LLC Tax

Stories, Opinion, Analysis:

Senate panel backs bill to repeal LLC tax
Nashua Telegraph 3/3/10
“We feel strongly that it’s one thing to repeal the LLC tax, but in doing that, we have to come up with a more sane definition of what is reasonable compensation that businesses in our state can rely upon,” D’Allesandro said.

Lawmakers, businesspeople unhappy with LLC tax
Eagle Tribune 3/3/10
"The biggest problem is that people don't understand our taxes, and that's our fault," Clougherty said.

A saga of spin: The fall of the LLC tax
Union Leader 2/28/10
Business owners talked to their accountants and discovered that the tax was much more onerous than advertised. As the outcry against it grew, Gov. Lynch and legislative Democrats continued spinning it as an insignificant loophole closing. Now, their efforts to claim the tax as a moral imperative are reportedly at an end.

Lawmakers: Tax definitions need fixing
Nashua Telegraph 2/26/10
David Heath, a principal in a Nashua accounting firm, said the vague compensation law breeds a harmful “uncertainty’’ about investing in New Hampshire.

Left out of LLC-repeal loop
Union Leader 2/26/10
However, Senate Finance Committee Chairman Lou D'Allesandro, D-Manchester, and House Finance Committee Chairman Marjorie Smith, D-Durham, were not included in those discussions.

Lawmakers ready to ax business tax
Nashua Telegraph 2/25/10
Gov. John Lynch and top leaders in the state Legislature have privately reached a consensus to support repealing the levy, which they had counted on to raise $15 million a year, Democratic sources told The Telegraph on Tuesday.

Defining 'reasonable compensation'
Concord Monitor 2/21/10
When Andy Sanborn started his first company, he recalls sleeping on the floor on an air mattress eating ramen noodles. Now, Sanborn owns The Draft in Concord, along with a couple of real estate companies. He won't say how much money he makes, but he is outraged at the thought of the government telling him what salary is considered "reasonable."

LLC tax collection rules OK'd
Union Leader 2/20/10
Bills to repeal it were killed in the House this month. Bills to repeal and to reform the tax are pending in the Senate.

LLC tax approved by rules panel
Nashua Telegraph 2/20/10
State officials estimate about 20,000 new taxpayers would pay on these dividends.

LLC tax rules in place
Concord Monitor 2/20/10
Carson also worried about the financial effect on business owners and on the state, which must implement the rules. "There are many LLC owners that don't have tax attorneys or accountants and now have to deal with the new tax," she said.

Bill proposes rolling back LLC tax
Union Leader 2/17/10
Odell said a long-time tax accountant wrote him with a mix of support and skepticism, saying, "It makes so much sense it probably won't pass."

Call made to repeal LLC tax
Union Leader 2/10/10
"To have someone tell us what is reasonable compensation when we're working 70 hours a week, on call for tenants 24/7 is, well, disheartening," Boucher said.

GOP: Goley's tax stand a 'trick'
Union Leader 2/6/10
State GOP Chairman John H. Sununu said Goley is "desperately trying to trick District 16 residents into believing that he opposes the same disastrous tax he helped create. Jeff Goley's deceitful LLC tax mailer sets a new standard for dishonesty in New Hampshire politics."

Let's repeal this measure - and fast
Jim Roche, president of the BIA 2/6/10
We believe a fast-track repeal of this tax is the best way to restore trust in the legislative process and calm small-business fears surrounding this matter.

Lynch: Cut corrections spending, inefficiencies
Portsmouth Herald 2/4/10
Lynch called much of the backlash that erupted over the proposed LLC tax, particularly the term "job tax," political rhetoric. He also said the late addition to the budget was in large part due to the legislative calendar, which often requires last-minute decisions. While there was no public hearing, he said, there was public discussion about the potential revenue source, which he says closes loopholes.

A View Through Tax-Colored Glasses
Live Free or Die Blog 2/4/10
This is in response to Mark Fernald's op-ed.

