HB 454-FN-A – AS INTRODUCED
2011 SESSION
09/10
HOUSE BILL 454-FN-A
AN ACT establishing a job creation credit against the business profits tax and the business enterprise tax for small businesses increasing employment in New Hampshire.
SPONSORS: Rep. Brunelle, Hills 10; Rep. Grassie, Straf 1; Rep. Suzanne Smith, Graf 7; Rep. Harding, Graf 11; Rep. Schlachman, Rock 13; Rep. Taylor, Graf 2; Rep. Horrigan, Straf 7; Rep. Pierce, Graf 9
This bill establishes a job creation credit against the business profits tax and the business enterprise tax for small businesses increasing employment in New Hampshire.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0244
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT establishing a job creation credit against the business profits tax and the business enterprise tax for small businesses increasing employment in New Hampshire.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Business Profits Tax; Small Business Job Creation Tax Credit. Amend RSA 77-A:5 by inserting after paragraph XIV the following new paragraph:
XV. The unused portion of any job creation tax credit awarded by the commissioner under RSA 77-E:3-d shall be available to apply to the business profits tax.
2 New Section; Business Enterprise Tax; Small Business Job Creation Tax Credit. Amend RSA 77-E by inserting after section 3-c the following new section:
77-E:3-d Small Business Job Creation Tax Credit.
I. There shall be a tax credit in the amount of $2,500 allowed for each qualified tax credit employee as certified by the commissioner of resources and economic development under RSA 162-R:2.
II. Unused portions of this credit shall be carried forward up to 5 years. Unused, carried forward credit under this section shall be applied before any other available carry-forward credit.
III. For the purpose of the credit allowed under this section, the job creation tax credit shall be considered taxes paid under RSA 77-E.
3 New Chapter; Small Business Job Creation Tax Credit. Amend RSA by inserting after chapter 162-Q the following new chapter:
CHAPTER 162-R
SMALL BUSINESS JOB CREATION TAX CREDIT
162-R:1 Definitions.
I. In this chapter, “qualified tax credit employee” means a new, full-time, year-round employee who was unemployed on July 1, 2011 hired by a business with 75 employees or fewer for work directly in one or more business activities for which actual wages paid are equal to or greater than 150 percent of the current state minimum wage. “Qualified tax credit employee” does not include an employee who is:
(a) Shifted to a new position because of a merger, acquisition, or restructuring.
(b) Laid-off and rehired within 270 days to the same or similar position.
(c) Not on the employer’s payroll for at least 90 days prior to the date on which the employer claims the credit for the first tax period.
(d) Laid off or fired within 2 years of date of hire.
II. For the purposes of calculating wages paid to the employee under paragraph I, the amount paid by the employer for medical and dental health care benefits for the employee shall be included in the amount of actual wages paid.
162-R:2 Approval and Certification. The commissioner of the department of resources and economic development, in consultation with the commissioner of the department of revenue administration, shall develop application forms with which taxpayers may apply for the job creation tax credit. The forms shall be submitted by taxpayers to the commissioner of the department of resources and economic development, and the commissioner shall approve or deny such application and certify to the commissioner of the department of revenue administration the total credit awarded to each business organization that hires qualified tax credit employees.
162-R:3 Reports. The commissioner of the department of resources and economic development shall file a report detailing the implementation of the tax credit program under RSA 77-E:3-d and the results achieved. This report shall be filed with the president of the senate, the speaker of the house of representatives, and the governor on or before July 31 of each year, beginning with July 31, 2012. The report shall include the following:
I. Methods and activities used to implement the job creation tax credit program.
II. The number and type of jobs created by small businesses.
III. The total amount of job creation tax credits awarded.
IV. Other information as deemed relevant.
4 Applicability. Sections 1-3 of this act shall apply for tax periods ending after July 1, 2011.
5 Effective Date. This act shall take effect July 1, 2011.
LBAO
11-0244
Revised 02/04/11
HB 454 FISCAL NOTE
AN ACT establishing a job creation credit against the business profits tax and the business enterprise tax for small businesses increasing employment in New Hampshire.
FISCAL IMPACT:
The Department of Revenue Administration and Department of Resources and Economic Development state this bill may decrease state general fund and education trust fund revenue, and have an indeterminable impact on state general fund expenditures in FY 2012 and each year thereafter. This bill will have no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill would establish a job creation credit against the business profits tax (BPT) and business enterprise tax (BET) for small businesses increasing employment in New Hampshire. The Department assumes many businesses would reorganize in order to take advantage of the proposed credit. This could result in many current business tax filers no longer paying the BET. The Department states the proposed credit could have a cascading effect in that the credit used to offset any BET liability would also be considered taxes paid under RSA 77-E, and thus the exact same credit would, in effect, be used to offset BPT liability as well. Each credit granted represents a new job for a qualified tax credit employee. As a result each proposed $2,500 credit granted could cost the state $5,000 in business tax revenues ($2,500 BET + $2,500 BPT). Should 100 credits be granted, state general and education trust fund revenue could decrease by $500,000, and 1,000 credits could decrease state general and education trust fund revenue by $5,000,000. The exact fiscal impact cannot be determined at this time since it is dependent on the number of credits granted under the proposed bill.
The Department of Resources and Economic Development states there is no appropriate methodology to quantify how many job credits would actually be applied for, and what would be required in terms of administrative oversight necessary to adjudicate the actual job credits applications or requirements. The exact fiscal impact cannot be determined at this time.