HB 679-FN - AS INTRODUCED
2015 SESSION
15-0808
10/08
HOUSE BILL 679-FN
AN ACT establishing tax deferrals for expansion of natural gas distribution systems.
SPONSORS: Rep. Shattuck, Hills 1
This bill establishes a 5-year tax deferral from the business profits tax, the business enterprise tax, and the utility property tax for the expansion of natural gas distribution systems. The bill also allows municipalities to adopt a 5-year deferral for local property taxes.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
15-0808
10/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT establishing tax deferrals for expansion of natural gas distribution systems.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Section; Business Profits Tax; Tax Deferral for Natural Gas Distribution Systems. Amend RSA 77-A by inserting after section 15 the following new section:
77-A:15-a Tax Deferral for Natural Gas Distribution Systems.
I. Upon application by a qualifying business organization engaged in the expansion of natural gas distribution systems in this state, the commissioner shall grant a deferral of the payment of all taxes under this chapter for a 5-year period. The deferral shall be for the tax due each year during the 5-year period and for interest accrued at 5 percent annually on the amount due.
II. A business organization qualifies and may apply for the tax deferral under paragraph I if:
(a) The business organization is engaged in the expansion of primary, lateral, and local natural gas lines and related facilities located within the state of New Hampshire attributable to expanded gas distribution systems.
(b) The business organization has obtained certification of compliance with best management practices established by the department of environmental services for:
(1) Exploration, drilling, and production of natural gas;
(2) Transportation of natural gas; and
(3) Distribution of natural gas to users and retail sellers.
(c) The business organization provides a performance bond or other security determined by the commissioner to ensure payment of the deferred taxes and interest when due.
III. In this section:
(a) “Primary natural gas line” means a pipeline that transports natural gas from its production source.
(b) “Lateral natural gas line” means a pipeline that transports natural gas from a primary gas line to a local distribution system.
(c) “Local natural gas line” means a pipeline that transports natural gas from a primary or lateral gas line to users or retail sellers.
(d) “Related facilities” includes compressor stations and facilities for retail sale of natural gas.
(e) “Natural gas” means gas mixture of mainly methane (CH4) and incidental quantities of propane (C3H6) and butane (C4H10). Transportation of product consisting mainly of propane and other related light hydrocarbons is not natural gas for purposes of tax deferrals under this section.
IV. The commissioner of revenue administration shall adopt rules under RSA 541-A for the administration and implementation of this section.
2 New Section; Business Enterprise Tax; Tax Deferral for Natural Gas Distribution Systems. Amend RSA 77-E by inserting after section 11 the following new section:
77-E:11-a Tax Deferral for Natural Gas Distribution Systems.
I. Upon application by a qualifying business enterprise engaged in the expansion of natural gas distribution systems in this state, the commissioner shall grant a deferral of the payment of all taxes under this chapter for a 5-year period. The deferral shall be for the tax due each year during the 5-year period and for interest accrued at 5 percent annually on the amount due.
II. A business enterprise qualifies and may apply for the tax deferral under paragraph I if:
(a) The business enterprise is engaged in the expansion of primary, lateral, and local natural gas lines and related facilities located within the state of New Hampshire attributable to expanded gas distribution systems.
(b) The business enterprise has obtained certification of compliance with best management practices established by the department of environmental services for:
(1) Exploration, drilling, and production of natural gas;
(2) Transportation of natural gas; and
(3) Distribution of natural gas to users and retail sellers.
(c) The business enterprise provides a performance bond or other security determined by the commissioner to ensure payment of the deferred taxes and interest when due.
III. In this section:
(a) “Primary natural gas line” means a pipeline that transports natural gas from its production source.
(b) “Lateral natural gas line” means a pipeline that transports natural gas from a primary gas line to a local distribution system.
(c) “Local natural gas line” means a pipeline that transports natural gas from a primary or lateral gas line to users or retail sellers.
(d) “Related facilities” includes compressor stations and facilities for retail sale of natural gas.
(e) “Natural gas” means gas mixture of mainly methane (CH4) and incidental quantities of propane (C3H6) and butane (C4H10). Transportation of product consisting mainly of propane and other related light hydrocarbons is not natural gas for purposes of tax deferrals under this section.
IV. The commissioner of revenue administration shall adopt rules under RSA 541-A for the administration and implementation of this section.
3 New Section; Utility Property Tax; Tax Deferral for Natural Gas Distribution Systems. Amend RSA 83-F by inserting after section 7 the following new section:
83-F:7-a Tax Deferral for Natural Gas Distribution Systems.
I. Upon application by a qualifying utility engaged in the expansion of natural gas distribution systems in this state, the commissioner shall grant a deferral of the payment of all taxes under this chapter for a 5-year period. The deferral shall be for the tax due each year during the 5-year period and for interest accrued at 5 percent annually on the amount due.
II. A utility qualifies and may apply for the tax deferral under paragraph I if:
(a) The utility is engaged in the expansion of primary, lateral, and local natural gas lines and related facilities located within the state of New Hampshire attributable to expanded gas distribution systems.
