Revision: March 8, 2016, midnight
\t \t\tHB 668-FN - AS AMENDED BY THE HOUSE
11Feb2016... 0464h
2015 SESSION
\t15-0761
\t09/03
HOUSE BILL\t\t668-FN
AN ACT\trelative to expense deductions under the business profits tax.
COMMITTEE:\tWays and Means
\tThis bill allows a business organization to calculate expense deductions as defined by Internal Revenue Code section 179, but not to exceed $100,000 per calendar year under the business profits tax.
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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\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11Feb2016... 0464h
\t15-0761
\t09/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT\trelative to expense deductions under the business profits tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
\t1 Business Profits Tax; Expense Deductions. Amend RSA 77-A:3-a to read as follows:
\t77-A:3-a Expense Deductions. Notwithstanding the definition of Internal Revenue Code in RSA 77-A:1, XX, in determining gross business profits before net operating loss and special deductions, a business organization shall calculate expense deductions [not to exceed $25,000] as permitted under Internal Revenue Code section 179 using the version of the United States Internal Revenue Code in effect as of January 1, 2012, but not to exceed $100,000 per calendar year.
\t2 Applicability. This act shall apply for tax periods beginning January 1, 2017.
\t3 Effective Date. This act shall take effect January 1, 2017.
\t\t\t\t\t\t\t\t\t\t\t15-0761
\t\t\t\t\t\t\t\t\t\t\tAmended 2/23/16
HB 668-FN- FISCAL NOTE
AN ACT\trelative to expense deductions under the business profits tax.
FISCAL IMPACT:
METHODOLOGY:
The Department of Revenue Administration (DRA) states this bill seeks to increase the Internal Revenue Code (IRC) Section 179 expense deduction allowed under NH’s business tax from $25,000 to $100,000. This bill would take effect January 1, 2017 and would apply to taxable periods beginning January 1, 2017. The Department used all business taxpayer records that have been filed for Tax Year 2013 as of January 26, 2015 to determine the impact of the proposed legislation. The amount of each taxpayer’s IRC Section 179 expense was analyzed to identify who had between $25,000 (the current deduction cap) and $100,000 (the proposed deduction cap). Each taxpayer’s amount was multiplied by their apportionment percentage and then multiplied by the tax rate of 8.5% to calculate the fiscal impact. The Department states had the proposed legislation been in place for Tax Year 2013, there would have been a reduction in revenue of at least $4,722,522. The impact provided for Tax Year 2013 does not consider the offset of deductions or credits taken by taxpayers. Additionally, any portion of the taxpayer's federal IRC section 179 deduction that is disallowed on the New Hampshire return may be deducted as regular depreciation over several years under the relevant IRC depreciation provision. The Department has no way to isolate the depreciated amount over the years compared to the initial add back of the IRC section 179 expense. The Department indicates that in theory the IRC section 179 expense add back is a timing issue because any deduction disallowed by New Hampshire in the year of acquisition would be deducted as depreciation in later years. However, because businesses move, go out of business, or their New Hampshire apportionment changes, it cannot be stated with any certainty that New Hampshire's limitation of the IRC section 179 deduction is simply a timing issue. The Department states it could administer this bill within its budget.