Bill Text - HB1422 (2016)

Creating an exemption from the business profits tax for new businesses in New Hampshire.


Revision: March 8, 2016, midnight

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HB 1422-FN - AS INTRODUCED

 

2016 SESSION

\t16-2639

\t09/10

 

HOUSE BILL\t1422-FN

 

AN ACT\tcreating an exemption from the business profits tax for new businesses in New Hampshire.

 

SPONSORS:\tRep. Estevez, Hills. 37; Rep. Eastman, Hills. 28; Rep. Manning, Rock. 8; Rep. Marston, Hills. 19; Rep. Takesian, Hills. 37

 

COMMITTEE:\tWays and Means

 

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ANALYSIS

 

\tThis bill creates an exemption from the business profits tax for new businesses in New Hampshire.

 

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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\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.

\t16-2639

\t09/10

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Sixteen

 

AN ACT\tcreating an exemption from the business profits tax for new businesses in New Hampshire.

 

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 New Businesses.  Amend RSA 77-A by inserting after section 2-c the following new section:

\t77-A:2-d  Exemption for New Business Organizations.

\t\tI.  There shall be an exemption from the tax due under this chapter for business organizations which begin conducting new business activity in this state for the tax periods for 10 years after the new business activity commences.

\t\tII.  To qualify for the exemption, the business organization shall:

\t\t\t(a)  Register 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 New Hampshire or, 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 a minimum of 4 persons for which it pays unemployment tax to the state of New Hampshire.  For a business that begins operations with fewer than 4 employees for which it pays unemployment tax, the exemption shall begin with the quarter in which the number of employees reaches a minimum of 4 and end in any quarter in which the minimum number of employees falls below 4.

\t\t\t(d)  Demonstrate corporate good citizenship or other evidence of the ability of the new business to contribute to the economy and the community.

\t\t\t(e)  Establish a documented hiring preference for New Hampshire residents.

\t\t\t(f)  Have partnerships with one or more local colleges or universities to offer internships for college and university students.

  \t3  Effective Date.  This act shall take effect January 1, 2017.

 

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\t\t\t\t\t\t\t\t\t\t\t16-2639

\t\t\t\t\t\t\t\t\t\t\t11/12/15

 

HB 1422-FN- FISCAL NOTE

 

AN ACT\tcreating an exemption from the business profits tax for new businesses in New Hampshire.

 

 

FISCAL IMPACT:

The Department of Revenue Administration states this bill, as introduced, will decrease state general fund and education trust fund revenue and increase state expenditures by an indeterminable amount in FY 2017 and each year thereafter.  There is no fiscal impact on county or local revenue and expenditures.

 

METHODOLOGY:

The Department of Revenue Administration states this bill provides for a 10 year tax exemption from the business profits tax to any business organization which begins conducting new business activity in New Hampshire.  To qualify for the exemption a business organization must be registered with the Secretary of State as a corporation, LLC, LLP, or LP; be a newly formed or organized business conducting business activity in the State; employ a minimum of four employees for which it pays unemployment tax to the State; demonstrates corporate good citizenship and contribution to the economy and the community; establish a hiring preference for New Hampshire residents; and partner with local colleges to offer internships.  Additionally, a business organization may qualify for the exemption if the business organization was formerly domiciled in New Hampshire and has since relocated back to New Hampshire 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.  The Department has no data or information to determine the number of businesses that would move to the State or 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.  The Department states this bill will increase state expenditures related to administering and auditing this tax exemption.

 

 

 

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