New Hampshire's Virtual Town Hall
"Taxing NH Small Business Men & Women"
The following is an editorial written by LFDA Founding Member Tom Thomson. Please leave a comment and let us know what you think.
"Taxing NH Small Business Men & Women" by Tom Thomson
Mark your calendar for December 16, 2009 and promise yourself that you and others will take the time to testify at the only public hearing for the 5% Tax on LLC’s and Partnerships which the Department of Revenue Administration (DRA) plans to hold at 10:00am at their Concord office on 109 Pleasant Street.
This past June, when the NH Legislature was voting on HB 2, the state budget, some powerful Democrats decided to slip into the bill a 5 % interest and dividends tax on individuals for any distributions they receive from a Limited Liability Corporation (LLC) and Partnerships, this is an Income Tax!
Because this was slipped into HB 2 at the eleventh hour, there was no ability for our taxpayers to testify on this issue. Now, the DRA has written the rules for this 5% tax on all LLC’s and Partnerships throughout New Hampshire.
There are well over 10,000 LLC’s and Partnerships in New Hampshire made up of small business men and women who are about to get a wakeup call from big brother; “You owe us more money!” In full disclosure, I own an LLC. However, this is shocking to me for two reasons:
1. We are in a national recession with over 10% unemployment. Noone can deny that our small business men and women are the backbone of our economy, they are ones that provide the jobs, yet this 5% tax will only help to kill jobs in New Hampshire. This is not job creation in NH, it's job elimination! Yesterday, one owner of an LLC said to me, “I am working nearly 24/7 and there isn’t any more money to be made. Any additional tax will force me to lay off employees or go out of business."
2. I have looked into what the DRA calls “more transparency” on this issue and I am appalled at what I have learned.
The DRA comment period for the LLC & Partnership 5% tax ends December 28th, 2009, three days after Christmas. Only after calling DRA and asking about public hearings did I learn that they will only have one public hearing on the rules on this important tax. When implemented, this tax will cost LLC's and Partnerships $15 million dollars both in fiscal years 2010 and 2011. The only public hearing is scheduled for December 16th, 2009 at 10am at DRA office located 109 Pleasant Street, Concord, NH. You can review the proposed rules at www.nh.gov/revenue.
I have contacted both the Commissioner of DRA and Governor Lynch’s office and asked that these rules be pushed forward into January 2010. I also requested that after the first of the year, a total of 5 public hearings be scheduled across the state starting at 6pm so that our hard working men and women can attend. Ask yourself why DRA scheduled only one public hearing on December 16th with the comment period ending December 28th. To me the answer is simple; with family, Christmas and a recession going on no one will take the day off to come to Concord and testify.
This is a game that different state agencies play with public hearings on rule making; if you wrap the hearing around holidays no one will show up and the proposed rules will slide under the radar screen and be approved, which will carry the same impact as law. The state is not serving our taxpayers by allowing mischief like this to happen, it is wrong and must stop.
The taxpayers did not the have opportunity to testify on this issue last June. Governor Lynch, please give the 10,000 plus New Hampshire LLC small business men and women and Partnerships no less than 5 public hearings across New Hampshire as requested on this important issue. If you do, we will be serving our citizens. If not, your message will be loud and clear, “The state of New Hampshire does not care about our small business men and women who are truly the backbone of our state’s economy." Please do the right thing!
"Taxing NH Small Business Men & Women" by Tom Thomson
Mark your calendar for December 16, 2009 and promise yourself that you and others will take the time to testify at the only public hearing for the 5% Tax on LLC’s and Partnerships which the Department of Revenue Administration (DRA) plans to hold at 10:00am at their Concord office on 109 Pleasant Street.
This past June, when the NH Legislature was voting on HB 2, the state budget, some powerful Democrats decided to slip into the bill a 5 % interest and dividends tax on individuals for any distributions they receive from a Limited Liability Corporation (LLC) and Partnerships, this is an Income Tax!
Because this was slipped into HB 2 at the eleventh hour, there was no ability for our taxpayers to testify on this issue. Now, the DRA has written the rules for this 5% tax on all LLC’s and Partnerships throughout New Hampshire.
There are well over 10,000 LLC’s and Partnerships in New Hampshire made up of small business men and women who are about to get a wakeup call from big brother; “You owe us more money!” In full disclosure, I own an LLC. However, this is shocking to me for two reasons:
1. We are in a national recession with over 10% unemployment. Noone can deny that our small business men and women are the backbone of our economy, they are ones that provide the jobs, yet this 5% tax will only help to kill jobs in New Hampshire. This is not job creation in NH, it's job elimination! Yesterday, one owner of an LLC said to me, “I am working nearly 24/7 and there isn’t any more money to be made. Any additional tax will force me to lay off employees or go out of business."