WELCOME TO NEW TAX-SHIRE (part 2)
State Sen. Jeb Bradley 2/2/10
As shared on the program.

Sen. Hassan defends LLC tax
Portsmouth Herald 2/2/10
Russell Prescott, who owns R.E. Prescott Co., Inc., started in Exeter 55 years ago by his father, said the company has relied on New Hampshire's low taxes to keep the business strong. Russell, a two-term state senator, will run against Hassan this year.

Hampton's non-partisan forum is democracy in action
Portsmouth Herald Editorial 2/2/10
When asked about the Legislature's last-minute creation back in June of the LLC tax to fill a budget gap, Democrat Clark reassured the public that this would only impact a small number of businesses. That being said, we still see problems in the application of the tax and see a potential for limited liability companies to be taxed twice on the same revenue stream. We also urge the Legislature to kill the plan to make the tax retroactive to Jan. 1, 2009.

Some see ‘LLC tax’ as tip of iceberg
Nashua Telegraph 1/31/10
The controversial last-minute change in LLC taxation to come up with $30 million to balance the state budget – referred to as a “loophole” and “no big deal” by state Rep. Dan Eaton, D-Stoddard, a member of a general panel before the LLC discussion – had some business leaders so angry they began to make animal noises.

Republicans to host meeting with revenue official on LLC tax
Union Leader 1/27/10
Friday's meeting involves Republican House members of the Ways and Means Committee and the Joint Legislative Committee on Administrative Rules.

Headache time: NH small biz owners worry about tax
Boston Globe 1/25/10
"I'm still fairly confused," said Sean Kendrigan, 40, who's run New Hampshire Computer Specialists in New London since 2004 and has five employees in his LLC. "A profit for me is basically my paycheck. It's not something where I'm banking thousands of dollars and building up this huge nest egg of money in some type of corporate machine. It's what I pay my mortgage with, it's what I put my kids to school with and buy my groceries with."

GOP wants closed-door meeting records
Union Leader 1/23/10
Speaker of the House Terie Norelli called the meeting. In an e-mail invitation, she wrote, "This update should be very informative and helpful to us at this point in the session."

Democrats and the Tax Assault on Small Business in NH Killing Our Golden Goose
Op-Ed Small Business & Small Industry Association 1/22/10
How are they going to do that? By passing HB1607, the second shoe to drop in the Democrats’ tax assault. This legislation was heard before the House Ways & Means Committee last week. The purpose of HB1607 is to empower the State Department of Revenue Administration (DRA) to set arbitrary standards of what is “reasonable compensation” for every sole proprietor, partnership and LLC in the State. That is a 180 degree change from current practice in which the department examines or “audits” individual taxpayers which are flagged as unusual or suspicious. Moreover, HB1607 would allow the department to set these standards by administrative rules, without legislative review and approval. This would make the commissioner the New Hampshire “pay czar” over every small business in the State. By comparison, the federal “pay czar” only has oversight of executive compensation in those few companies that have received taxpayer money in the form of TARP bailouts. In other words, the power wielded by Czar Clougherty would make the federal pay czar pale in comparison. So where does it all lead? Once this income stream----remember DRA projects it will affect 20,000 taxpayers—is relabeled “profit,” guess what? It will also be taxed as business profits at a rate of 8.5%, imposing additional taxes on these entrepreneurs of $25.5 million.

Testimony on HB 1661 from former Senior DRA Official Val Berghaus
Small Business & Small Industry Association 1/22/10
The old I&D tax, enacted in 1923, set about changing the way investment property was to be taxed in New Hampshire. Instead of selecting “money in hand” as the measure of taxable property, it proposed taxing “money received.” That is, instead of taxing the value of shares of stock or “credits,” i.e., the right to receive money from a debtor, the tax would be levied on the actual dividends or interest paid to the owner or creditor.

