New Hampshire Senate are Voted for LLC Tax

The New Hampshire Senate swallowed hard, but voted for a reasonable compensation bill that keeps the so-called "LLC tax" in place, at least for now. Only Sen. Jack Barnes, R-Raymond, voted against the bill in protest, but the rest of the Senate agreed to it, leaving the fate of the LLC tax repeal to budget deliberations in special session.

Repeal of the LLC tax did not make it into HB 1607 which deals with reasonable compensation that the House and Senate are voted. The whole debate over extending the interest and dividends tax to limited liability company distributions (more commonly known as the "LLC tax") focused attention on the reasonable compensation issue, but House members say the two are unrelated.

The New Hampshire House and Senate have passed legislation setting the amount state business owners are allowed to deduct for themselves as earnings, before they are taxed on profits. The bill sets $50,000 as a so-called "safe harbor" as reasonable compensation business owners can pay themselves without justifying it to state revenue officials.

The Department of Revenue Administration has been increasingly questioning such deductions, and the $50,000 threshold will lessen the fear among business owners, though most business groups think the figure is too low especially the $50,000 limit is per entity, as opposed to each individual in a business ownership. The compromise passed the Senate, 23-1. The House approved it with no debate and a loud "no," but the chair ruled that the motion passed.

Here are some other measures approved by lawmakers that will become law, unless prohibited by Gov. John Lynch:

• Under SB 408, trade groups and chambers of commerce would be able to form alliances to purchase health insurance for members. As a last-minute addition to the bill, the Insurance Department was told not to prevent leasing companies from using a group rate that would include many of its clients to buy insurance.
• Under SB 480, those who wish to appeal environmental board decisions would be able to only go to court over interpretation of the law, and not on matters of fact.
• Under HB 491, all things being equal, the state would give local vendors preference in bidding (with Department of Transportation contractors exempted), and those contractors that violated law in the last two years would be barred from bidding.
• Under HB 1168, a person would no longer be denied unemployed benefits for gross misconduct involving dishonesty but instead for a theft of more than $500, and only if that theft was connected to his or her work.
• Under HB 1239, developers would receive a timely permit from the state Department of Environmental Services, or their permits will be approved automatically (stricter conditions than contained in an earlier version that gave developers their money back.) Under HB 1380, developers also wouldn't have to pay for duplicate review from local planning board.
• Under HB 1267, municipalities would be able to force hawkers and peddlers to submit to criminal background checks in order to obtain a license.
• Under HB 1461, municipalities would be able to regulate sellers' display of martial arts weapons, with an eye of protecting marketing to children.
• Under SB 411, those with permits for large groundwater withdrawals would have to comply with local regulations.
• Under SB 420, insurers offering prescription drug benefits would be required to allow participants to use non-mail order pharmacies.
• Under SB 181, the Department of Safety, not the Liquor Commission, would be in charge of liquor licensing, enforcement and education. Licensing and education would start in July, but the enforcement switch wouldn’t take place until July 2011.