Revision: Jan. 22, 2019, 9:03 a.m.
SB 190-FN - AS INTRODUCED
2019 SESSION
19-0625
10/01
SENATE BILL 190-FN
AN ACT relative to apportionment of sales under the business profits tax.
SPONSORS: Sen. Birdsell, Dist 19; Sen. D'Allesandro, Dist 20
COMMITTEE: Ways and Means
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ANALYSIS
This bill clarifies the apportionment to this state of sales of a business organization with activity in other states. The bill also reestablishes the commission to study apportionment under the business profits tax.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
19-0625
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nineteen
AN ACT relative to apportionment of sales under the business profits tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Business Profits Tax; Apportionment of Sales. Amend RSA 77-A:3, I(c) to read as follows:
(c) The percentage of the total sales, including charges for services, made by the business organization everywhere as is made by it within this state[.]:
(1) Sales of tangible personal property are made in this state if the property is delivered or shipped to a purchaser, other than the United States government, within this state regardless of f.o.b. point or other conditions of sale, or the property is shipped from an office, store, warehouse, factory or other place of storage in this state and [(1)] (A) the purchaser is the United States government, or [(2)] (B) the business organization is not taxable in the state of the purchaser.
(2) Sales other than sales of tangible personal property are in this state if the [income-producing activity is performed in this state, or the income-producing activity is performed both in and outside this state and a greater proportion of the income-producing activity is performed in this state than in any other state, based on costs of performance] business organization's market for the sales is in this state, follows:
(A) In the case of sale, rental, lease or license of real property, if the property is located in this state;
(B) In the case of rental, lease or license of tangible personal property, if the property is located in this state;
(C) In the case of sale of a service, if the service is delivered to a location in this state;
(D) In the case of sale, rental, lease or license of intangible property, if the property is used in this state;
(E) In the case of interest income, if the debtor or encumbered property is located in this state;
(F) In the case of dividend income, if the business organization's commercial domicile is in this state; and
(G) In the case of other income, if the income is derived from sources in this state.
(3) In the case of sales other than sales of tangible personal property, if the state or states of assignment cannot be determined, the state or states of assignment shall be reasonably approximated.
(4) In the case of sales other than sales of tangible personal property, if the taxpayer is not taxable in a state to which a sale is assigned, or if the state of assignment cannot be determined or reasonably approximated, such sale shall be excluded from the denominator of the sales factor.
2 New Section; Commission on Apportionment. Amend RSA 77-A by inserting after section 22 the following new section:
77-A:22-a Commission on Apportionment. There is established a commission to study the apportionment of gross business profits under the business profits tax.
I. The members of the commission shall be as follows:
(a) Two members of the senate, appointed by the president of the senate.
(b) Three members of the house of representatives, appointed by the speaker of the house of representatives.
(c) One member of the business community, appointed by the president of the senate.
(d) One member of the business community, appointed by the speaker of the house of representatives.
(e) The president of the New Hampshire Bar Association, or designee.
(f) The president of the New Hampshire Society of Certified Public Accountants, or designee.
(g) The commissioner of the department of business and economic affairs, or designee.
(h) The commissioner of the department of revenue administration, or designee.
(i) The attorney general, or designee.
II. Legislative members of the commission shall receive mileage at the legislative rate when attending to the duties of the commission.
III. The commission shall study apportionment among states pursuant to RSA 77-A:3 of gross business profits under the business profits tax.
IV. The members of the commission shall elect a chairperson from among the members. The first meeting shall be called by the first-named senate member. The first meeting of the commission shall be held within 45 days of the effective date of this section. Six members of the commission shall constitute a quorum.
V. The commission shall report its findings and any recommendations for proposed legislation to the president of the senate, the speaker of the house of representatives, the senate clerk, the house clerk, the governor, and the state library on or before November 1, 2020.
3 Repeal. RSA 77-A:22-a, relative to commission on apportionment, is repealed.
I. Section 3 of this act shall take effect November 1, 2020.
II. Section 1 of this act shall take effect January 1, 2022.
III. The remainder of this act shall take effect upon its passage.
19-0625
1/15/19
SB 190-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to apportionment of sales under the business profits tax.
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 | $0 | $0 | Indeterminable | Indeterminable |
Expenditures | $0 | $0 | $0 | $0 |
Funding Source: | [ X ] General [ X ] Education [ ] Highway [ ] Other | |||
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METHODOLOGY:
This bill amends the Business Profits Tax method for assigning service-based revenue and income from the use of intangibles to New Hampshire from a cost-of-performance to market-based sourcing method. The Department has no data or records on file from which to determine the fiscal impact of shifting from the cost-of-performance method of apportionment to the market-based sourcing method to determine a fiscal impact.
AGENCIES CONTACTED:
Department of Revenue Administration