2001 SESSION

01-0403

10/09

HOUSE BILL 766-FN-A-LOCAL

COMMITTEE: Ways and Means

ANALYSIS

This bill establishes a New Hampshire education tax on gross receipts from the consumption of sales of goods and services at a rate of one percent. A one percent tax is imposed on the taxable receipts from the sale at retail of tangible personal property or services in this state to consumers. Revenues from the New Hampshire education tax are continually appropriated to the education trust fund to be used to fund an adequate public education.

This bill also reduces the rates of the education property tax, the utility property tax, the real estate transfer tax, and the business enterprise tax, repeals the legacies and successions tax, and increases certain exemptions to the interests and dividends tax. The bill also establishes low income homeowner's property tax relief.

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

01-0403

10/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand One

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Intent. The legislature intends by this act to establish a durable foundation of funding in response to the state's obligation to adequately provide educational opportunities to the youth of New Hampshire. In addition, the legislature finds that since Claremont II necessitated action with regard to changing the funding mechanisms for public education and the tax structure of the state, it is also timely for the legislature to recognize the importance that consideration be given to funding for the university system, the regional-community technical colleges, and early childhood programs in order to best meet the goals and requirements of Part II, article 83 of the New Hampshire constitution.

2 Education Trust Fund; New Hampshire Education Tax Added. Amend RSA 6:12, I (www) to read as follows:

(www) Money received under RSA 77-A, [RSA 77-E,] RSA 78, RSA 78-A, [RSA 78-B,] RSA 78-D, RSA 83-F, RSA 198:46, and from the sweepstakes fund, which shall be credited to the education trust fund under RSA 198:39.

3 Duties of the Commissioner. Amend RSA 21-J:3, XV to read as follows:

XV. Establish and approve tax rates as required by law including the uniform education tax rate.

4 Education Property Tax; Rate Reduced. Amend RSA 76:3 to read as follows:

76:3 Education Property Tax. An annual education property tax at the uniform rate of [$6.60] $4.60 on each $1000 of the value of taxable property is hereby imposed on all persons and property taxable pursuant to RSA 72 and RSA 73, except property subject to tax under RSA 82 and RSA 83-F.

5 Individuals, Businesses, Fiduciaries. Amend RSA 77:3, I(a)-(c) to read as follows:

(a) Individuals who are inhabitants or residents of this state for any part of the taxable year whose gross interest and dividend income from all sources exceeds [$2,400] $5,200 during that taxable period.

(b) Partnerships, limited liability companies, associations, and trusts, the beneficial interest in which is not represented by transferable shares, whose gross interest and dividend income from all sources exceeds [$2,400] $5,200 during the taxable year, but not including a qualified investment company as defined in RSA 77-A:1, XXI, or a trust comprising a part of an employee benefit plan, as defined in the Employee Retirement Income Security Act of 1974, section 3.

(c) Fiduciaries deriving their appointment from a court of this state whose gross interest and dividend income from all sources exceeds [$2,400] $5,200 during the taxable year.

6 Increase in Exemption. Amend RSA 77:5, I to read as follows:

I. Income of [$2,400] $5,200.

7 Filing of Returns. Amend RSA 77:18, IV(a) and (b) to read as follows:

(a) Every individual whose total interest and dividend income is less than [$2,400] $5,200 for a taxable period.

(b) For joint filers whose total interest and dividend income is less than [$4,800] $10,400 for a taxable period.

8 Business Enterprise Tax; Rate Reduced. Amend RSA 77-E:2 to read as follows:

77-E:2 Imposition of Tax. A tax is imposed at the rate of [1/2] ¼ of one percent upon the taxable enterprise value tax base of every business enterprise. A 2/3 majority of those present and voting of each house of the general court shall be necessary to increase the tax rate under this section.

9 Transfer Tax; Rate Reduced. Amend RSA 78-B:1, I(b) to read as follows:

(b) The rate of the tax is [$.75] $.50 per $100, or fractional part thereof, of the price or consideration for such sale, grant, or transfer; except that where the price or consideration is $4,000 or less there shall be a minimum tax of $20. The tax imposed shall be computed to the nearest whole dollar.

10 New Chapter; New Hampshire Education Tax. Amend RSA by inserting after chapter 78-C the following new chapter:

CHAPTER 78-D

NEW HAMPSHIRE EDUCATION TAX

78-D:1 Definitions. In this chapter:

I. "Admissions" means the money or other consideration for admitting a person or vehicle to any place of amusement, sport, recreation, or physical fitness, and all dues and fees paid to private clubs and membership clubs providing amusement, sport, recreation, or physical fitness.

