SB 211-FN - AS AMENDED BY THE SENATE
03/05/2015 0510s
2015 SESSION
15-0634
10/09
SENATE BILL 211-FN
AN ACT relative to taxation of employee leasing companies under the business enterprise tax.
SPONSORS: Sen. Carson, Dist 14; Sen. Boutin, Dist 16; Sen. Daniels, Dist 11; Sen. Bradley, Dist 3; Sen. Lasky, Dist 13; Sen. Soucy, Dist 18; Rep. L. Ober, Hills 37; Rep. Cilley, Straf 4
This bill allows an employee leasing company and a client company to elect to make the client company solely responsible for paying business enterprise taxes concerning its leased employees and be eligible for credits against such taxes.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/05/2015 0510s
15-0634
10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT relative to taxation of employee leasing companies under the business enterprise tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Section; Business Enterprise Tax; Employee Leasing Companies. Amend RSA 77-E by inserting after section 13 the following new section:
77-E:13-a Employee Leasing Companies.
I. For the purposes of the provisions of RSA 277-B:9, I(h), an employee leasing company and client company may elect to make the client company solely responsible for paying the tax imposed by RSA 77-E, and include in the client company’s compensation portion of the enterprise value tax base those wages paid to the leased employees.
II. If the employee leasing company and the client company make such an election, the client company shall be eligible for the credit provided in RSA 77-A:5, X.
III.(a) In order to make the election under paragraph I, the client company and the employee leasing company shall file the forms required by the department pursuant to rules adopted by the commissioner under RSA 541-A.
(b) For an election to be effective for any given tax year, forms required to be filed with the commissioner shall be filed prior to the end of the employee leasing company’s tax year.
(c) An election under this section shall remain in effect until the employee leasing company and the client company both notify the department of the termination of an election described in paragraph I on forms required by the department pursuant to rules adopted by the commissioner under RSA 541-A.
(d) Upon making such an election, a client company may elect to authorize the employee leasing company to act as an agent for the client company for purposes of collecting and paying the tax imposed by RSA 77-E, provided that the client company files the forms required by the department of revenue administration to designate such an agent pursuant to rules adopted by the commissioner.
IV. For purposes of this section, the terms “employee leasing company” and “client company” shall have the same meaning as in RSA 277-B:2.
2 New Section; Employee Leasing Companies; Tax Credits. Amend RSA 277-B by inserting after section 17 the following new section:
277-B:17-a Tax Credits and Other Incentives. For purposes of determination of tax credits, grants, or any other economic incentives provided by this state or other government entity that are based on employment, leased employees shall be deemed employees solely of the client company. A client company shall be entitled to the benefit of any tax credit, economic incentive, or other benefit arising as the result of the employment of leased employees of such client company. Notwithstanding that the employee leasing company is the W-2 reporting employer, the client company shall continue to qualify for such benefit, incentive, or credit. If a grant or amount of any such incentive is based on the number of employees, then each client company shall be treated as employing only those leased employees co-employed by the client company. Leased employees working for other client companies of the employee leasing company shall not be counted together. Each employing leasing company shall provide, upon request by a client company, state agency, or department responsible for administration of any such tax credit or economic incentive, employment information reasonably required by such agency or department and necessary to support any request, claim, application, or other action by a client company seeking any such tax credit or economic incentive. The provisions of this section shall not apply to credits available under RSA 77-E which are governed by RSA 77-E:13-a.
3 Effective Date. This act shall take effect July 1, 2015.
LBAO
15-0634
Amended 03/23/15
SB 211-FN FISCAL NOTE
AN ACT relative to taxation of employee leasing companies under the business enterprise tax.
FISCAL IMPACT:
The Department of Revenue Administration states this bill, as amended by the Senate (Amendment #2015-0510s), will have an indeterminable impact on state revenue in FY 2016 and each year thereafter. There will be no fiscal impact on state, county, and local expenditures, or county and local revenue.
METHODOLOGY:
The Department of Revenue Administration states under existing NH Labor law, RSA 277-B, an employee leasing company and client company are deemed co-employers and divide employment responsibilities under RSA 277-B:9. More specifically, RSA 277-B:9, I (h) requires the employee leasing company to pay the Business Enterprise Tax (BET) imposed by RSA 77-E and include in its compensation portion of the base tax those wages paid to its leased employees. This bill would allow an employee leasing company and a client company to elect to make the client company solely responsible for paying the BET concerning its leased employees and be eligible for credits against such taxes. This bill would allow the leasing company and the client company to elect the leasing company to act as an agent of the client company to collect and pay the BET. The Department is unable to estimate the fiscal impact of this bill because it does not know what companies would make such an election and if those companies would be liable for BET and/or Business Profits Tax (BPT). For example, a leasing company could have paid $1,000 in BET and $500 in BPT = $1,500 in revenue and:
• An election is made to shift the BET liability to the client company, but the client company does not meet the BET threshold and has a BPT liability of $1,000.
• An election is made to shift the BET liability to the client company and the client company pays $500 in BET, but does not have a BPT liability to use a BET credit.
An election is made to shift the BET liability to the client company and the client company pays $1,000 in BET and has a $1,000 BPT liability that is offset by the BET credit.