HB 185-FN-A-LOCAL - AS INTRODUCED
2019 SESSION
19-0150
10/05
HOUSE BILL 185-FN-A-LOCAL
SPONSORS: Rep. Weyler, Rock. 13; Rep. L. Ober, Hills. 37; Rep. Torosian, Rock. 14; Sen. Birdsell, Dist 19
COMMITTEE: Ways and Means
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ANALYSIS
This bill contingently reduces the rate of the interest and dividends tax depending on state general fund revenues, and repeals the tax on December 31, 2024.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
19-0150
10/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nineteen
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Interest and Dividends; Tax Rate. Amend RSA 77:1 to read as follows:
77:1 Rate.
I. The annual tax upon incomes, for returns made for taxable periods ending on or before December 31, 2019, shall be levied at the rate of 5 percent [for taxable periods].
II. The annual rate upon incomes for returns made for taxable periods ending January 1, 2020 through December 31, 2020 shall be 4 percent.
III. Beginning with taxable periods ending January 1, 2021 and later, the annual rate applicable to returns made for a taxable period shall be at the rate published by the commissioner of the department of revenue administration according to paragraph IV.
IV. By December 1, 2020, and by each December 1 thereafter, the legislative budget assistant, using the combined amount of revenue from the schedule of undesignated/unassigned fund balance for the general fund and education trust fund as contained in the audited comprehensive annual report performed pursuant to RSA 21-I:8, II(a), shall make a report to the speaker of the house of representatives, the senate president, and the commissioner of the department of revenue administration, determining whether the combined unrestricted general and education trust fund revenues collected for the most recently completed fiscal year is equal to or greater than the corresponding amount specified in the state operating budget for that year. Each year that the report finds that such revenues were equal to or greater than the corresponding amount specified in the state operating budget, the commissioner shall reduce the rate of the annual tax upon incomes by one percent and publish such rate applicable for the subsequent January 1 through December 31 period. If for any reported year such state revenues are less than the corresponding amount specified in the state operating budget, the commissioner shall apply and publish the same rate as the previous year. If for any 2 consecutive reported years such state revenues are less than the corresponding amount specified in the state operating budget, the commissioner shall increase the rate of the annual tax upon incomes by one percent and publish such rate applicable for the subsequent January 1 through December 31 period.
2 Who Taxable. Amend RSA 77:3 to read as follows:
77:3 Who Taxable.
I. Taxable income is that income received from interest and dividends during the tax year prior to the assessment date by:
(a) Individuals who are inhabitants or residents of this state for any part of the taxable year whose gross interest and dividend income from all sources, including income from a qualified investment company pursuant to RSA 77:4, V, exceeds [$2,400] $4,800 during that taxable period.
(b) Partnerships, limited liability companies, and associations, the beneficial interest in which is not represented by transferable shares, whose gross interest and dividend income from all sources exceeds [$2,400] $4,800 during the taxable year, but not including a qualified investment company as defined in RSA 77-A:1, XXI, or a trust comprising a part of an employee benefit plan, as defined in the Employee Retirement Income Security Act of 1974, section 3.
(c) Executors deriving their appointment from a court of this state whose gross interest and dividend income from all sources exceeds [$2,400] $4,800 during the taxable year.
II. No person shall be subject to tax under RSA 77 solely due to its holding an ownership interest in a qualified investment company as defined in RSA 77-A:1, XXI.
3 Exemptions. Amend RSA 77:5 to read as follows:
77:5 Exemptions. Each taxpayer shall have the following exemptions:
I. Income of [$2,400] $4,800.
II. An additional [$1,200] $2,400 if either or both taxpayers are 65 years of age or older on the last day of the tax year.
III. An additional [$1,200] $2,400 if either or both taxpayers are blind.
IV. An additional [$1,200] $2,400 if either or both taxpayers are disabled, unable to work, and have not yet reached their sixty-fifth birthday.
4 Reference to Interest and Dividends Tax Deleted; 2024. Amend RSA 14-B:8, III(q) to read as follows:
(q) New Hampshire taxes, specifying if business profits tax[,] or business enterprise tax[, or interest and dividends tax].
5 Reference to Interest and Dividends Tax Deleted; 2024. Amend RSA 15-A:5, I(d)(17) to read as follows:
(17) New Hampshire taxes, specifying if business profits tax[,] or business enterprise tax[, or interest and dividends tax].
6 Reference to Interest and Dividends Tax Deleted; 2024. Amend RSA 21-J:31 to read as follows:
21-J:31 Penalty for Failure to File. Any taxpayer who fails to file a return when due, unless an extension has been granted by the department, shall pay a penalty equal to 5 percent of the amount of the tax due or $10, whichever is greater, for each month or part of a month during which the return remains unfiled. The total amount of any penalty shall not, however, exceed 25 percent of the amount of the tax due or $50, whichever is greater. This penalty shall not be applied in any case in which a return is filed within the extended filing period as provided in [RSA 77:18-b,] RSA 77-A:9, RSA 77-E:8, RSA 83-C:6, RSA 83-E:5, RSA 84-A:7, or RSA 84-C:7, or the failure to file was due to reasonable cause and not willful neglect of the taxpayer. The amount of the penalty is determined by applying the percentages specified to the net amount of any tax due after crediting any timely payments made through estimating or other means.
7 Reference to Interest and Dividends Tax Deleted; 2024. Amend the introductory paragraph of RSA 21-J:33-a, I to read as follows:
I. If there is a substantial understatement of tax imposed under [RSA 77,] RSA 77-A, RSA 77-E, RSA 78-A, RSA 78-C, RSA 82-A, RSA 83-C, RSA 83-E, or RSA 84-A for any taxable period, there shall be added to the tax an amount equal to 25 percent of the amount of any underpayment attributable to such understatement.