II. "Business activity" means a group of actions performed by a person or persons for the purpose of earning income or profit from such actions and includes every operation which forms a part of, or a step in, the process of earning income or profit from such group of actions. The actions ordinarily include, but are not limited to, the receipt of money, property, or other items of value and the incurring or payment of expenses.

III. "Commissioner" means the commissioner of the department of revenue administration.

IV. "Consumer" means any person, including governmental units, purchasing or leasing at retail any tangible personal property or service for consumption in this state.

V. "Consuming" or "consumption" means the ownership, possession, utilization, use, or employment of tangible personal property or the acquisition or enjoyment of services other than for resale.

VI. "Construction" or "constructing" means building, altering, repairing, or demolishing any building or structure upon real estate and includes leveling or clearing land, excavating earth, drilling wells of any type, or similar activity upon real estate.

VII. "Department" means the department of revenue administration.

VIII. "Gross receipts" means the total amount of money or the value of other consideration received from the sale at retail of tangible personal property, from the leasing of property and the performance of services in this state, and from selling services performed outside New Hampshire, the product of which is initially used in this state. In an exchange in which the money or value of other consideration received does not represent the value of the property or service exchanged, "gross receipts" means the fair market value of the property or service exchanged. Gross receipts shall also include the amount of out-of-state services purchased for use in state or attributable to the provision of services or sale of goods in state.

IX. "In this state" means within the legal jurisdictional boundaries of New Hampshire and includes all territory within these limits owned by or ceded to the United States.

X. "Lease," "leasing," or "rental" means any arrangement whereby, for a consideration, property is possessed or employed for or by a person other than the owner of the property. The terms "lease," "leasing," or "rental" shall include any admittance to or use or enjoyment of property for which an admission is charged.

XI. "Manufacturing" means combining or processing components or materials to increase their value for sale in the ordinary course of business, but does not include construction.

XII. "Property" means real property, tangible personal property, licenses, franchises, patents, trademarks, and copyrights.

XIII. "Real property" or "real estate" means the land, improvements thereto, and fixtures thereon.

XIV. "Retail sale" or "sale at retail" means the sale to a consumer for consumption of tangible personal property or services and includes all such transactions that may be made in lieu of retail sale or sale at retail.

XV.(a) "Service" means all activities engaged in for other persons for a consideration, which activities involve predominately the performance of labor or intellectual activity as distinguished from selling or leasing property. The term "service" includes construction activities. The commissioner shall adopt rules relative to the determination of such service component. The term "service" does not include labor or intellectual activity performed for or on behalf of other persons when:

(1) The person performing the activity is an employee as defined in section 3401(c) of the United States Internal Revenue Code. Any person from whom an employer, as defined in section 3401(d) of the United States Internal Revenue Code, is required to withhold for federal income tax purposes shall prima facie be deemed an employee; or

(2) The person is an independent contractor performing the activity exclusively for a single business enterprise. The commissioner shall adopt rules relative to the determination of whether an independent contractor qualifies for employee status under this section.

(b) The term "service" shall not include the sale of services for resale.

XVI. "Taxable receipts" means gross receipts less the money or value of other consideration received from the sale or transfer of the following:

(a) Property subject to the tax on meals and rooms, pursuant to RSA 78-A.

(b) Property subject to the tax on transfer of real property, pursuant to RSA 78-B.

(c) Property subject to taxes imposed on liquor, under RSA Title XIII.

(d) Property subject to tax pursuant to RSA 260:32, relative to motor fuels.

(e) Property subject to tax pursuant to RSA 260:52, relative to special motor fuels.

(f) Property subject to taxation pursuant to RSA 432:9, relative to the airways toll on aviation fuels, and RSA 432:9-a, relative to the airways toll on other aviation fuels.

(g) Property subject to taxation pursuant to RSA 79, relative to forest conservation and taxation, but only to the extent such property remains in its original condition immediately following the point at which such property became taxable under said chapter.

(h) Property subject to the tax on communication services, pursuant to RSA 82-A.

XVII. "United States Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended, without the rules, regulations, forms, and procedures of the United States Internal Revenue Service. The rules, regulations, forms, and procedures of the United States Internal Revenue Service may, however, be used by the commissioner of revenue administration in formulating rules for adoption under RSA 541-A.

