SB 95-FN - AS INTRODUCED
2019 SESSION
19-1029
04/10
SENATE BILL 95-FN
AN ACT establishing a working families property tax refund program.
SPONSORS: Sen. Cavanaugh, Dist 16
COMMITTEE: Ways and Means
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ANALYSIS
This bill establishes a working families property tax refund program for 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: 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
19-1029
04/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nineteen
AN ACT establishing a working families property tax refund program.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subdivision; Working Families Property Tax Refund Program. Amend RSA 198 by inserting after section 62 the following new subdivision:
Working Families Property Tax Refund Program
198:63 Definitions. In this subdivision:
I. “Commissioner” means the commissioner of the department of revenue administration.
II. "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:
(a) A vendee in possession under a land contract;
(b) One or more joint tenants or tenants in common; or
(c) A person who has equitable title, or the beneficial interest for life in the homestead.
III. "Working families property 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:
(a) Fifty percent of the claimant’s federal child and dependent care tax credit provided by Internal Revenue Code Section 21; or
(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.
198:64 Working Families Property Tax Refund; Procedures.
I. Pursuant to the provisions of this subdivision, eligible claimants shall be granted a refund following the effective date of this subdivision.
II. Residents shall apply to the department of revenue administration for the working families property tax refund.
III. An eligible claimant is a person who:
(a) Owns a homestead or interest in a homestead subject to the state education property tax;
(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;
IV. If a homestead is owned by 2 or more persons as joint tenants or tenants in common, the working families property tax refund applies to the state education property tax attributable to the proportionate share of the homestead that reflects the ownership percentage of the claimant.
V.(a) Completed applications for the working families property 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.
(b) The commissioner may accept late filed, but complete, applications filed on or before November 1, under the following circumstances:
(1) The claimant satisfies the commissioner that the claimant was prevented from timely filing the application due to accident, mistake or misfortune, or
(2) The claimant or other adult member of the household requested an extension of time to file his or her federal income tax return.
VI. Each claimant shall provide a copy of his or her federal income tax return for the corresponding tax period.
198:65 Rulemaking; Forms; Notice.
I. The commissioner shall adopt rules, under RSA 541-A, relative to the administration of the working families property tax refund program.
II. 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 reasonably necessary to determine the accuracy of the claim.
III. The claimant shall certify that the claim is made in good faith and that the facts contained on the claim are true.
198:66 Penalties; Assessment of Erroneous Claims.
I. Any person who files a claim for the working families property 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.
II. 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.
III. The commissioner may assess and collect the amount of any working families property 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.
198:67 Appeals.
I. Whenever the commissioner denies an application for the working families property 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.
II. 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.
198:68 Refund of Tax Claims. The department of revenue administration shall review a claim for the working families property 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.
2 Reference Added; Education Trust Fund. Amend the introductory paragraph of RSA 198:39, I to read as follows:
I. 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 working families property 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:
3 Exemption; Purchase of Supplies. Amend RSA 21-I:18, I(l) to read as follows:
(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 working families property tax refund claims.
4 Effective Date. This act shall take effect July 1, 2019.
19-1029
1/15/19
SB 95-FN- FISCAL NOTE
AS INTRODUCED
AN ACT establishing a working families property tax refund program.
FISCAL IMPACT: [ X ] State [ X ] County [ ] Local [ ] None
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STATE: | FY 2020 | FY 2021 | FY 2022 | FY 2023 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase |
Funding Source: | [ X ] General [ X ] Education [ ] Highway [ ] Other | |||
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COUNTY: |
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Revenue | $0 | $0 | $0 | $0 |
Expenditures | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase |
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METHODOLOGY:
This bill establishes a working families property tax refund program for taxpayers who receive the federal child and dependent care tax credit pursuant to Internal Revenue Code 21. The refund is calculated based on the lesser of the two calculations: (1) 50 percent of the claimant’s federal child and dependent care tax credit; or (2) the total amount of state wide education property tax (SWEPT) paid by the claimant for the claimant’s homestead less any property tax relief already received under the low and moderate income homeowners property tax relief program pursuant to RSA 198:57. Refunds in this bill are paid from the education trust fund.
