax for certain manufacturing businesses.
Be it Enacted by the Senate and House of Representatives in General Court convened:
\t1 Definition; Business Organization. Amend RSA 77-A:1, I to read as follows:
\t\tI. "Business organization'' means any enterprise, whether corporation, partnership, limited liability company, proprietorship, association, business trust, real estate trust or other form of organization; organized for gain or profit, carrying on any business activity within the state, except such enterprises as qualify as exempt under RSA 77-A:2-d or as are expressly made exempt from income taxation under the United States Internal Revenue Code as defined in RSA 77-A:1, XX. Each enterprise under this definition shall be subject to taxation under RSA 77-A:2 as a separate entity, unless specifically authorized by this chapter to be treated otherwise, such as, but not limited to, combined reporting. Trusts treated as grantor trusts under section 671 of the United States Internal Revenue Code shall be included in the return of their owners, and such owners shall be subject to the tax thereon to the extent such owners would be considered a business organization hereunder notwithstanding the existence of the trust. The use of consolidated returns as defined in the United States Internal Revenue Code as defined in RSA 77-A:1, XX is not permitted. Notwithstanding any other provision of this paragraph, an enterprise shall not be characterized as a business organization and shall be excluded from taxation at the entity level if it elects to be treated as a qualified investment company as defined in RSA 77-A:1, XXI. A partnership, limited liability company, estate, trust except grantor trusts pursuant to section 671 of the United States Internal Revenue Code, "S'' corporation, real estate investment trust, or any other such entity, other than an organization electing to be treated as a qualified investment company as defined in RSA 77-A:1, XXI whose net income is reportable by the true owners either directly or indirectly shall be subject to tax at the entity level, and no part of such earnings or loss shall be included in the calculation of the gross business profits of the owners of such entity.
\t2 New Section; Exemption for Qualifying Manufacturing Businesses. Amend RSA 77-A by inserting after section 2-c the following new section:
\t77-A:2-d Exemption for Qualifying Manufacturing Businesses.
\t\tI. There shall be an exemption from the tax due under this chapter for business organizations which are qualifying manufacturing businesses under this section for the tax periods for 15 years after the business organization starts up business activity in Coos, Grafton, Carroll, Sullivan, or Cheshire county.
\t\tII. To qualify for the exemption, the business organization shall:
\t\t\t(a) Be registered with the secretary of state as a corporation, limited liability company, limited liability partnership, or limited partnership.
\t\t\t(b) Be a newly formed or organized business conducting business activity in Coos, Grafton, Carroll, Sullivan, or Cheshire county. In the case of a business entity formerly domiciled in New Hampshire which relocates to this state, the business shall qualify for the exemption if a period of 3 years has lapsed from the time it was last subject to New Hampshire business taxes. If the business entity has one or more other branches or divisions presently established in this state, the new business shall have a different sector and subsector code or set of codes under the North American Industry Classification System or the North American Production Classification System than the presently established divisions or branches in order to qualify for the exemption. Employees of a presently established branch or division shall not be reduced due to the staffing of the newly established business.
\t\t\t(c) Employ and maintain a minimum of 15 manufacturing employees for which it pays unemployment tax to the state of New Hampshire. For a business that begins operations with fewer than 15 manufacturing employees for which it pays unemployment tax, the exemption shall begin with the quarter in which the number of manufacturing employees reaches a minimum of 15 and end in any quarter in which the minimum number of manufacturing employees falls below 15. For purposes of this section, "manufacturing employees" do not include management, sales, administrative or secretarial, or maintenance employees.