XVIII. "Use" means the exercise of any right or power over tangible personal property incident to the ownership thereof or interest therein, except it does not include the sale at retail of such property.

XIX. "Vendor" means any person, including a governmental unit engaged in the business activity of making sales at retail to a consumer.

78-D:2 Imposition of Tax.. A tax is imposed on the gross receipts from applicable transactions and sales at retail of tangible personal property or services in this state to consumers, at the rate of one percent upon the taxable receipts from such sale.

78-D:3 Liability for Tax; Prior Sales Exempted.

I. Except as provided in paragraph III, every vendor shall be liable for the tax and such liability shall not be extinguished until the tax has been paid to the state.

II. Except as provided in paragraph III, any tax required to be paid, shall become a personal debt of the vendor until paid to the state.

III. Vendors shall not be required to pay any tax on any tangible personal property or services sold or used in this state prior to the effective date of this chapter.

78-D:4 Financial Services Transactions.

I. For purposes of this section the following definitions shall apply:

(a) "Billing address" means the location indicated by the consumer to which any notice, statement, invoice, or bill relating to the consumer's account with the vendor is mailed.

(b) "Commercial domicile" means the place from which a trade or business is principally managed and directed.

(c) "Financial institution" means any state or national bank, bank holding company, savings and loan, federal savings bank, credit association, credit union, or other similar institution.

(d) "Financial products vendor" means any vendor of stocks, bonds, securities, or other similar products who is not a financial institution.

(e) "Financial services transaction" means any transaction with respect to which the vendor is a financial institution or a financial products vendor.

II. The taxes imposed under RSA 78-D:2 shall apply to any financial services transaction within New Hampshire. Notwithstanding any other provision of this chapter, financial services transactions are within New Hampshire if:

(a) The consumer is an individual or business organization engaged in a trade or business which maintains its commercial domicile in the state; or

(b) The consumer is an individual whose residence is in this state.

(c) In the absence of clear evidence of commercial domicile or residence relative to subparagraphs (a) or (b) a transaction shall be presumed to be within New Hampshire if the consumer's billing address is within the state.

III. The taxable amount of receipts from financial service transactions shall be calculated by deducting from the gross receipts the amount of direct cost to the vendor in procuring the subject matter of the transaction. In the event that payment of the receipt is made in installments, a proportional amount of direct cost shall be allocated and deducted from each installment.

IV. The tax on financial services transaction receipts paid in installments may be paid in one lump sum at the commencement of the installment payments or pro rata over the number of installments.

78-D:5 Tax Returns; Date Payment Due.

I. Except as provided in this section, every vendor liable to pay over the taxes imposed by this chapter shall make a return to the department for the preceding month on a form prescribed by the commissioner. Payment shall be due as follows:

(a) The payment of the tax for a vendor having annual gross receipts of less than $500,000 shall be due December 30.

(b) The payment of the tax for a vendor having annual gross receipts of between $500,000 and $5,000,000 shall be due quarterly on March 30, June 30, September 30, and December 30.

(c) The payment of the tax for a vendor having annual gross receipts over $5,000,000 shall be due on or before the twenty-eighth day of February and the thirtieth day of each other month.

II. Any ex-vendor who ceases to engage in business activity in this state, including making sales at retail for consumption, and is thereby not responsible for filing returns under this chapter, shall file a final return with the department not more than one month after discontinuing such activity. This requirement shall apply notwithstanding any other provision of this chapter regarding the time within which to file a return.

III. If the commissioner finds that the information required for the making of an accurate return cannot reasonably be compiled by a vendor within the period provided in this section, the commissioner may grant an extension of time for the filing of such return. Any such extension shall be granted for a period not to exceed 31 calendar days. The granting of such extension may be conditioned upon the payment by the vendor of an amount of money equal to the amount estimated by the commissioner to be due with the return when filed under extension. All such estimated payments shall be credited against the vendor's liabilities under this chapter.

IV. The vendor shall pay to the department the amount of tax imposed by this chapter at the time the return is due.

78-D:6 Books, Records, Papers, and Other Documents.

I. Every vendor liable for payment of tax under this chapter shall provide and keep the necessary records to show the amount of gross receipts, taxable receipts, and any exclusions, exemptions, or deductions therefrom of any tangible personal property or services sold by said vendor.

II. Every vendor maintaining a place of business in this state or required to file or actually filing in this state under this chapter shall keep books, records, papers, and other documents which are adequate to reflect the information required by this chapter to be reported to the department by the filing of timely returns with the department.

