SB 155-FN-A – AS INTRODUCED
2011 SESSION
10/03
SENATE BILL 155-FN-A
AN ACT relative to section 179 expense deductions under the business profits tax.
SPONSORS: Sen. Forrester, Dist 2; Sen. Gallus, Dist 1; Sen. Forsythe, Dist 4; Sen. Sanborn, Dist 7; Rep. Worsman, Belk 3; Rep. Chandler, Carr 1
This bill allows a business organization to apply the current federal section 179 expense deduction amount in the calculation of gross business profits before net operating loss and special deductions under the business profits 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-0929
10/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to section 179 expense deductions under the business profits tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Section; Business Profits Tax; Gross Business Profits; Expense Deductions. Amend RSA 77-A by inserting after section 3 the following new section:
77-A:3-a Expense Deductions. Notwithstanding the definition of Internal Revenue Code in RSA 77-A:1, XX(l), in determining gross business profits before net operating loss and special deductions, a business organization shall calculate expense deductions as permitted under Internal Revenue Code section 179 using the version of the United States Internal Revenue Code in effect as of December 31, 2010.
2 Application. Section 1 of this act shall apply to taxable periods beginning on or after January 1, 2011.
3 Effective Date. This act shall take effect upon its passage.
LBAO
11-0929
Revised 02/24/11
SB 155 FISCAL NOTE
AN ACT relative to section 179 expense deductions under the business profits tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill would increase state general fund expenditures, and decrease state general fund revenue by an indeterminable amount in FY 2011 and each year thereafter. There would be no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill allows a business organization to apply the current federal Section 179 expense deduction amount in the calculation of gross business profits before net operating loss and special deductions under the business profits tax (BPT). The Department states with respect to the BPT, New Hampshire has only adopted the Internal Revenue Code (IRC) that was in effect for December 31, 2000. As such, taxpayers must make adjustments to their New Hampshire taxable business profits based upon New Hampshire’s non-recognition of certain expenses allowed by the most current IRC. It is assumed that this bill would allow some of the section 179 expenses to be recognized on the New Hampshire BPT return which are made on the New Hampshire form Schedule R. The Department states it does not capture information entered on the Schedule R on their computer system. Thus, the Department is unable to estimate the negative impact that this legislation would have on BPT revenues. The Department states there were 22,588 filers of corporate BPT returns in tax year 2009. Those 22,588 filers paid $57,069,706 in BPT. 12,927 of the filers checked a box indicating they filed a Schedule R with their return, and 3,536 of these filers paid $42,023,868 in BPT in Tax Year 2009. The Department does not have the same information on proprietorships, partnerships, and water’s edge entities. Although these entities are required to file a Schedule R if applicable, the Bonus Depreciation Box which they must check on their BPT return is not captured on the Department’s current computer system. The law would be effective upon passage and apply to taxable periods beginning on or after January 1, 2011, therefore there may be an impact in FY 2011 due to the possible reduction of estimated tax payments. The Department states this bill would also increase administrative costs to the Department to change the BPT form Schedule R and additional computer programming expenses. The exact fiscal impact cannot be determined at this time.