SB 511-FN-A - AS INTRODUCED
2016 SESSION
\t16-2822
\t10/04
SENATE BILL\t511-FN-A
AN ACT\testablishing a refund of a portion of state education property taxes for child and dependent care expenses.
SPONSORS:\tSen. Hosmer, Dist 7; Sen. Feltes, Dist 15; Sen. Kelly, Dist 10; Sen. Reagan, Dist 17; Sen. Soucy, Dist 18; Sen. Woodburn, Dist 1
COMMITTEE:\tWays and Means
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ANALYSIS
\tThis bill establishes a refund of a portion of state education property taxes paid by taxpayers who claimed the federal child and dependent care tax credit pursuant to Internal Revenue Code Section 21. The refunds are paid from the education trust fund.
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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\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
\t16-2822
\t10/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Sixteen
AN ACT\testablishing a refund of a portion of state education property taxes for child and dependent care expenses.
Be it Enacted by the Senate and House of Representatives in General Court convened:
\t1 New Subdivision; Refund for Child and Dependent Care Expenses. Amend RSA 198 by inserting after section 62 the following new subdivision:
Refund for Child and Dependent Care Expenses
\t198:63 Definitions. In this subdivision:
\t\tI. “Commissioner” means the commissioner of the department of revenue administration.
\t\tII. "Homestead'' means the dwelling owned by a claimant or, in the case of a multi-unit dwelling, the portion of the dwelling which is owned and used as the claimant's principal place of residence and the claimant's domicile for purposes of RSA 654:1. "Homestead'' shall not include land and buildings taxed under RSA 79-A or land and buildings or the portion of land and buildings rented or used for commercial or industrial purposes. In this paragraph, the term "owned'' includes:
\t\t\t(a) A vendee in possession under a land contract;
\t\t\t(b) One or more joint tenants or tenants in common; or
\t\t\t(c) A person who has equitable title, or the beneficial interest for life in the homestead.
\t\tIII. "Child and dependent care tax refund” means a refund of state education property taxes paid by taxpayers who receive the federal child and dependent care tax credit pursuant to Internal Revenue Code Section 21, equal to the lesser of:
\t\t\t(a) Fifty percent of the claimant’s federal child and dependent care tax credit provided by Internal Revenue Code Section 21; or
\t\t\t(b) The total amount of the state education property tax paid by the claimant attributable to that portion of such property that qualifies as the claimant’s homestead less any property tax relief provided by RSA 198:57.
\t198:64 Child and Dependent Care Tax Refund; Procedures.
\t\tI. Pursuant to the provisions of this subdivision, eligible claimants shall be granted a child and dependent care tax refund following the effective date of this subdivision.
\t\tII. Residents shall apply to the department of revenue administration for the child and dependent care tax refund.
\t\tIII. An eligible claimant is a person who:
\t\t\t(a) Owns a homestead or interest in a homestead subject to the state education property tax;
\t\t\t(b) Resided in such homestead on April 1 of the year for which the claim is made, except such persons as are on active duty in the United States armed forces or are temporarily away from such homestead but maintain the homestead as a primary domicile;
\t\tIV. If a homestead is owned by 2 or more persons as joint tenants or tenants in common, the child care property tax credit applies to the state education property tax attributable to the proportionate share of the homestead that reflects the ownership percentage of the claimant.
\t\tV.(a) Completed applications for the child and dependent care tax refund shall be filed with the department of revenue administration between May 1 and June 30 following the due date of the final tax bill as defined in RSA 76:1-a for state education property taxes.
\t\t\t(b) The commissioner may accept late filed, but complete, applications filed on or before November 1, under the following circumstances:
\t\t\t\t(1) The claimant satisfies the commissioner that the claimant was prevented from timely filing the application due to accident, mistake or misfortune, or
\t\t\t\t(2) The claimant or other adult member of the household requested an extension of time to file his or her federal income tax return.