(b) The utility has obtained certification of compliance with best management practices established by the department of environmental services for:
(1) Exploration, drilling, and production of natural gas;
(2) Transportation of natural gas; and
(3) Distribution of natural gas to users and retail sellers.
(c) The utility provides a performance bond or other security determined by the commissioner to ensure payment of the deferred taxes and interest when due.
III. In this section:
(a) “Primary natural gas line” means a pipeline that transports natural gas from its production source.
(b) “Lateral natural gas line” means a pipeline that transports natural gas from a primary gas line to a local distribution system.
(c) “Local natural gas line” means a pipeline that transports natural gas from a primary or lateral gas line to users or retail sellers.
(d) “Related facilities” includes compressor stations and facilities for retail sale of natural gas.
(e) “Natural gas” means gas mixture of mainly methane (CH4) and incidental quantities of propane (C3H6) and butane (C4H10). Transportation of product consisting mainly of propane and other related light hydrocarbons is not natural gas for purposes of tax deferrals under this section.
IV. The commissioner of revenue administration shall adopt rules under RSA 541-A for the administration and implementation of this section.
4 New Section; Property Taxation. Amend RSA 72 by inserting after section 42 the following new section:
72:42-a Local Option; Tax Deferral for Natural Gas Distribution Systems. A town or city may adopt a tax deferral for natural gas distribution systems under this section in the same manner as the procedures for exemptions and credits in RSA 72:27-a.
I. Upon application by a qualifying business entity engaged in the expansion of natural gas distribution systems in this state, the commissioner shall grant a deferral of the payment of all taxes under this chapter for a 5-year period. The deferral shall be for the tax due each year during the 5-year period and for interest accrued at 5 percent annually on the amount due.
II. A business entity qualifies and may apply for the tax deferral under paragraph I if:
(a) The business entity is engaged in the expansion of primary, lateral, and local natural gas lines and related facilities located within the state of New Hampshire attributable to expanded gas distribution systems.
(b) The business entity has obtained certification of compliance with best management practices established by the department of environmental services for:
(1) Exploration, drilling, and production of natural gas;
(2) Transportation of natural gas; and
(3) Distribution of natural gas to users and retail sellers.
(c) The business entity provides a performance bond or other security determined by the commissioner to ensure payment of the deferred taxes and interest when due.
III. In this section:
(a) “Primary natural gas line” means a pipeline that transports natural gas from its production source.
(b) “Lateral natural gas line” means a pipeline that transports natural gas from a primary gas line to a local distribution system.
(c) “Local natural gas line” means a pipeline that transports natural gas from a primary or lateral gas line to users or retail sellers.
(d) “Related facilities” includes compressor stations and facilities for retail sale of natural gas.
(e) “Natural gas” means gas mixture of mainly methane (CH4) and incidental quantities of propane (C3H6) and butane (C4H10). Transportation of product consisting mainly of propane and other related light hydrocarbons is not natural gas for purposes of tax deferrals under this section.
IV. The commissioner of revenue administration shall adopt rules under RSA 541-A for the administration and implementation of this section.
5 Effective Date. This act shall take effect July 1, 2015.
LBAO
15-0808
Revised 02/02/15
HB 679-FN FISCAL NOTE
AN ACT establishing tax deferrals for expansion of natural gas distribution systems.
FISCAL IMPACT:
The Department of Revenue Administration states this bill, as introduced, will increase state expenditures, and decrease state and local revenue by an indeterminable amount in FY 2016 and each year thereafter. There will be no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration (DRA) states this bill establishes a tax deferral on the Business Profits Tax (BPT), the Business Enterprise Tax (BET), the Utility Property Tax (UPT) and Property Tax for natural gas distribution systems. A qualifying business may apply to the commissioner of DRA for a 5-year tax deferral of the BPT, BET and UPT for taxes due each year during the 5-year period and for interest accrued at 5% annually on the amount due.
A qualifying business organization, business enterprise, utility or business entity must engage in the expansion of primary, lateral, and local natural gas lines and related facilities located within New Hampshire (NH) attributable to the expanded gas distribution systems. They must have obtained a certification of compliance with best management practices established by the Department of Environmental Services. The qualified business must provide a performance bond or other security determined by the commissioner of DRA to ensure payment of the deferred taxes and interest when due. The Department is unable to determine the amount of qualifying business for natural gas distribution that will request a tax and interest deferral and the deferral amount over a 5-year period. The Department assumes additional personnel would be needed to revise forms, reprogram computers, write rules and administer the bill, but is unable to determine the amount of staffing needed at this time. The Department is also unable to estimate the reduction in revenues to the General Fund, Education Trust Funds and local revenues during the deferral period. The Department assumes the bill could take effect as early as FY 2016, so the DRA assumes the reduction in revenues would begin in FY 2016 and carry forward until repayment of the deferral of taxes and interest begins.