SB 473-FN – AS INTRODUCED
2010 SESSION
09/01
SENATE BILL 473-FN
AN ACT making distributions from limited liability companies, partnerships, and associations subject to the interest and dividends tax only if they have transferable shares, and requiring a reduction in general fund appropriations for the biennium ending June 30, 2011.
SPONSORS: Sen. Bradley, Dist 3; Sen. Gallus, Dist 1; Sen. Roberge, Dist 9; Sen. Bragdon, Dist 11; Sen. Carson, Dist 14; Sen. Barnes, Jr., Dist 17; Sen. Letourneau, Dist 19; Sen. Downing, Dist 22; Rep. Wendelboe, Belk 1; Rep. Boutin, Merr 9; Rep. Hess, Merr 9; Rep. Chandler, Carr 1; Rep. Major, Rock 8
This bill makes distributions from limited liability companies, partnerships, and associations subject to the interest and dividends tax only if they have transferable shares.
This bill also requires a reduction in general fund appropriations for the biennium ending June 30, 2011.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
10-2685
09/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT making distributions from limited liability companies, partnerships, and associations subject to the interest and dividends tax only if they have transferable shares, and requiring a reduction in general fund appropriations for the biennium ending June 30, 2011.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Taxation of Interest and Dividends; Who Taxable. Amend RSA 77:3, I(b) to read as follows:
(b) Partnerships, limited liability companies, associations, and trusts, the beneficial interest in which is not represented by transferable shares, whose gross interest and dividend income from all sources exceeds $2,400 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.
2 Taxation of Interest and Dividends; What Taxable. RSA 77:4, III is repealed and reenacted to read as follows:
III. Dividends, other than stock dividends paid in new stock of the partnership, limited liability company, association, or trust issuing the same, on shares in partnerships, limited liability companies, associations, or trusts the beneficial interest in which is represented by transferable shares.
3 New Sections; Taxation of Interests and Dividends; Partnerships and Limited Liability Companies. Amend RSA 77 by inserting after section 14 the following new sections:
77:14-a Partnerships and Limited Liability Companies. Partnerships and limited liability companies having a usual place of business in this state, any member of which is an inhabitant thereof, shall be subject to taxes imposed by this chapter. If any of the members of the partnership or limited liability company are not inhabitants of this state only so much of the income thereof as is proportionate to the aggregate interest of the partners or members who are inhabitants of this state in the profits of the partnership or limited liability company shall be taxed.
77:14-b Partners and Members. The tax shall be assessed on such a partnership or limited liability company by the name under which it does business, and the partners or members shall not be taxed with respect to the taxable income derived by them from such a partnership or limited liability company.
77:14-c Members of Partnership or Limited Liability Company Outside the State. An inhabitant of this state who is a member of a partnership or limited liability company having no usual place of business in this state, who receives income from such partnership or limited liability company derived from such a source that it would be taxable if received directly from such source by such partner or member, shall as to such income be subject to the taxes imposed by this chapter.
77:14-d Application of Sections. RSA 77:14-a to 14-d shall apply, so far as apt, to associations and trusts, but not to partnerships, limited liability companies, associations, and trusts the beneficial interest in which is represented by transferable shares.
4 Repeal. RSA 77:1-a, relative to definitions, is repealed.
5 Applicability. Sections 1-4 of this act shall apply for taxable periods ending on or after December 31, 2010.
6 Reduction in General Fund Appropriations. For the biennium ending June 30, 2011, the governor shall implement a plan to reduce general fund appropriations by $30,000,000. Any direct services to New Hampshire citizens shall be excluded from these reductions unless expressly approved by the fiscal committee of the general court. The office of the governor shall provide a quarterly report of reductions made under this section to the fiscal committee of the general court.
7 Effective Date. This act shall take effect July 1, 2010.
LBAO
10-2685
12/30/09
SB 473-FN - FISCAL NOTE
AN ACT making distributions from limited liability companies, partnerships, and associations subject to the interest and dividends tax only if they have transferable shares, and requiring a reduction in general fund appropriations for the biennium ending June 30, 2011.
FISCAL IMPACT:
The Department of Revenue Administration states this bill will decrease state general fund revenue by $7,500,000 in FY 2010, $15,000,000 in FY 2011, and an indeterminable amount in each fiscal year thereafter.
This bill directs the Governor to reduce general fund appropriations by $30,000,000 over the biennium ending June 30, 2011.
There will be no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill reverses changes made relative to limited liability companies under the interest and dividends tax that became effective July 1 2009 for taxable periods ending on or after December 31, 2009. This bill would take effect July 1, 2010 and apply to taxable periods ending on or after December 31, 2010. Therefore, only tax year 2009 returns would produce revenue under this bill. The Department states it estimated $15,000,000 per year of general fund revenue would be produced by the changes made to the interest and dividends tax effective July 1, 2009 was $15,000,000 per fiscal year. However, the FY 2010 estimate included consideration of the April and June 2010 estimate payments for tax year 2010. Under this bill, no estimate payments would be made for tax year 2010, reducing FY 2010 revenue to $7,500,000. Therefore, this bill would decrease state general fund revenue by $7,500,000 in FY 2010 and $15,000,000 in FY 2011. The Department states it cannot project the state general fund revenue reduction beyond FY 2011 because such estimates would have to be based on revenue for FY 2010 and FY 2011 that is not yet complete.
LBAO
10-2685
12/30/09
The Office of Legislative Budget Assistant states that this bill directs the Governor to implement a plan to reduce general fund appropriations by $30 million over the biennium ending June 30, 2011. The bill further states that this reduction shall exclude any direct services to New Hampshire citizens and Governor shall provide quarterly reports of reductions made to the Fiscal Committee.