III. All books, records, and other papers and documents required to be kept by this chapter shall, at all times during business hours of the day, be subject to inspection by the department.

78-D:7 Determination of Tax; Additional Returns.

I. If a return required by this chapter is not filed, or if a return when filed, is incorrect or insufficient, the amount of tax due shall be determined and assessed by the commissioner from any information available. If necessary, the tax may be estimated on the basis of external indices, such as stock on hand, purchases, rental paid, location, scale of rents or charges, comparable rents or charges, type of accommodations and service, number of employees, or other factors.

II. The commissioner may provide by rule for the exclusion from taxable receipts of amounts representing sales where the contract of sale has been canceled, the property has been returned, or the receipt or charge has been ascertained to be uncollectable. If the tax has been paid upon that receipt or charge, the commissioner may provide for refund or credit of the tax so paid.

III. When the commissioner has reason to believe that a vendor has failed to file a return or to include any part of the taxable receipts of sales by such vendor in a filed return, the commissioner may require the vendor to file a return or a supplementary return showing such additional information as the commissioner prescribes. The making of such additional return does not relieve the vendor of any penalty for failure to make a correct original return, or relieve it from liability for interest imposed under RSA 21-J:28 or for any additional charges imposed by the commissioner. This section shall not be construed to modify or extend the statute of limitations provided in RSA 21-J:29.

78-D:8 Administration; Rulemaking.

I. The commissioner shall collect the taxes imposed under this chapter, interest on tax, additions to tax, and penalties imposed, and pay over to the state treasurer the amount of funds collected under this chapter for deposit in the education trust fund established in RSA 198:39.

II. The commissioner shall adopt rules, under RSA 541-A, relative to:

(a) The form of the return and the data which it must contain for the correct computation of the taxable receipts from sales of tangible personal property and services and the tax assessed.

(b) The administration of the New Hampshire education tax.

(c) The recovery of any tax, interest on tax, additions to tax, or penalties imposed by RSA 78-D or RSA 21-J.

78-D:9 Surety Bonds.

I. When the commissioner deems it necessary to protect the revenues due under this chapter, the commissioner may, after notice and hearing, require any vendor required to pay the tax imposed by this chapter to file with the commissioner a bond issued by a surety company authorized by the New Hampshire insurance department to do business in this state, in an amount fixed by the commissioner, to secure the payment of any tax, interest, or penalties due, or which may become due. The vendor shall file a bond within 10 days after the department has issued and mailed such notice. Surety bonds may be required in situations such as, but not limited to, failure to file returns, failure to make payments with returns at the time required by law, tender by a vendor of checks returned for insufficient funds, failure to pay interest and penalties assessed, vendors who are itinerant, transient, or temporary, and any other situation which, in the discretion of the commissioner, renders the collection of the tax in jeopardy.

II. The surety on such bond shall be discharged from the liability accruing on the bond after the expiration of 60 days from the date on which the surety shall have logged with the department a written request to be so discharged; but such request shall not discharge such surety from any liability already accrued or which shall accrue before the expiration of said 60-day period. The duration of surety bonds shall be for one year only, unless the requirement is canceled or revised by the commissioner before the expiration of the one-year period.

III. In lieu of a bond, cash in an amount prescribed by the commissioner may be deposited with the state treasurer who may, at any time, upon instructions from the commissioner and without notice to the depositor, apply the cash deposited to any tax or interest or penalties due. Cash deposited in lieu of a surety bond shall not earn interest.

78-D:10 Deferred Payment Purchases. The commissioner may provide that the tax upon receipts from purchases on installment plan, seasonal purchases, or deferred payment purchases may be paid on the amount of each deferred payment and upon the date when the payment is received.

78-D:11 Exemptions.

I. The following receipts or uses shall be exempted from the tax imposed under RSA 78-D:2:

(a) Food products for human consumption.

(b) Prescription and non-prescription medicines, drugs, or medical supplies.

(c) Rent payments for lease or rental of real estate, except that this subparagraph shall not be construed to exempt admissions from the taxes imposed by this chapter.

(d) Tuition payments.

(e) Any property or service purchased or used by the following:

(1) The United States or any agency, department, or instrumentality thereof;

(2) The state of New Hampshire or any political subdivision thereof;

(3) Any foreign nation or agency, instrumentality, or political subdivision thereof, but only when required by a treaty in force to which the United States is a party;

(4) Any nonprofit organization expressly made exempt from income taxation under section 501(c)(3) of the United States Internal Revenue Code to the extent that such organization does not engage in business activity constituting unrelated trade or business as defined by section 513 of the United States Internal Revenue Code.

