Revision: May 29, 2024, 12:55 p.m.
HB 1525 - AS AMENDED BY THE SENATE
7Mar2024... 0711h
05/22/2024 1982s
2024 SESSION
24-2518
02/10
HOUSE BILL 1525
AN ACT relative to credits for the business profits tax and business enterprise tax.
SPONSORS: Rep. Doucette, Rock. 25; Sen. Abbas, Dist 22
COMMITTEE: Ways and Means
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AMENDED ANALYSIS
This bill extends tax credits for the business profits tax and business enterprise 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
7Mar2024... 0711h
05/22/2024 1982s 24-2518
02/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
AN ACT relative to credits for the business profits tax and business enterprise tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Business Profits Tax; Payments Due with Returns and Estimates. Amend RSA 77-A:7, I(b)(2)-(3) to read as follows:
(2) For taxable periods ending on or after December 31, [2025] 2029 a credit shall only be allowed in an amount up to 250 percent of the total tax liability for the taxable period and the remainder of the overpayment shall be refunded; and
(3) For taxable periods ending on or after December 31, [2027] 2031 a credit shall only be allowed in an amount up to 100 percent of the total tax liability for the taxable period and the remainder of the overpayment shall be refunded.
2 Business Enterprise Tax; Payments Due with Returns. Amend RSA 77-E:6, II(b)-(c) to read as follows:
(b) For taxable periods ending on or after December 31, [2025] 2029 a credit shall only be allowed in an amount up to 250 percent of the total tax liability for the taxable period and the remainder of the overpayment shall be refunded; and
(c) For taxable periods ending on or after December 31, [2027] 2031 a credit shall only be allowed in an amount up to 100 percent of the total tax liability for the taxable period and the remainder of the overpayment shall be refunded.
3 Effective Date. This act shall take effect July 1, 2024.
24-2518
Amended 5/29/24
HB 1525- FISCAL NOTE
AS AMENDED BY THE SENATE (AMENDMENT #2024-1982s)
AN ACT relative to credits for the business profits tax and business enterprise tax.
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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Estimated State Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
Revenue | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | ||
Revenue Fund(s) | General Fund and Education Trust Fund
| |||||
Expenditures | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None
| |||||
Appropriations | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None
| |||||
• Does this bill provide sufficient funding to cover estimated expenditures? [X] N/A • Does this bill authorize new positions to implement this bill? [X] N/A | ||||||
METHODOLOGY:
This bill amends the future credit carry forward limits for the Business Profits Tax (BPT) and Business Enterprise Tax (BET). This bill will allow the overpayment a taxpayer may claim as a credit to remain at 500% of the total tax liability until the tax period ending on or after December 31, 2029, at which time overpayment a taxpayer may claim as a credit will be reduced from 500% to 250% of the total tax liability. The overpayment a taxpayer may claim as a credit will decrease from 250% to 100% of the total tax liability for the tax period ending on or after December 31, 2031.
The Department of Revenue Administration states this bill will result in an indeterminable increase in General Fund and Education Trust Fund revenue for fiscal year 2025 through 2029 and an indeterminable decrease in General Fund and Education Trust Fund revenue for fiscal years 2030 through 2034. The Department is not able to estimate an exact fiscal impact as it cannot predict what the total requested carry forward amount from the BPT and BET will be in future years. The Department notes the following reasons as to why determining the fiscal impact is challenging:
Using tax year 2022, the Department estimates the cumulative fiscal impact would not have exceeded $102.4 million if the proposed bill had been in effect for this tax year. However, the Department is not able to project how much of this impact would be realized each year for the period FY 2025 through FY 2034. To the extent the actual fiscal impact is higher in the earlier years it will be lower in the later years and alternatively if the actual fiscal impact is lower in the earlier years it will be higher in the later years.
The Department provides two scenarios to demonstrate the fiscal impact. The first scenario assumes no adjustments would be made to estimate payments and that the first impact of the credit carryforward cap would be realized through mandatory refunds (See Table 1). The second scenario assumes the historic breakdown of fiscal year revenue into tax years will determine how the impact of the credit carryforward cap will be realized, with taxpayers adjusting their estimates, returns, and extension payments and claiming refunds (See Table 2).
Table 1: No adjustments by taxpayer and credit carry forward cap realized through mandatory refunds (Maximum Cumulative Impact Not to Exceed $102.4 million) | |
Fiscal Year | Estimated Fiscal Impact Range |
2025 | $0 - $10,300,000 |
2026 | $2,900,000 - $29,400,000 |
2027 | $19,300,000 - $39,100,000 |
2028 | $5,900,000 - $35,100,000 |
2029 | $8,400,000 - $41,500,000 |
2030 | ($2,900,000) - ($26,700,000) |
2031 | ($19,300,000) - ($39,100,000) |
2032 | ($5,900,000) - ($35,100,000) |
2033 | ($8,400,000) - ($51,800,000) |
2034 | $0 - ($2,700,000) |
Table 2: Credit Carryforward Cap realized using historic breakdown of fiscal year revenue into tax years and taxpayers making adjustments (Maximum Cumulative Fiscal Impact Not to Exceed $102.4 million) | |
Fiscal Year | Estimated Fiscal Impact Range |
2025 | $0 - $15,700,000 |
2026 | $4,500,000 - $45,100,000 |
2027 | $17,500,000 - $61,200,000 |
2028 | $5,400,000 - $19,400,000 |
2029 | $4,600,000 - $14,100,000 |
2030 | ($4,500,000) - ($43,500,000) |
2031 | ($17,500,000) - ($61,200,000) |
2032 | ($5,400,000) - ($19,400,000) |
2033 | ($4,600,000) - ($29,800,000) |
2034 | $0 - ($1,600,000) |
The Department states it would need to update all necessary tax return forms and electronic management systems to reflect the changes contained in this bill; however, it is not anticipated this will result in any additional administrative costs that could not be absorbed in the Department's operating budget.
AGENCIES CONTACTED:
Department of Revenue Administration