Repeal LLC tax and start process from scratch
Letter to the Editor Portsmouth Herald 1/22/10
More than 46,000 LLC 2009 tax returns are due on April 15, 2010. The all important administrative rules will not be finalized, at the soonest, until sometime in mid March. Business owners will be left to hurriedly try to comprehend and pay for a complex and far-reaching new tax law, creating chaos for a great many. Responsible business owners do not like conducting business this way, the state should not force this type of conduct upon them.

Business owners share LLC tax concerns with lawmakers
Portsmouth Herald 1/22/10
Isaac Brake, who owns Brake & Associates Consulting and Marketing Group, said he had come to get his questions answered about the LLC tax. He said he was considering transforming his company into an LLC, but the recent news had given him pause and made him question why taxes would be imposed on small businesses, which he called the backbone of the community.

N.H. Legislature has balancing act
Sen. Maggie Hassan Op-Ed Portsmouth Herald 1/22/10
We balanced this year's budget without major new taxes, but we did close a tax loophole — the so-called LLC tax. This change simply treats the dividends that investors receive from limited liability companies the same way as the dividends they receive from corporations. According to independent experts — including the chair-elect of the Business and Industry Association — this change will not impact most New Hampshire businesses. Unfortunately, there is an incredibly partisan and misleading campaign against closing this loophole that is unnecessarily scaring a lot of small business owners.

Speaker Holds Secret Meeting on LLC Tax
Red Hampshire 1/21/10
You can chalk up another one for “transparency in government” in the New Hampshire House of Representatives today. In a private, closed-door, session in Concord, Speaker Terie Norelli brought together House Democrats on both the Joint Legislative Committee on Administrative Rules and the Ways & Means committee for a private briefing on the LLC tax with Revenue Commissioner Kevin Clougherty.

Small Business and Small Industry Association Speaks Out Against NHDRA Final Rules on LLC Tax
SBSIA 1/21/10
"Never in my over 30 years at the Department of Revenue Administration have I ever seen such a drastic change to our tax law without a single public hearing. The fact that the rules can change so drastically shows just how flawed the rules were to begin with. Moving forward with these rules and not repealing this LLC tax will cost the state of New Hampshire countless jobs and millions of dollars of lost economic activity,” said SBSIA board member and former DRA Commissioner Phil Blatsos.

State proposes altering LLC tax
Concord Monitor 1/21/10
Meanwhile, House Republican leaders accused Norelli of setting up a closed-door meeting with Clougherty yesterday for only the Democratic members of the Joint Legislative Committee on Administrative Rules and the House Ways and Means Committee.

N.H. officials simplify new LLC tax law
Portsmouth Herald 1/21/10
The rules were submitted to a legislative committee for review Wednesday. The earliest the committee can approve the proposed rules is during a hearing scheduled for Feb. 19. That would give people about two months to determine what they need to pay, if anything.

Officials move to soften tax impact
Nashua Telegraph 1/21/10
“Regardless of the rules and how well they are written, New Hampshire still remains the only state in the Northeast that now imposes a tax on income at the business level and at the individual owner level,” said Health of Melanson, Heath and Co. based in Nashua.

Companies: 'LLC Tax' Comes At Worst Possible Time
WMUR 1/20/10
"It basically takes the competitive edge out of New Hampshire. In other words, it's the only state in the northeast that taxes its business owners at two levels -- one at the business level and one at the owner level," Heath said.

LLC tax sparks lawsuit
Union Leader 1/15/10
Manchester attorney John Cronin of Cronin and Bisson PC said: "All LLCs are haunted by this tax because they don't know how it will affect them. They call us and we can't tell them the impact, except to get their checkbooks ready because it will cost more than they thought."

Fair pay, profits pop up as issue at NH businesses
Union Leader 1/15/10
Jeremy Katz, an entrepreneur from Lebanon, said if the aim is to put corporations and LLCs on even footing, rules on reasonable compensation should be more flexible in allowing businesses to take a loss after owners have been paid. The Almy bill, as written now, does not. He said LLCs that are related through a controlling company should be considered separate for tax purposes, not lumped together.