\t3 Business Enterprise Tax; Definitions. Amend RSA 77-E:1, III to read as follows:
\t\tIII. "Business enterprise'' means any profit or nonprofit enterprise or organization, whether corporation, partnership, limited liability company, proprietorship, association, trust, business trust, real estate trust or other form of organization engaged in or carrying on any business activity within this state, except such enterprises as qualify as exempt under RSA 77-E:2-a or as are expressly made exempt from income taxation under section 501(c)(3) of the United States Internal Revenue Code to the extent such enterprise does not engage in any business activity constituting unrelated business activity as defined by section 513 of the United States Internal Revenue Code. Each business enterprise under this definition shall be subject to the tax imposed under RSA 77-E as a separate entity except that trusts treated as grantor trusts under section 671 of the United States Internal Revenue Code shall be included in the return of their owners, and such owners shall be subject to the tax thereon to the extent any such owners would be considered a business enterprise hereunder notwithstanding the existence of the trust. The use of consolidated returns as defined in the United States Internal Revenue Code or of combined reporting is not permitted. Notwithstanding any other provision of this paragraph, an enterprise shall not be characterized as a business enterprise and shall be excluded from taxation at the entity level if it is a qualified investment company as defined in RSA 77-E:1, XIV.
\t4 New Section; Exemption for Qualifying Manufacturing Businesses. Amend RSA 77-E by inserting after section 2 the following new section:
\t77-E:2-a Exemption for Qualifying Manufacturing Businesses.
\t\tI. There shall be an exemption from the tax due under this chapter for business enterprises which are qualifying manufacturing businesses under this section for the tax periods for 15 years after the business organization starts up business activity in Coos, Grafton, Carroll, Sullivan, or Cheshire county.
\t\tII. To qualify for the exemption, the business enterprise shall:
\t\t\t(a) Be registered with the secretary of state as a corporation, limited liability company, limited liability partnership, or limited partnership.
\t\t\t(b) Be a newly formed or organized business conducting business activity in Coos, Grafton, Carroll, Sullivan, or Cheshire county. In the case of a business entity formerly domiciled in New Hampshire which relocates to this state, the business shall qualify for the exemption if a period of 3 years has lapsed from the time it was last subject to New Hampshire business taxes. If the business entity has one or more other branches or divisions presently established in this state, the new business shall have a different sector and subsector code or set of codes under the North American Industry Classification System or the North American Production Classification System than the presently established divisions or branches in order to qualify for the exemption. Employees of a presently established branch office or division shall not be reduced due to the staffing of the newly established business.
\t\t\t(c) Employ and maintain a minimum of 15 manufacturing employees for which it pays unemployment tax to the state of New Hampshire. For a business that begins operations with fewer than 15 manufacturing employees for which it pays unemployment tax, the exemption shall begin with the quarter in which the number of manufacturing employees reaches a minimum of 15 and end in any quarter in which the minimum number of manufacturing employees falls below 15. For purposes of this section, "manufacturing employees" do not include management, sales, administrative or secretarial, or maintenance employees.
\t5 Effective Date. This act shall take effect January 1, 2017.
\t\t\t\t\t\t\t\t\t\t\t16-2194
\t\t\t\t\t\t\t\t\t\t\t11/5/15
1254-FN-LOCAL - FISCAL NOTE
AN ACT\tproviding an exemption from the business profits tax and the business enterprise tax for certain manufacturing businesses.
FISCAL IMPACT:
The Department of Revenue Administration states this bill, as introduced, will decrease state general fund and education trust fund revenue by an indeterminable amount in FY 2017 and each year thereafter. There is no fiscal impact on state expenditures or county or local revenue and expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill provides a 15 year exemption from the business profits tax and the business enterprise tax to qualifying manufacturing business organizations that start up business activity in Coos, Grafton, Carroll, Sullivan or Cheshire County. To qualify for the exemption the business organization must be registered with the Secretary of State; be a newly formed or organized business in Coos, Grafton, Carroll, Sullivan or Cheshire County; and employ and maintain a minimum of 15 manufacturing employees for which it pays unemployment tax to the State. A business may also qualify if it was formerly domiciled in the State and has since relocated back to the State and has not been subject to New Hampshire business taxes for a period of three years. A New Hampshire business entity that creates a new branch with a different sector than its other entities and does not reduce staffing to its original entities due to the newly established business would also qualify for the exemption to the business taxes. The Department has no data or information to determine the number of manufacturing businesses in the identified counties, no means to determine how many qualified business organizations might move to the identified counties or no information on the amount of business tax they would be exempted from to determine the fiscal impact on revenue. However, the Department is able to state this bill will decrease state general fund and education trust fund by an indeterminable amount in FY 2017 and each year thereafter.