The Department of Revenue Administration states this bill will increase State expenditures by an indeterminable amount. While the SWEPT is retained locally and not kept by the State, SWEPT refunds under this bill would be paid using the state education trust fund. Using Internal Revenue Services and United States Census Bureau data, the Department determined that $7,526,000 was claimed under the federal child and dependent care tax credits by New Hampshire taxpayers in 2016 and 50 percent of those claims would be $3,763,000. The rate of owner-occupied housing in New Hampshire in 2016 was 70.7%. Applying 70.7% to $3,763,000 produces a hypothetical amount of eligible SWEPT refunds totaling $2,660,441. However, the Department notes the estimated $2.66 million in refunds is likely overstated due to the following reasons: it assumes 50 percent of the claimant’s federal child and dependent care tax credit is always less than the SWEPT and it assumes claimants do not receive low and moderate income property tax relief under RSA 198:57.
To implement this bill, the Department estimates the need to hire a Tax Forms Examiner (LG 12, Step 1) in FY 2020 which will increase Department expenditures as follows:
Estimated Tax Forms Examiner Position Costs | FY 2020 | FY 2021 | FY 2022 | FY 2023 |
Salary | $30,000 | $31,000 | $33,000 | $34,000 |
Benefits | $26,000 | $28,000 | $29,000 | $31,000 |
Total | $56,000 | $59,000 | $62,000 | $65,000 |
The Board of Tax and Land Appeals is unable to determine the number of appeals to be filed under this bill. Any increase in appeals may impact state expenditures needed to process such appeals.
This bill contains penalties that may have an impact on the New Hampshire judicial and correctional systems. There is no method to determine how many charges would be brought as a result of the changes contained in this bill to determine the fiscal impact on expenditures. However, the entities impacted have provided the potential costs associated with these penalties below.
Judicial Branch | FY 2020 | FY 2021 |
Class B Misdemeanor | $53 | $54 |
Class A Misdemeanor | $76 | $77 |
Simple Criminal Case | $296 | $301 |
Appeals | Varies | Varies |
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It should be noted that average case cost estimates for FY 2020 and FY 2021 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. An unspecified misdemeanor can be either class A or class B, with the presumption being a class B misdemeanor. | ||
Judicial Council |
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Public Defender Program | Has contract with State to provide services. | Has contract with State to provide services. |
Contract Attorney – Misdemeanor | $300/Case | $300/Case |
Assigned Counsel – Misdemeanor | $60/Hour up to $1,400 | $60/Hour up to $1,400 |
It should be noted that a person needs to be found indigent and have the potential of being incarcerated to be eligible for indigent defense services. The majority of indigent cases (approximately 85%) are handled by the public defender program, with the remaining cases going to contract attorneys (14%) or assigned counsel (1%). | ||
Department of Corrections |
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FY 2018 Average Cost of Incarcerating an Individual | $40,615 | $40,615 |
FY 2018 Annual Marginal Cost of a General Population Inmate | $4,620 | $4,620 |
FY 2018 Average Cost of Supervising an Individual on Parole/Probation | $571 | $571 |
NH Association of Counties |
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County Prosecution Costs | Indeterminable | Indeterminable |
Estimated Average Daily Cost of Incarcerating an Individual | $105 to $120 | $105 to $120 |
Many offenses are prosecuted by local and county prosecutors. When the Department of Justice has investigative and prosecutorial responsibility or is involved in an appeal, the Department would likely absorb the cost within its existing budget. If the Department needs to prosecute significantly more cases or handle more appeals, then costs may increase by an indeterminable amount.
AGENCIES CONTACTED:
Department of Revenue Administration, Board of Tax and Land Appeals, Judicial Branch, Departments of Corrections and Justice, Judicial Council, and New Hampshire Association of Counties
| Date | Body | Type |
|---|---|---|
| Feb. 13, 2019 | Senate | Hearing |
| Senate | Floor Vote | |
| Jan. 8, 2020 | Senate | Floor Vote |
Jan. 8, 2020: Pending Motion Inexpedient to Legislate; 01/08/2020; SJ 1
Jan. 8, 2020: Sen. Feltes Moved Laid on Table, MA, VV; 01/08/2020; SJ 1
: Committee Report: Inexpedient to Legislate
Jan. 8, 2020: Committee Report: Inexpedient to Legislate, 01/08/2020; SC 47
March 14, 2019: Rereferred to Committee, MA, VV; 03/14/2019; SJ 8
March 14, 2019: Committee Report: Rereferred to Committee, 03/14/2019; SC 13
Feb. 13, 2019: ==TIME CHANGE== Hearing: 02/13/2019, Room 100, SH, 12:15 pm; SC 10
Jan. 3, 2019: Introduced 01/03/2019 and Referred to Ways and Means; SJ 4