\t\tVI. Each claimant shall provide a copy of his or her federal income tax return for the corresponding tax period.
\t198:65 Rulemaking; Forms; Notice.
\t\tI. The commissioner shall adopt rules, under RSA 541-A, relative to the administration of the child and dependent care tax refund.
\t\tII. The commissioner shall approve and provide forms relative to the administration of this subdivision, which shall include sections for information concerning the claimant, the claimant’s household, the property for which the tax refund is sought, and such other information as is reasonable necessary to determine the accuracy of the claim.
\t\tIII. The claimant shall certify that the claim is made in good faith and that the facts contained on the claim are true.
\t198:66 Penalties; Assessment of Erroneous Claims.
\t\tI. Any person who files a claim for the child and dependent care tax refund under this subdivision with fraudulent intent and any person who assisted in the preparation or filing of the claim or supplied information upon which the claim was prepared shall be guilty of a misdemeanor.
\t\tII. The commissioner may audit any claim for relief filed under this subdivision to determine whether the claim has been granted erroneously. Any such audit shall commence within 3 years after the claim has been granted. Any assessment made by the commissioner shall be subject to appeal in accordance with RSA 198:67, I.
\t\tIII. The commissioner may assess and collect the amount of any child and dependent care tax refund granted relative to a fraudulent or erroneously paid claim, including interest provided under RSA 21-J:28 and an additional penalty of 25 percent for the erroneous amount of such claim or an additional penalty of the greater of 25 percent or $1,000 for a fraudulent claim.
\t198:67 Appeals.
\t\tI. Whenever the commissioner denies an application for the child and dependent care tax refund, or after an audit, assesses an amount against the claimant, including interest and applicable penalties for an erroneously paid claim, the claimant may appeal in writing within 30 days of notice of such refusal or assessment to the board of tax and land appeals.
\t\tII. The board of tax and land appeals may reverse or affirm, in whole or in part, or modify the decision appealed from when there is an error of law or when the board finds the commissioner's action to be arbitrary or unreasonable.
\t198:68 Refund of Tax Claims. The department of revenue administration shall review a claim for the child and dependent care tax refund filed with it and, if such claim is determined to be valid, shall certify such amount to the state treasurer within 120 days who shall pay such claims from funds in the education trust fund. Such sums are hereby appropriated and the governor is authorized to draw a warrant from the education trust fund to satisfy the state's obligation under this section. Such warrant for payment shall be issued regardless of the balance of funds available in the education trust fund. If the balance in the education trust fund, after the issuance of any such warrant, is less than zero, the commissioner of the department of revenue administration shall inform the fiscal committee and the governor and council of such balance. This reporting shall not in any way prohibit or delay the payment of valid claims. The department shall notify a claimant whose claim is rejected in whole or in part of such determination within 90 days of the department's receipt of the claim and all required documentation.
\t2 Reference Added; Education Trust Fund. Amend the introductory paragraph of RSA 198:39, I to read as follows:
\t\tI. The state treasurer shall establish an education trust fund in the treasury. Moneys in such fund shall not be used for any purpose other than to distribute adequate education grants to municipalities' school districts and to approved charter schools pursuant to RSA 198:42, to provide low and moderate income homeowners property tax relief under RSA 198:56-198:61, to provide child and dependent care tax refunds under RSA 198:63-198:68, and to fund kindergarten programs as may be determined by the general court. The state treasurer shall deposit into this fund immediately upon receipt:
\t3 Exemption; Purchase of Supplies. Amend RSA 21-I:18, I(l) to read as follows:
\t\t\t(l) Purchases of services from private contractors by the department of revenue administration with respect to the administration of low and moderate income homeowners property tax relief claims and child and dependent care tax refund claims.
\t4 Effective Date. This act shall take effect July 1, 2017.