2. I have looked into what the DRA calls “more transparency” on this issue and I am appalled at what I have learned.
The DRA comment period for the LLC & Partnership 5% tax ends December 28th, 2009, three days after Christmas. Only after calling DRA and asking about public hearings did I learn that they will only have one public hearing on the rules on this important tax. When implemented, this tax will cost LLC's and Partnerships $15 million dollars both in fiscal years 2010 and 2011. The only public hearing is scheduled for December 16th, 2009 at 10am at DRA office located 109 Pleasant Street, Concord, NH. You can review the proposed rules at www.nh.gov/revenue.
I have contacted both the Commissioner of DRA and Governor Lynch’s office and asked that these rules be pushed forward into January 2010. I also requested that after the first of the year, a total of 5 public hearings be scheduled across the state starting at 6pm so that our hard working men and women can attend. Ask yourself why DRA scheduled only one public hearing on December 16th with the comment period ending December 28th. To me the answer is simple; with family, Christmas and a recession going on no one will take the day off to come to Concord and testify.
This is a game that different state agencies play with public hearings on rule making; if you wrap the hearing around holidays no one will show up and the proposed rules will slide under the radar screen and be approved, which will carry the same impact as law. The state is not serving our taxpayers by allowing mischief like this to happen, it is wrong and must stop.
The taxpayers did not the have opportunity to testify on this issue last June. Governor Lynch, please give the 10,000 plus New Hampshire LLC small business men and women and Partnerships no less than 5 public hearings across New Hampshire as requested on this important issue. If you do, we will be serving our citizens. If not, your message will be loud and clear, “The state of New Hampshire does not care about our small business men and women who are truly the backbone of our state’s economy." Please do the right thing!
Comment
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Comment by Barbara Aichinger on January 30, 2010 at 8:19am -
Also I would like to hear from folks who actually think they understand some of the NEW legislation proposed. What I have read is that they are proposing to TAX as a dividend RENTAL INCOME here in NH. That is if you have a vacation home and rent it out when you are not using it the DRA will slap you with the 5% Dividend Tax. Comments?
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Comment by Barbara Aichinger on January 30, 2010 at 8:17am
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The scary part about some of the NEW legislation proposed is the concept of 'reasonable compensation'. This is where the DRA will determine what the small business owner should earn. This 'resonable compensation' will be tax free as income but everything above that level (as determined by the DRA) will be taxed as a dividend. Now I don't see the DRA walking over to Fidelity or Bank of America and determining 'reasonable compensation' for those people...I only see the DRA (and our state legislature) attacking small business owners here in NH
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Comment by Brian Lawson on January 1, 2010 at 9:41pm -
Check out this article about the lack of hearings in southern NH.
Southern NH small businesses seek LLC voice
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Comment by Chuck McKenney on December 29, 2009 at 2:08pm -
Any hearings in southern NH?
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Comment by LFDA Editor on December 29, 2009 at 10:29am -
Below is the schedule for the upcoming LLC tax hearings:
January 5, 2010 - 1:00 pm at White Mountain Community College, Berlin
January 7, 2010 - 6:00 pm at Hyde Hall, Plymouth State University, Plymouth
January 9, 2010 - 10:00 am at Kennett High School Auditorium, Conway
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Comment by Mark D. Eastman on December 18, 2009 at 1:39pm -
This is a prime example how people ignore history and refuse to recognize that in order to create jobs businesses must have the capital. In a climate where it is nearly impossible to obtain working capital loan, they want to shake down small bustiness even more. If consumers have more cash in they're pockets, they will spend it on goods and services which in turn grows business which in turn creates a need for more production which in turn creates jobs.
WHY DON"T THEY GET IT?
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Comment by LFDA Editor on December 17, 2009 at 12:27pm
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Read this great NHPR story on the LLC hearing: Frustration Boils Over at LLC Tax Hearing
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Comment by Chuck McKenney on December 15, 2009 at 11:25am
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You can act by signing this "Stop the LLC Tax" online petition.
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Comment by Tom C on December 11, 2009 at 12:12pm
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I feel that since it has not even been through the rule making process, to make it retroactive to Jan 09 would be unconstitutional under NH's Constitution since no law shall be retroactive.
Tom C
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Comment by LFDA Editor on December 11, 2009 at 10:17am
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The Union Leader is reporting that, "Gov. John Lynch, speaking to a business audience yesterday, defended changes being made in the way that distributions by limited liability corporations are taxed."
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