(f) Receipts from the isolated or occasional sale of or leasing of property or a service by persons who are neither regularly engaged nor holding themselves out as engaged in the business of selling or leasing the same or similar property or service.

(g) Receipts from dues of nonprofit social, fraternal, political, trade, labor, or professional organizations and business leagues. For purposes of this subparagraph, "dues" means amounts that a member of an organization pays at recurring intervals to retain membership in an organization or business league where such amounts are used for the general maintenance and upkeep of the organization or business league.

(h) Receipts from services provided by nonprofit organizations expressly made exempt from income taxation under section 501(c)(3) of the United States Internal Revenue Code to the extent that such receipts are not from services provided by such nonprofit organization as a result of unrelated trade or business as defined by section 513 of the United States Internal Revenue Code.

(i) Services purchased in state but used or consumed without the state. The value of services purchased out-of-state but used or consumed both within and without New Hampshire shall be apportioned according to the percentage of the total sales, including charges for services, made within this state. Sales of tangible personal property are made in this state if the property is delivered or shipped to a purchaser, other than the United States government, within this state regardless of f.o.b. point or other conditions of sale, or the property is shipped from an office, store, warehouse, factory, or other place of storage in this state and (1) the purchaser is the United States government, or (2) the business organization is not taxable in the state of the purchaser. Sales other than sales of tangible personal property are in this state if the income-producing activity is performed in this state, or the income-producing activity is performed both in and outside this state and a greater proportion of the income-producing activity is performed in this state than in any other state, based on costs of performance.

78-D:12 Deductions.

I. The following may be deducted from taxable receipts:

(a) Receipts from selling tangible personal property if the sale is made to a person who delivers a nontaxable transaction certificate to the vendor. The buyer delivering the nontaxable transaction certificate shall resell the tangible personal property either by itself or in combination with other tangible personal property in the ordinary course of business.

(b) Receipts from selling a service for resale if the sale is made to a person who delivers a nontaxable transaction certificate to the vendor. Buyers delivering the nontaxable transaction certificate shall separately state the value of the service purchased in his or her charge for the service on its subsequent sale, and the subsequent sale shall be in the ordinary course of business and subject to the tax.

(c) Receipts from selling tangible personal property and licenses if the sale is made to a person who delivers a nontaxable transaction certificate to the vendor. The buyer delivering the nontaxable transaction certificate shall be engaged in a business that derives a substantial portion of its receipts from leasing or selling tangible personal property or licenses of the type sold. The buyer may not utilize the tangible personal property or license in any manner other than holding it for lease or sale or leasing or selling it either by itself or in combination with other tangible personal property or licenses in the ordinary course of business.

(d) Receipts from leasing tangible personal property or licenses if the lease is made to a lessee who delivers a nontaxable transaction certificate to the lessor. The lessee delivering the nontaxable transaction certificate may not use the tangible personal property or license in any manner other than for subsequent lease in the ordinary course of business.

(e) Receipts from selling a construction service if the sale is made to a person engaged in construction who delivers a nontaxable transaction certificate to the person performing the construction service. The buyer delivering the nontaxable transaction certificate must have the construction services performed upon:

(1) A construction project which is subject to the tax under this chapter upon its completion or upon the completion of the overall construction project of which it is a part; or

(2) A construction project which is subject to tax under RSA 78-B upon the sale of the real property upon which it was constructed.

(f) Receipts from performing a service if the sale of the service is made to a buyer who delivers to the vendor either an appropriate nontaxable transaction certificate or other evidence acceptable to the commissioner unless the buyer of the service or any of the buyer's employees or agents makes initial use of the product of the service in New Hampshire or takes delivery of the product of the service in New Hampshire.

II. Receipts whether specified once or several times in paragraph I may be deducted only once from taxable receipts.

78-D:13 Credits.

I. When the receipts from the sale of real property constructed by a person in the ordinary course of a construction business are subject to the gross receipts tax, the amount of tax previously paid by the person on receipts from construction services performed upon the construction project may be credited against the tax due on the sale.