LLC tax is unfair and hurts New Hampshire
Letter to the Editor Portsmouth Herald 1/15/10
The so-called LLC tax is simply a new tax that applies to partnerships and LLCs — that is most of job-creating small businesses in New Hampshire. When the interest and dividend tax was created many years ago, its originators no doubt justified it as a tax on passive investment income. Partnerships existed at the time, but were excluded because they are by nature significantly different than large corporations. Exclusion of partnerships did not violate the New Hampshire Constitution's requirement for equal taxation or it would have been struck down by the Supreme Court.

New LLC tax raises more questions
Foster's Daily Democrat 1/14/10
"We've done it that way in the past" is no excuse for the Legislature to pass legislation or the governor to sign it

Opponents Pack Hearing On LLC Tax Amendment
WMUR 1/14/10
"I have a difficult time having somebody say, that has never experienced this kind of stuff from either angle, 'Yeah, you're worth this much money,'" said Rep. Joe Osgood, R-Claremont.

How the new LLC tax will harm NH's competitiveness
Union Leader Op-Ed 1/13/10
David Heath is a CPA and director of tax at Melanson Heath & Company, PC. He is chairman of the Nashua Chamber of Commerce Government Advocacy Committee.

Hassan's hint: LLC tax changes coming?
Union Leader Editorial 1/13/10
First, the taxing of dividend payments made from debt must be repealed. No other state, nor the federal government, taxes dividends paid from borrowed money. Second, the state must devise a transparent and reliable standard for what it deems "reasonable compensation" so business owners can anticipate from one year to the next what their tax bill might be. Right now, there is no way to know how much money to set aside for taxes because there is no way of determining precisely what "reasonable compensation" is.

Legislature needs to correct its LLC mistake
Foster's Daily Democrat Editorial 1/13/10
The problem with the state budget is not revenue. It is on the expense side of the ledger. When forced to, as in the current recession, the administration and the Legislature are capable of making budget cuts.

BIA forum to probe LLC tax change
NH Business Review 1/13/10
A panel made up of opinion leaders, legislators and tax policy experts is expected to cover such topics as the original of the tax change, who it covers, how much revenue it is expected to raise, its effect on the state’s business climate and the prospects of its repeal.

New business filings pick up at end of ‘09
NH Business Review 1/12/10
The December 2009 increase in new business filings came despite a 11 percent drop-off in limited liability company filings, perhaps in response to all the publicity about changes in the state’s interest and dividends tax to cover LLC distributions.

Hassan: LLC tax decision was mindful of economy, state budget
Portsmouth Herald 1/11/10
While she says she understands the concerns over the LLC tax included in the 2010 budget, and now believes that, in hindsight, the Legislature should have been more forthcoming about its intentions, state Sen. Maggie Hassan said it was a decision made with a tough economy and with the state's budget in mind

Hard of hearing: State tries not to listen
Union Leader Editorial 1/11/10
Clougherty's other lame excuse was that the rules have to be in place by February and so there isn't enough time to hold hearings south of Plymouth. The department has known about this tax since July. Actually longer -- Clougherty was the one who proposed it last spring. There was plenty of time for more hearings.

A retroactive tax: Where is Lynch?
Union Leader Editorial 1/10/10
The state cannot pass a law and make it take effect before the date of passage. Part 1, Art. 23 of the state constitution forbids it. That's why, for instance, the killers of Mont Vernon mom Kimberly Cates will never be eligible for the death penalty. It wasn't a punishment that applied to them at the time of the crime. So why can the state pass a tax and make it take effect before the date of passage?

Outcry over LLC tax continuing
Fosters Daily Democrat 1/10/10
Seacoast chamber of commerce leaders met Wednesday and asked constituents to reach out to legislators to voice opposition to the law, which adds LLCs to the business organizations whose "distribution income" — similar to a corporation's dividends — will be subject to the state's Interest and Dividends Tax.

