SB 0448

AN ACT creating business profits tax credits for contributions made by business organizations for housing for its low and moderate income employees and for certain affordable housing programs.

SPONSORS: Sen. Cohen, Dist 24; Sen. Hollingworth, Dist 23; Sen. McCarley, Dist 6; Rep. Dowling, Rock 13; Rep. M. Fuller Clark, Rock 36; Rep. Spiess, Hills 14

This bill creates business profits tax credits for contributions made by business organizations for housing for its low and moderate income employees and for certain affordable housing programs.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT creating business profits tax credits for contributions made by business organizations for housing for its low and moderate income employees and for certain affordable housing programs.

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

1 New Paragraphs; Business Profits Tax Credits. Amend RSA 77-A:5 by inserting after paragraph XI the following new paragraphs:

2 New Subdivision; Business Organization Tax Credits. Amend RSA 204-C by inserting after section 86 the following new subdivision:

I. There shall be allowed as a credit against the business profits tax imposed under RSA 77-A and as provided in RSA 204-C:89 in any tax year an amount equal to the amount paid during such tax year by a business into a revolving loan fund established to provide loans for housing located in the state for low and moderate income employees of the business organization or any subsidiary of the business organization. Loans from any such fund shall be spent in this state and used for:

(a) The cost of housing that is to be a principal residence and falls within 150 percent of the price guidelines established for programs administered by the authority, including costs for down payments, mortgage interest rate buy-downs, closing costs, and other costs determined to be eligible under written procedures adopted by the authority under paragraph II; and

II. The authority shall adopt written procedures for establishment and operation of employer revolving loan funds eligible for the credit provided in this section. Such procedures shall include provisions for employee eligibility, specify expenses for which loans may be made and provide the documentation and procedures necessary for a business organization to qualify for the tax credit.

III. Any business organization claiming the credit allowed by this section shall submit documentation to the commissioner of the department of revenue administration that the revolving loan fund complies with written procedures for revolving loan funds established by the authority under paragraph II.

IV. Nothing in this section shall be construed to prevent 2 or more business organizations from participating jointly in one or more programs under the provisions of this section. Such joint programs shall be submitted, and acted upon, as a single program by the business organizations involved.

V. To apply for the credit allowed by this section, a business organization shall submit the documentation required under paragraph III of this section to the authority on or before November 1 of each year. The authority shall randomly select from among all qualified business organizations, those organizations allowed said credit. The credit shall be claimed on the tax return for the tax year during which the selected business organization made payment into the revolving loan fund. The sum of all tax credits granted pursuant to the provisions of this section shall not exceed $100,000 annually per business organization. In no event shall the total amount of all tax credits allowed to all business organizations pursuant to the provisions of this section exceed $1,000,000 in any one tax year.

VI. Any tax credit not used in the period during which the investment was made may be carried forward or backward for the 5 immediately succeeding or preceding tax years until the full credit has been allowed. For income years commencing on or after January 1, 2003, if the authority determines that 60 percent or more of a revolving loan fund has not been loaned as provided in this section by a business organization on or before the date that is 3 years after the date that a revolving loan fund is established pursuant to this section by such business organization, the authority shall notify such business organization and the commissioner of the department of revenue administration that the authority has determined that 60 percent or more of the fund has not been loaned as provided in this section, and such business organization shall be required to recapture the credits previously granted under this section, to the extent provided for in written procedures of the authority, on the first tax return required to be filed on or after the date of such notice for a tax imposed under RSA 77-A and as provided in RSA 204-C:89. If any amount of such recaptured credit has not been paid to the commissioner on or before the due date of such return, such amount shall bear interest at the rate of one percent per month or fraction thereof from such due date to the date of payment.

I. There shall be allowed as a credit against the business profits tax imposed under RSA 77-A and as provided in RSA 204-C:89 a credit for contributions made by business organizations to affordable housing programs approved by the authority. The authority shall grant a tax credit voucher equal to 100 percent of the value of the contribution made. No more than a total of $1,000,000 in vouchers shall be granted by the authority in any one fiscal year.

II.(a) The credit provided by this section shall be available to contributors on or after the date contributions for which credit is to be taken are actually received.

(b) Contributions received for which credit is to be taken shall not exceed $50,000 in any state fiscal year. Contributions received in excess of $50,000 in any state fiscal year shall not be eligible for credit in such fiscal year but may be carried forward to the next succeeding fiscal year or years and shall be given priority in determining the total contributions eligible for credit in such fiscal year.

III. The credit or any unused portion thereof may be carried forward for no more than 5 succeeding years, but shall not exceed $250,000 in any given tax year.

I. Tax credits under RSA 204-C:87 and RSA 204-C:88 shall be allowed against any of the following individually or in combination:

II. Credits provided by this subdivision applied against the liabilities imposed by RSA 400-A and RSA 77-E shall be deemed to be taxes paid for the purpose of RSA 77-A:5, III and X, respectively.

III. Estimated tax payments under RSA 400-A:32 due and payable after the date of contribution may be reduced by the credits allowable under this subdivision.

IV. No credit under this subdivision shall be granted to any bank, bank and trust company, insurance company, trust company, national bank, savings association, building and loan association, or any other business entity for activities that are a part of its normal course of business.

AN ACT creating business profits tax credits for contributions made by business organizations for housing for its low and moderate income employees and for certain affordable housing programs.

The Department of Revenue Administration indicates this bill will decrease state unrestricted revenue by an indeterminable amount in FY 2003 and each year thereafter. There is no fiscal impact on state, county and local expenditures or county and local revenue.

The Department states that it is unclear how many businesses will participate in these programs, therefore, the decrease in the Business Profits Tax (BPT) is indeterminable. This bill contains two BPT credits that are limited for each business and in total: one credit, the Employer-Assisted Housing Tax Credit is limited to $100,000 per year, per business entity and limited to $1,000,000 per year to all business entities, while the other credit is the Affordable Housing Contribution Tax Credit which is limited to $50,000 per year, per business entity and limited to $1,000,000 per year to all business entities. Both of these credits contain carryover provisions.

The Department states that it is not clear whether the money later repaid to the revolving fund created by the BPT credits on program loans is returned to the contributing business, or whether the money remains in the fund to be loaned out again. The Department further states that there is not sufficient language in this bill to administer this credit program.