II. If on services performed outside the state, a gross receipts, sales, or similar tax has been levied by another state or a political subdivision thereof and such tax has been paid, the amount of the tax paid may be credited against any tax due this state on the receipts from the sale in New Hampshire of the product of the services performed outside this state. The amount of credit shall not exceed an amount equal to the rate of tax imposed under RSA 78-D:2 multiplied by the amount subject to tax by both New Hampshire and the other state or political subdivision of that state.

78-D:14 Certificate or Affidavit of Exemption. Unless a vendor shall have taken from the purchaser a certificate, signed by the purchaser and bearing the purchaser's name and address and the number of the purchaser's registration certificate, to the effect that the property was purchased for resale, or the purchaser prior to taking delivery furnishes to the vendor any affidavit, statement, or additional evidence, documentary or otherwise, which the commissioner may require demonstrating that the purchaser is an exempt person described in RSA 78-D:11, the purchase shall be deemed a taxable purchase at retail.

78-D:15 Proceedings to Recover Taxes.

I. The commissioner may institute actions in the name of the state to recover any tax, interest on tax, additions to tax, or penalties imposed by this chapter.

II. In the collection of the tax imposed by this chapter, the commissioner may use all of the powers granted to tax collectors under RSA 80 for the collection of taxes, except that the tax imposed by this chapter shall not take precedence over prior recorded mortgages. The commissioner shall also have all of the duties imposed upon the tax collectors by RSA 80 that are applicable to the commissioner. The provisions of RSA 80:26 apply to the sale of land for the payment of taxes due under this chapter, and the state treasurer is authorized to purchase the land for the state. If the state purchases the land, the state treasurer shall certify the purchase to the governor, and the governor shall draw a warrant for the purchase price out of any money in the treasury not otherwise appropriated.

78-D:16 Refunds.

I. Claims for refund or credit may be made by a person required to collect the tax, who has paid over the tax to the commissioner, provided that the claim is timely made in accordance with RSA 21-J:28-a and RSA 21-J:29. The commissioner may, in lieu of any refund, allow credit on payments due from the claimant.

II. If the commissioner determines, on a claim for refund or otherwise, that a person has paid an amount of tax under this chapter which, as of the date of the determination, exceeds the amount of tax liability owing from the person to the state, with respect to the current and all preceding taxable periods, under any provision of this chapter, the commissioner shall forthwith refund the excess amount to the person together with interest as provided in RSA 21-J:28.

78-D:17 Liens. If any person required to pay and transmit a tax under this chapter neglects or refuses to pay the same after demand, the amount, together with all penalties and interest provided for in this chapter and together with any costs that may accrue in addition thereto, shall be a lien in favor of the state of New Hampshire upon all property and rights to property, whether real or personal, belonging to such person. Such lien shall arise at the time demand is made by the commissioner and shall continue until the liability for such sum with interest and costs is satisfied or becomes unenforceable. No lien upon real estate for taxes imposed by this chapter is valid and binding against any person other than the taxpayer until notice of such lien stating the name and address of the taxpayer and the amount of the tax due shall have been filed and recorded in the registry of deeds in the grantor index in the county in which such real estate is located. Notwithstanding the provisions of any other law, the lien shall continue and shall be valid and binding until the liability for the sum, with interest and costs, is satisfied or becomes unenforceable.

11 Utility Property Tax; Rate Reduced. Amend RSA 83-F:2 to read as follows:

83-F:2 Tax Imposed. For taxable periods beginning April 1, 2001, a tax is imposed upon the value of utility property at the rate of [$6.60] $4.60 on each $1000 of such value, to be assessed annually as of April 1, and every year thereafter, and paid in accordance with this chapter.

12 Education Trust Fund. Amend RSA 198:39 to read as follows:

198:39 Education Trust Fund Created and Invested.

I. The state treasurer shall establish an education trust fund in the treasury. Moneys in such fund shall not be used for any purpose other than to distribute adequate education grants to municipalities' school districts pursuant to RSA 198:42, [and] to provide education property tax hardship relief under RSA 198:55, and to make taxpayer refunds under RSA 78-D:16. The state treasurer shall deposit into this fund immediately upon receipt:

(a) Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 77-A:20-a, relative to business profits taxes.

(b) [Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 77-E:14, relative to business enterprise tax.] Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA 78-D:8, I.

(c) Funds collected and paid over to the state treasurer by the commissioner of revenue administration pursuant to RSA 78-A:26, III relative to the tax on motor vehicle rentals.

(d) Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA 78:32, relative to tobacco taxes.

(e) [Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 78-B:13, relative to real estate transfer taxes.