Statewide opposition surfaces at PSU against new LLC tax
Laconia Citizen 1/8/10
Ronda J. Kilanowski, a CPA and a partner with Malone, Dirubbo & Company, P.C which has offices in Laconia, Franklin and Lincoln, said she did not have answers for clients who wanted to know now how the LLC tax would work.

Send LLC tax back to the drawing board
Portsmouth Herald Editorial 1/8/10
Given the confusion surrounding the tax and the fact that in the six months since it was passed the state still has not figured out how it will implement it, we think it is only fair to wipe the slate clean and start over.

Businesspeople by the busload blast LLC tax
Union Leader 1/8/10
"This is a shame. We should not have had to do this," State Sen. Sharon Carson, R-Londonderry, said at the hearing. "It's well-known this was passed in the dead of night, caught a lot of people unaware and they're in an uproar."

Small Business Owners Protest Tax
WMUR-TV 1/7/10
Watch the video story and you'll see that The Pulse was there!

New Hampshire Legislators Playing Whack a Mole with Small Business and Jobs
Andy Sanborn 1/6/10
Our representatives have now determined that $50,000 in compensation is reasonable and a dollar over that amount makes you a big bad company so here comes the loop around your neck

BIA urges fast-track repeal of I&D tax extension
Business & Industry Association 1/6/10
“The debate over this tax expansion has shifted in recent weeks from a public policy discussion to a political and rhetorical football,” said BIA President Jim Roche. “The absence of input from anyone – let alone small businesses most affected by this provision – when the tax extension was added to the state budget in June has led to too much distrust, confusion, frustration and misunderstanding.”

Small business owners rally against 11th-hour LLC tax
Union Leader 1/6/10
"We work, live and die on a one-half of 1 percent margin," he said. "We have to have that money to expand, buy inventory and (cope with) the higher costs. Without that, we could not do the job that we do."

Area chambers, businesses want local hearing on 'LLC tax'
Portsmouth Herald 1/6/10
As part of the process, the DRA is holding public hearings. However, those hearings have been scheduled in Concord and the northern part of the state. Those hosting today's news conference said the Seacoast is being excluded, as business owners cannot travel the far distance during business hours without neglecting their businesses.

Can’t blame LLCs for feeling neglected
Nashua Telegraph Editorial 1/6/10
The business community of New Hampshire deserves a better opportunity for input on this important legislation.

Businesses bristle over tax change
Nashua Telegraph 1/5/10
“It’s not that I’m reluctant to have public hearings. I’m trying to be open on this and have been and asking for opportunities for input,” Clougherty said. “The interest in this has come so late in the process, we just aren’t able to accommodate it and get the rules out on time.”

Chambers rent bus for LLC hearing
Union Leader 1/4/10
Three requests to have a hearing in the southern part of the state have been rejected or ignored.

Southern NH small businesses seek LLC voice
Union Leader 1/1/10
The Nashua chamber asked the state Department of Revenue three times to hold a hearing in southern New Hampshire and offered to help plan the event, he said. As recently as Dec. 22, the Nashua and Manchester chambers wrote jointly to Commissioner Kevin A. Clougherty, but were again ignored, Williams said.

Exeter area business owners speak out against LLC tax
Portsmouth Herald 12/30/09
The group of approximately 15 members of the Exeter area business community who gathered for a "Stop the LLC Tax Forum" held Tuesday, at the Exeter Area Chamber of Commerce, prepared chamber President Michael Schidlovsky to speak on behalf of area businesses at a Jan. 5 hearing in Berlin, to be held by the Department of Revenue Administration.

NH gets an income tax the sneaky
Union Leader Op-Ed 12/25/09
David H. Mirsky is an attorney in Exeter.

NH Constitution Article 23
Tom Thomson 12/22/09
Letter to the Executive Council.

Sham hearings: LLC tax charade continues
Union Leader Editorial 12/22/09
That schedule might be convenient for the DRA, but it could hardly be more cumbersome for the small business owners who will be affected by this tax. Maybe that's the point.

