NH business tax amnesty on tap to start in December

Penalties, half interest would be forgiven on back taxes filed between Dec. 1 and Feb. 15

The first New Hampshire tax amnesty in more than a decade will go into effect in two months, yet few people are aware of it.

Lost in the budget compromise over business taxes and tucked into Senate Bill – the giant trailer bill – is a 95-word provision that would forgive penalties and half the interest to business and individuals that fess up and pay up back taxes between Dec. 1, 2015, and Feb. 15, 2016.

“This is the first time we have had a general amnesty in 15 years,” said Department of Revenue Administration Commissioner John Beardmore at the Business and Industry Association’s Business Tax Forum in Manchester. “So we’ll see what it brings in.”

That 2001 amnesty brought in $14.9 million. This time, the state is hoping for $16 million. There was also an amnesty in 2005, but it was specific to real estate.

Businesses and accountants wanted to know about audits conducted during the amnesty period that turn up back taxes owed. Will businesses be able to pay those taxes without the penalty?

Beardmore said the department hasn’t figure that one out, but plans to come up with rules before the amnesty starts.

The state also hopes to raise more money from businesses by participating in a Multistate Tax Commission auditing program on complex assessment of large companies, Beardmore said. There was some concern that auditors would mistakenly apply the rules of other states to New Hampshire, but Beardmore said that the DRA will review the audits, and that it appeared the commission planned to employ a former NH DRA employee to work on Granite State companies. The auditing program won’t affect most of the small businesses in the state, Beardmore said.

Meanwhile, more tax revenue continues to roll into New Hampshire coffers than last year, according to the latest numbers previewed by Beardmore.

Estimated business tax revenue was up 13 percent in September and up nearly 8 percent during the calendar year to date.

Interest and dividends tax revenues were up 12 percent in September, 10.4 percent year to date. Real estate transfer tax revenues were up 27.4 percent year to date and rooms and meals tax revenues went up 6.6 percent year to date.

All this makes it looks like the state will reach its revenue goals, and that would trigger further cuts in business tax rates in 2018. The rates are already slated to go down in 2016.

The business profits tax rate is set to decrease from 8.5 to 8.2 percent next year and would go to 7.9 percent in 2018 if revenue goals are met. And the business enterprise tax rate, cut from 0.75 to 0.72 next year, would drop further to 0.675.

Next year, Beardmore said, people will be able to e-file their interest and dividends returns and pay with a credit card. The aim is to spread that program to business taxes in 2017, he said.