HB 291-FN-A – AS INTRODUCED
2005 SESSION
09/10
HOUSE BILL 291-FN-A
AN ACT establishing a research and development tax credit against the business profits tax.
SPONSORS: Rep. P. Sullivan, Hills 10
This bill establishes a research and development tax credit against 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
05-0149
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT establishing a research and development tax credit against the business profits tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Business Profits Tax; Research and Development Tax Credit. Amend RSA 77-A:5 by inserting after paragraph XII the following new paragraph:
XIII.(a) There shall be allowed a research and development tax credit equal to 15 percent of qualified manufacturing research and development expenditures made or incurred during the taxable period. For purposes of this paragraph the term “qualified manufacturing research and development expenditures” shall mean any wages paid to an employee of the business organization for services rendered by such employee within this state within the meaning of RSA 77-A:3, I(b), if:
(1) Such wages may be treated as research and development expenditures under section 174 of the United States Internal Revenue Code; and
(2) Such services are undertaken for the purpose of discovering information which constitutes qualified research and development as defined in section 41 of the United States Internal Revenue Code.
(b) In this paragraph, “employee” means an employee, as defined in section 3401(c) of the United States Internal Revenue Code, who is also an eligible employee, as defined in RSA 77-A:1, XXIII.
(c) In no event shall the credit allowed under this paragraph exceed 5 percent of the tax due under this chapter before any credits under RSA 77-A:5 are taken into account, and the credit allowed under this paragraph shall be limited so that no more than 50 percent of such credit shall be attributable to wages paid to an employee who is not an “eligible employee” as defined in RSA 77-A:1, XXIII.
(d) The research and development tax credit shall apply to eligible research and development costs that occur on or after July 1, 2005.
2 Effective Date. This act shall take effect July 1, 2005.
LBAO
05-0149
1/25/05
HB 291-FN-A - FISCAL NOTE
AN ACT establishing a research and development tax credit against the business profits tax.
FISCAL IMPACT:
The Department of Revenue Administration indicates this bill will decrease state unrestricted general fund revenue by $650,000 in FY 2006 and FY 2007, and by $700,000 in FY 2008 and FY 2009. There is no fiscal impact on state, county and local expenditures or county and local revenue.
METHODOLOGY:
The Department states that this bill reinstates the research and development credit that was repealed on July 1, 1995. To determine an equivalent research and development credit for FY 2006, the Department used the credit that was taken in 1994 and 1995 as a percentage of total Business Profits Taxes (BPT) paid (.38%), and applied that percentage to an estimate of FY 2006 BPT (FY 2003 BPT times a growth factor of 1% per year).
The Department states that this tax change can be administered within their existing budget.