\t\t\t\t\t\t\t\t\t\t\t16-2822
\t\t\t\t\t\t\t\t\t\t\t1/11/16
SB 511-FN-A- FISCAL NOTE
AN ACT\testablishing a refund of a portion of state education property taxes for child and dependent care expenses.
FISCAL IMPACT:
The Department of Revenue Administration, Judicial Branch, and New Hampshire Board of Tax and Land Appeals state this bill, as introduced, may increase state general fund expenditures, education trust fund expenditures, and state revenue by an indeterminable amount in FY 2018 and each year thereafter. There will be no fiscal impact to county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill amends RSA 198 by establishing a refund of a portion of the State Education Property Tax paid by New Hampshire taxpayers who received the Federal Child and Dependent Care tax credit. The refund would be equal to the lesser of 50 percent of the claimant's Federal Child and Dependent Care tax credit or the total amount of State Education Property tax paid by the claimant less any tax relief already provided by the Low and Moderate Income Homeowners Property Tax Relief program. The Department states the statewide education property tax is locally retained and this bill contemplates the payment of refunds from the Education Trust Fund. The Department interprets the proposed refund as an increased expense to the Education Trust Fund, as opposed to a decrease in revenue. This bill would first impact the Education Trust Fund in FY 2018 or tax year 2018 as the effective date is July 1, 2017. The Department does not have access to data indicating the number of New Hampshire homeowners qualifying for the federal Child and Dependent Care Tax Relief program. The Department estimates the following fiscal impact on the Education Trust Fund based on available information:
Estimated Expenditure Increase From Education Trust Fund | ||
Row # |
| |
1 | Total amount of Child and Dependent Care Tax Relief received by New Hampshire Taxpayers on federal returns in Tax Year 2013 (Source - Internal Revenue Service) | $15,718,000 |
2 | Proposed Bill Refund = 50% of claimaint's Federal Child and Dependent Care tax credit or the total amount of state property tax paid less any tax relief from the Low and Moderate Income Homeowners Tax Relief program | 50.0% |
3 | Average Homeownership in New Hampshire in 2013 (Source - US Census Bureau) | 74.1% |
4 | Estimated Maximum Amount of Refund Under Proposed Bill ((Row 1 * Row 2)* Row 3) | $5,823,519 |
The Department is responsible to administer the refund and must review claims and certify amounts to the Department of Treasury within 120 days if approved. To administer the refund the Department anticipates it would need to create a Tax Forms Examiner position (Labor Grade 12, step 1) primarily responsible for reviewing refund applications. Assuming the position would be filled on May 1, 2018, the Department estimates it would cost $15,000 in FY 2018, $56,000 in FY 2019, and $59,000 in FY 2020.
This bill does not contain an appropriation or authorization for new positions.
The Judicial Branch states this bill contains an unspecified misdemeanor, which can be either class A or B, with the presumption being a class B misdemeanor. Claimants of the child and dependent care tax refund can appeal adverse decisions to the board of tax and land appeals and resulting decisions may be appealed to the supreme court. There is no method to determine how many charges would be brought or appeals filed to the supreme court as a result of this bill to determine the fiscal impact on expenditures. The table below provides the potential costs associated with the penalty included in this bill:
| FY 2017 | FY 2018 |
Judicial Branch* |
|
|
Class B Misdemeanor | $50 | $53 |
Class A Misdemeanor | $70 | $74 |
Appeals | Varies | Varies |
*It should be noted average case cost estimates for FY 2017 and FY 2018 are based on data that is more than ten years old and does not reflect changes to the courts over that same period of time or the impact these changes may have on processing the various case types. | ||
The New Hampshire Board of Tax and Land Appeals states that to the extent appeals are filed state expenditures and revenue would increase.
The Department of Justice states it can absorb any associated costs related to this bill within its existing budget.
The Judicial Council states this bill will have no fiscal impact on its operations.
The New Hampshire Association of Counties does not anticipate any fiscal impact on counties.