Lawmakers Look to 'Fix' LLC Tax
NHPR 12/22/09
Senator Lou D’Allesandro, one of the prime sponsors, says, the state must remain attractive.

"Enough is Enough"
Laconia Daily Sun 12/22/09 (pages 1, 9 & 10)
Owner of Laconia restaurants balks at state applying 5% dividends tax on ‘excess’ income passed through to partners in limited liability corporations

LLC tax’ to hit corporations, too
Drew Cline Union Leader Blog 12/21/09
The Department of Revenue Administration’s proposed rules for applying the interest and dividends tax to LLCs also would hit all New Hampshire businesses, except sole proprietorships, with a new tax. And that includes corporations.

New tax is bad for business
Letter to the Editor, Concord Monitor 12/21/09
by Marcy Vierzen, owner of Artisan's New London.

Bad for business
Letter to the Editor, Concord Monitor 12/20/09
by Tom Boucher, owner of T-Bones.

Public gets more time to discuss proposed tax
Union Leader 12/19/09
Revenue Administration Commissioner Kevin Clougherty announced yesterday he has scheduled hearings in Berlin, Plymouth and Conway to continue a public hearing process that started Wednesday.

More Proof That the Business & Industry Association of NH Supports the LLC Tax
Richard A. Samuels, chair-elect of the Business and Industry Association 12/19/09
"it is not unfair, and it will not put New Hampshire LLCs at a competitive disadvantage to LLCs operating in other states."

State to businesses: Put tax forms aside
Concord Monitor 12/18/09
So here's the advice from the Department of Revenue Administration: If you think the new law applies to you, put the tax forms aside for now and wait for further clarification.

Americans for Prosperity Calls for DRA Commissioner’s Immediate Resignation
Americans for Prosperity 12/17/09
Commissioner Clougherty says, “I’m going to be fair and I’m going to go after everybody.”

The secret tax: LLCs quietly clobbered
Union Leader editorial 12/15/09
Many LLCs -- those with transferrable shares -- were already paying this tax. Those with non-transferrrable shares were not. That's because the state has long recognized that money as personal income, which the state does not tax.

Business owners to governor: Ax new tax
Union Leader 12/15/09
The group opposes a proposed expansion of the state's 5 percent interest and dividends tax to include distributions by limited liability corporations (LLCs).

Marcy Vierzen's Letter to Legislators
Marcy Vierzen 12/14/09
In this busy holiday season, please take the time to contact your local state rep, and let them know your thoughts on this law, and the impact it will have on your small business, or that of someone you know.

New LLC tax looms over businesses
Concord Monitor 12/11/09
Not only did Gov. Lynch sign the budget containing the tax, he now defends it!

Lynch defends change in business tax
Union Leader 12/11/09
Did Governor Lynch ever campaign for this? This was never part of his original budget. This was slipped into the budget in the middle of the night, so is he also defending the process?

New Income Tax On Small Business Owners Will Cripple New Hampshire’s Recovery
Andy Sanborn 12/11/09
This new Tax isn’t closing a loophole; it’s squeezing the remaining blood from the stone.

Tom Thomson's Call to Action
Tom Thomson 12/7/09
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.

John Stephen: Creating jobs must be a higher priority in Concord
Union Leader editorial 12/7/09
First, the state just added a new tax on interest and dividends on limited liability corporations (LLCs). These are mostly small businesses, and the roughly 10,000 of them across the state represent some of the greatest job creators in New Hampshire. Adding this new tax on these firms is a job killer and places our state in a competitive disadvantage to other states. When Gov. Lynch signed the budget, including this new tax, we lost a piece of the New Hampshire Advantage.

Another NH tax: Democrats keep pouring it on
Union Leader 12/6/09
Not with the Democrat majority, which laughingly pitches this latest raid as merely applying the dividends tax "more fairly" and "closing a loophole." Businesses hit with it, many of them owned by one or two principals, more correctly call it an income tax.