(f)] Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA 83-F:7, I, relative to the utility property tax.

[(g)] (f) The full amount of excess education property tax payments from the department of revenue administration pursuant to RSA 198:46.

[(h)] (g) All moneys due the fund in accordance with RSA 284:21-j, relative to sweepstakes.

[(i)] (h) Tobacco settlement funds in the amount of $40,000,000 annually.

[(j)] (i) The school portion of any revenue sharing funds distributed pursuant to RSA 31-A:4 which were apportioned to school districts in the property tax rate calculations in 1998.

[(k)] (j) Any other moneys appropriated from the general fund.

II. The education trust fund shall be nonlapsing. The state treasurer shall invest that part of the fund which is not needed for immediate distribution in short-term interest-bearing investments. The income from these investments shall be returned to the fund.

13 New Subdivision; Low Income Homeowners Property Tax Relief. Amend RSA 198 by inserting after section 55 the following new subdivision:

Low Income Homeowners Property Tax Relief

198:56 Definitions. In this subdivision:

I. "Commissioner" means the commissioner of the department of revenue administration.

II. "Homestead" means the dwelling owned by a claimant or, in the case of a multi-unit dwelling, the portion of the dwelling which is owned and used as the claimant's principal place of residence and the claimant's domicile for purposes of RSA 654:1. "Homestead" shall not include land and buildings taxed under RSA 79-A or land and buildings or the portion of land and buildings rented or used for commercial or industrial purposes. In this paragraph, the term "owned" includes:

(a) A vendee in possession under a land contract;

(b) One or more joint tenants or tenants in common; or

(c) A person who has equitable title, or the beneficial interest for life in the homestead.

III. "Household income" means the sum of the adjusted gross income for federal income tax purposes of the claimant and any member of the claimant's household who resides in the homestead for which a claim is made. "Household income" shall also include all income of any trust through which the claimant holds equitable title, or the beneficial interest for life, in the homestead.

IV. "New Hampshire household" means any person filing a federal income tax return as head of household or 2 or more adults who jointly share the benefit of the homestead. "New Hampshire household" shall not include those adults who share the homestead under a landlord-tenant relationship.

198:57 Low Income Homeowners Property Tax Relief

I. Pursuant to the provisions of this subdivision, eligible claimants shall be granted tax relief following the effective date of this act.

II. Residents shall apply to the department of revenue administration for tax relief under this subdivision.

III. An eligible claimant is a person who:

(a) Owns a homestead or interest in a homestead subject to the education property tax;

(b) Resides in such homestead at the time of application for relief under this subdivision, except such persons as are on active duty in the United States armed forces or are temporarily away from such homestead but maintain the homestead as a primary domicile; and

(c) Realizes total household income of $40,000 or less.

IV. All or a portion of an eligible claimant's education property taxes, exclusive of municipal and county taxes, shall be rebated as follows:

(a) Deduct the municipal, county, and local education property tax rate from the claimant's total annual property tax rate;

(b) Multiply the net property tax rate computed in subparagraph (a) by the following percentage as applicable to determine the amount of the tax relief. For a claimant, whether single, married or head of household, with total household income of:

(1) Less than $20,000, 100 percent of the net tax rate;

(2) $20,000 but less than $22,000, 95 percent of the net tax rate;

(3) $22,000 but less than $24,000, 90 percent of the net tax rate;

(4) $24,000 but less than $26,000, 85 percent of the net tax rate;

(5) $26,000 but less than $28,000, 80 percent of the net tax rate;

(6) $28,000 but less than $30,000, 75 percent of the net tax rate;

(7) $30,000 but less than $32,000, 70 percent of the net tax rate;

(8) $32,000 but less than $34,000, 65 percent of the net tax rate;

(9) $34,000 but less than $36,000, 60 percent of the net tax rate;

(10) $36,000 but less than $38,000, 55 percent of the net tax rate; or

(11) $38,000 but less than or equal to $40,000, 50 percent of the net rate.

(c) Multiply the rate computed in subparagraph (b) by the local assessed valuation of the homestead from the claimant's current property tax bill;

(d) Multiply the rate computed in subparagraph (b) by the value of a homestead with an equalized value of $150,000 in the claimant's municipality for the current tax year;

(e) The total amount of tax relief allowable in any year shall be the amount computed in subparagraph (c) or (d), whichever is the lesser amount.