8 Reference to Interest and Dividends Tax Deleted; 2024. Amend RSA 21-J:46, III to read as follows:
III. This section shall apply only to tax returns and associated payments under [RSA 77,] RSA 77-A[,] and RSA 77-E.
9 References to Interest and Dividends Tax Deleted; 2024. Amend RSA 71-C:4, I and II to read as follows:
I. On or before December 15 of every fiscal year the commissioner of the department of revenue administration shall certify in a report to the general court and the governor an analysis of each of the past fiscal year’s tax expenditures as identified in RSA 71-C:2, and other credits allowed under [RSA 77,] RSA 77-A, RSA 77-E, RSA 77-G, RSA 78, RSA 78-A, 78-B, RSA 82-A, RSA 83-E, RSA 84-A, RSA 84-C, and RSA 400-A.
II. The report shall be divided into the following parts:
(a) Tax expenditures as determined by the joint committee on tax expenditure review under RSA 71-C:3;
(b) Potential liabilities against the state’s revenues, specifically:
(1) Other credits allowed under [RSA 77,] RSA 77-A, RSA 77-E, RSA 77-G, RSA 78, RSA 78-A, RSA 78-B, RSA 82, RSA 82-A, RSA 83-E, RSA 84-A, RSA 84-C, and RSA 400-A against the business profits tax imposed by RSA 77-A; and
(2) Credit carryovers from overpaid taxes.
10 Returns for Interest and Dividends Taxes. All persons who are liable for a tax under RSA 77 as of December 31, 2024, who thereafter are no longer liable for a tax under RSA 77 because of the passage of this act shall make a return of such taxes due the commissioner of revenue administration in such manner and on such forms as the commissioner shall prescribe in rules adopted under RSA 541-A. The administrative provisions of RSA 77 shall remain in effect to permit the collection of taxes upon income taxable under RSA 77 which is received by persons subject to taxation under that chapter through December 31, 2024, and to permit the distribution of that revenue. Persons who are liable for a tax under RSA 77 who do not report the payment of federal income taxes on a calendar year basis are entitled to such proportion of the exemptions allowed in RSA 77 as the reporting period bears to their taxable year.
11 Repeals; Interest and Dividends Taxation; 2024. The following are repealed:
I. RSA 21-J:45, I(e), relative to reports on status of requested interest and dividends tax refunds.
II. RSA 77, relative to taxation of incomes.
III. RSA 77-A:4-c, II(c), relative to the duty of a committee to study the taxation of distributions received by investment organizations under the interest and dividends tax.
IV. RSA 77-A:4, I, relative to an adjustment to the business profits tax for taxes under RSA 77.
V. RSA 195-H:10, relative to exemption from RSA 77 for income and distributions from qualified tuition programs.
VI. RSA 261:52-a relative to notice that the interest and dividends tax may be due.
VII. RSA 391:3 relative to the taxation of common trust funds under RSA 77.
I. Sections 4-11 of this act shall take effect December 31, 2024.
II. The remainder of this act shall take effect July 1, 2019.
19-0150
11/5/18
HB 185-FN-A-LOCAL- FISCAL NOTE
AS INTRODUCED
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2020 | FY 2021 | FY 2022 | FY 2023 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
Expenditures | $0 | $0 | $0 | $0 |
Funding Source: | [ X ] General [ ] Education [ ] Highway [ ] Other | |||
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METHODOLOGY:
This bill reduces the Interest and Dividends (I&D) Tax from 5 percent to 4 percent for taxable periods ending January 1, 2020 through December 31, 2020. The I&D tax is either further reduced or increased depending on if certain contigencies are met begining with taxable periods ending January 1, 2020 and later, until December 31, 2024 when the tax is repealed. The gross I&D income thresholds are increased from $2,400 to $4,800 and increases the income exemption from $2,400 to $4,800 and the 65 years of age or older, blind and disabled exemptions from $1,200 to $2,400. The bill does not identify the tax year in which to apply these changes. The Department of Revenue Administration states it is not able to predict the fiscal impact of this bill on State General Fund Revenue as it is not able to predict future tax liabilities and credit carryforward amounts. Additionally, the Department is not able to provide an estimated impact on State General Fund Revenue based on a completed previous tax year because the applicability dates contained in the bill do not correspond to any particular tax year. The Department indicates this bill will not result in any additional administrative costs that could not be absorbed in the Department's operating budget.
The Office of Legislative Budget Assistant states the report contained in this bill can be completed within the Office's operating budget.
AGENCIES CONTACTED:
Department of Revenue Administration
| Date | Body | Type |
|---|---|---|
| Jan. 16, 2019 | House | Hearing |
| Jan. 29, 2019 | House | Exec Session |
| House | Floor Vote | |
| Feb. 14, 2019 | House | Floor Vote |
Feb. 14, 2019: Inexpedient to Legislate: MA RC 207-134 02/14/2019 HJ 5 P. 75
: Minority Committee Report: Ought to Pass with Amendment # 2019-0002h
Feb. 14, 2019: Majority Committee Report: Inexpedient to Legislate for 02/14/2019 (Vote 11-8; RC) HC 11 P. 20
: Majority Committee Report: Inexpedient to Legislate (Vote 11-8; RC)
Jan. 29, 2019: Executive Session: 01/29/2019 01:30 pm LOB 202
Jan. 22, 2019: Full Committee Work Session: 01/22/2019 02:00 pm LOB 202
Jan. 16, 2019: Public Hearing: 01/16/2019 11:00 am LOB 202
Jan. 2, 2019: Introduced 01/02/2019 and referred to Ways and Means HJ 2 P. 40