SB 126-FN – AS INTRODUCED
2011 SESSION
09/05
SENATE BILL 126-FN
AN ACT relative to net operating loss carryovers under the business profits tax.
SPONSORS: Sen. Luther, Dist 12; Sen. Barnes, Jr., Dist 17; Sen. Boutin, Dist 16; Sen. Bragdon, Dist 11; Sen. Carson, Dist 14; Sen. Forsythe, Dist 4; Sen. Gallus, Dist 1; Sen. Groen, Dist 6; Sen. Lambert, Dist 13; Sen. Rausch, Dist 19; Sen. Sanborn, Dist 7; Sen. White, Dist 9; Rep. Bettencourt, Rock 4; Rep. Major, Rock 8; Rep. Chandler, Carr 1; Rep. Tucker, Rock 17
This bill limits the amount of net operating loss generated in a tax year that may be carried forward under the business profits tax to $10,000,000.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0362
09/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to net operating loss carryovers under the business profits tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subparagraph; Business Profits Tax; Net Operating Loss Carryovers. Amend RSA 77-A:4, XIII by inserting after subparagraph (d) the following new subparagraph:
(e) On or after July 1, 2011, the amount of net operating loss generated in a tax year that may be carried forward may not exceed $10,000,000.
2 Effective Date. This act shall take effect July 1, 2011.
LBAO
11-0362
12/27/10
SB 126-FN - FISCAL NOTE
AN ACT relative to net operating los carryovers under the business profits tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill will decrease state revenue by an indeterminable amount in FY 2012 and each year thereafter. This bill will have no fiscal impact on state, county, and local expenditures, or county and local revenue.
METHODOLOGY:
The Department of Revenue Administration states this bill would increase the amount of net operating loss (NOL) that may be generated in a tax year from $1,000,000 to $10,000,000. It is assumed that this provision would prevent the recovery of New Hampshire Business Profits Tax (BPT). The NOL deduction provision within the New Hampshire BPT law was added in 1988 and effective for losses incurred after January 1, 1989. On July 1, 2002 the law was amended to allow an NOL to be carried forward for ten years following the loss year, instead of five years. The amount of NOL generated each year per entity allowed to be carried forward was $250,000. For taxable periods ending on or after July 1, 2003 and on or before June 30, 2004, the NOL generated may not exceed $500,000. For taxable periods ending on or after July 1, 2004 and on or before June 30, 2005, the NOL generated may not exceed $750,000. For the taxable periods ending on or after July 1, 2005, the NOL generated may not exceed $1,000,000 and the requirement to carry-back losses was eliminated. The Department states based upon tax returns filed in the following calendar years (CY), the NOL deduction brought about the following reductions in BPT revenue each year -
CY BPT Reduction
1991 $4,607,000
1992 $4,428,000
1993 $7,297,000
1994 $7,974,000
1995 $7,751,000
1996 $4,762,000
1997 $7,514,000
1998 $8,451,000
1999 $8,715,000
2000 $8,108,000
2001 $9,029,000
2002 $10,162,000
2003 $12,518,000
2004 $10,911,000
2005 $12,681,000
2006 $13,281,000
2007 $16,695,000
2008 $17,743,000
2009 $13,815,000
Data for calendar year 2010 will not be available until February 2011.
Since the expansion of the NOL reduction from $750,000 to $1,000,000 in 2005, there has been an increased loss in revenue of more than $5M when compared to 2008. The 2009 tax returns indicate less total NOL deductions because the economy reduced profits and, thus, taxpayers did not have to avail themselves of their loss carryovers. The Department is unable to determine the exact fiscal impact as a result of this bill, but state it would not be unreasonable to assume that the proposed increase in the NOL deduction would have a substantial impact on BPT revenue for several years.