V. If a homestead is owned by 2 or more persons as joint tenants or tenants in common, and one or more of such joint owners do not principally reside at such homestead, tax relief applies to the proportionate share of the homestead value that reflects the ownership percentage of the claimant. Only one claim may be filed for a single homestead.

VI. Claims for tax relief filed with the department of revenue administration shall be filed

within 60 days of the due date of the taxes.

VII. Each claim shall be accompanied by a copy of the claimant's federal income tax return filed by the claimant for the immediately prior tax period. Claimants who were not required to file a federal tax return for the immediately prior tax period may submit an affidavit to such effect in lieu of a tax return which document shall include the claimant's social security number. A claimant who asserts ownership in a homestead because he or she holds equitable title, or the beneficial interest for life, in the homestead shall also submit a copy of the document creating such interest and a copy of the federal tax return, if any, for the immediately prior tax period, of the trust holding legal title to the homestead. Any documents submitted shall be considered confidential, and protected under RSA 21-J:14.

VIII. The provisions of RSA 359-C shall not apply to the documents required to be submitted under this section.

198:58 Rulemaking; Forms; Notice.

I. The commissioner shall adopt emergency rules under RSA 541-A relative to the administration of the provisions of this subdivision. Notwithstanding RSA 541-A:18, II, such emergency rules shall be effective for 180 days. After 180 days the commissioner shall adopt rules pursuant to RSA 541-A.

II. The commissioner shall approve and provide forms relative to the administration of this subdivision.

III. Claim forms shall include the following:

(a) Instructions on completing and filing the form;

(b) Sections for information concerning the claimant, the claimant's household, the property for which relief is sought, and such other information as is reasonably necessary to determine the accuracy of the claim;

(c) Instructions on appeal procedure and time limits relative to such appeals; and

(d) A place for the claimant's signature with a certification by the claimant that the claim is made in good faith and that the facts contained in the claim are true.

IV. The commissioner shall publicize notice of the property tax relief provisions in a suitable manner.

198:59 Penalties; Assessment of Erroneous Claims.

I. Any person who files a claim under this subdivision with fraudulent intent and any person who assisted in the preparation or filing of the claim or supplied information upon which the claim was prepared shall be guilty of a misdemeanor.

II. The commissioner may assess and collect the amount of any sums granted for hardship relief relative to a fraudulent or erroneously paid claim for tax relief including interest provided under RSA 21-J:28 and an additional penalty of 25 percent for the erroneous amount of such claim or an additional penalty of the greater of 25 percent or $1,000 for a fraudulent claim.

198:60 Appeals.

I. Whenever the commissioner refuses to grant a claimant a tax relief claim, the claimant may appeal in writing within 30 days of notice of such refusal to the board of tax and land appeals.

II. When a taxpayer appeals the commissioner's refusal of a claim to the board of tax and land appeals, the board may reverse or affirm, wholly or partly, or may modify the decision brought up for review when there is an error of law or when the board finds the commissioner's action to be arbitrary or unreasonable.

198:61 Refund of Tax Claims. The department of revenue administration shall review a claim for relief filed with it and, if such claim is determined to be valid, shall certify such amount to the state treasurer within 90 days. The state treasurer shall pay the claim to the claimant from funds in the education trust fund. The department shall notify a claimant whose claim is rejected in whole or in part of such determination within 90 days of the department's receipt of the claim and all required documentation.

14 Statewide Property Tax Hardship Relief Repeal; Effective Date Changed. Amend 1999, 338:25, II to read as follows:

II. Section 22 of this act shall take effect July 1, [2003] 2002.

15 Repeal. The following are repealed:

I. RSA 77-E:14, relative to distribution of funds to the education trust fund from the increase in the business enterprise tax rate.

II. RSA 78-B:13, relative to distribution of funds to the education trust fund from the increase in the real estate transfer tax rate.

III. RSA 86:6, relative to the tax rate for the legacies and successions tax.

16 Repeal of Prospective Repeals of Education Property Tax and Adequate Education Grant Determination Provisions. The following are repealed:

I. 1999, 338:21, relative to the repeal of RSA 76:3, RSA 198:40, and RSA 198:41.

II. 1999, 338:25, I, relative to the effective date of 1999, 338:21.

17 Effective Date.

I. Sections 3, 4, and 11 of this act shall take effect April 1, 2001.

II. The remainder of this act shall take effect July 1, 2002.

LBAO

01-0403

3/15/01

HB 766-FN-A-LOCAL - FISCAL NOTE

FISCAL IMPACT: