The legislative budget finalized on Wednesday and Thursday exposes most New Hampshire businesses to a retroactive tax increase, Department of Revenue Administration data show.
The Committee of Conference budget raises the rates at which employers in New Hampshire have been taxed since January 1. Because it applies to taxes already paid, it would force thousands of New Hampshire businesses to adjust their tax filings. Businesses pay their taxes quarterly, not annually.
Current business tax rates for 2019 are:
Business Profits Tax: 7.7%;
Business Enterprise Tax: 0.6%.
The committee of conference budget tax rates for 2019 are:
Business Profits Tax: 7.9 p%;
Business Enterprise Tax: 0.675%.
That is a tax increase. Any legislator who says the Committee of Conference budget only repeals tax cuts that are scheduled to take place in the future is incorrect.
Who is paying the 7.7 and 0.6 percent rates now?
Ninety percent of New Hampshire businesses are “calendar year filers,” which means that their fiscal year is the calendar year, Shaun Thomas, counsel for the Department of Revenue Administration, confirmed in an interview Thursday.
All of those filers are being taxed right now at the 2019 rates, as are businesses with fiscal years that started between January 2nd and today.
So far this year, 15,500 businesses have already filed quarterly tax payments, according to the DRA. Those businesses are being taxed at the 7.7 percent BPT and 0.6 percent BET rates. (About half of the state’s businesses don’t earn enough money to owe taxes.)
The only businesses not currently paying quarterly taxes at the 2019 rates are firms whose fiscal years haven’t started yet. But as soon as those fiscal years start, they will be paying at the 2019 rates.
If the Committee of Conference budget becomes law, the 15,500 employers who have already filed estimated taxes would be subject to a rate increase on taxes they have already paid. For them, the state will have imposed a retroactive tax increase. They would have to increase their upcoming 2019 quarterly filings to make up the difference.