New Hampshire Department of Revenue

1. New HampshireDepartment of RevenueAdministration Asst. Utility Property Appraiser James W. Sadler Assistant Utility Property Appraiser, Bureau of Assessments, Property Appraisal Central Taxpayer Services, Taxpayer Advocate Audit department as a tax auditor small retail business owner business consulting Employed in various occupations, from mom & pops to multi-billion dollar corporations � Thank you for attending this presentation and for inviting us to share this information with you Assistant Utility Property Appraiser, Bureau of Assessments, Property Appraisal Central Taxpayer Services, Taxpayer Advocate Audit department as a tax auditor small retail business owner business consulting Employed in various occupations, from mom & pops to multi-billion dollar corporations � Thank you for attending this presentation and for inviting us to share this information with you

2. Outline General Information Business Taxes BPT � Business Profits Tax BET � Business Enterprise Tax Business Related Taxes M&R � Meals and Rentals Tax I&D � Interest and Dividends Tax RETT � Real Estate Transfer Tax E-file Forms Filing Errors Other Issues Other Taxes, fuels, insurance premiums, Inheritance and Estate Tax Communications Services Tax Electricity Consumption Tax Tobacco Tax Timber Tax Gravel Tax State Education Property Tax Utility Property Tax Local Property Tax no Sales Tax - Resale Certificates. Other Taxes, fuels, insurance premiums, Inheritance and Estate Tax Communications Services Tax Electricity Consumption Tax Tobacco Tax Timber Tax Gravel Tax State Education Property Tax Utility Property Tax Local Property Tax no Sales Tax - Resale Certificates.

3. General Information Central Taxpayer Service  603-271-2191 Tax Payer Advocate Robin Paveglio Forms Line 603-271-2192 Website � www.revenue.nh.gov or www.nh.gov/revenue most valuable resources at your disposal Call our Central Taxpayer Service, 603-271-2191 staff specifically dedicated to answering most questions quickly or directing TP to the appropriate group Hrs. of Operation M-F 8 - 4:30 Advocate - If you can�t resolve issues, problems, etc. Request for paper forms & booklets, simple answering machine checked throughout the day Website, sometimes browser/access problem if 1 not working, try using other URL most valuable resources at your disposal Call our Central Taxpayer Service, 603-271-2191 staff specifically dedicated to answering most questions quickly or directing TP to the appropriate group Hrs. of Operation M-F 8 - 4:30 Advocate - If you can�t resolve issues, problems, etc. Request for paper forms & booklets, simple answering machine checked throughout the day Website, sometimes browser/access problem if 1 not working, try using other URL

5. NH Business TaxesBPT RSA 77-A, Rev Rule 300 8.5% of taxable business profits Gross business income > $50,000, everywhere No change to rate or filing threshold Still � 8.5% of taxable business profits Gross Business Income in excess of $50,000, everywhereNo change to rate or filing threshold Still � 8.5% of taxable business profits Gross Business Income in excess of $50,000, everywhere

6. Rev 303.01 Compensation for Personal Services  of Proprietor, Partner or Member Fair and reasonable...actual personal services ...take into account return on assets and non-owner employees PROP-COMP, PART-COMP Worksheet NH Business TaxesBPT Rev 303.01 Compensation for Personal Services of Proprietor, Partner or Member language clarification concerning the Personal Compensation Deduction Proprietor or Partners. In considering the reasonableness of a deduction, the commissioner shall consider compensation for employees in positions of similar responsibility, devotion of time, education, and experience. Business owners from varying backgrounds, education levels, and industry measure Return using varying measures RO Assets RO Employees Assets � tangible or intangible i.e.: $100,000 construction equipment, Bank loan 16%, owner investor would expect return greater than that on asset. Methods for considering ROA & Employees What is the Expected Rate of Return, Internal Rate of Return, what Capitalization Rate used in valuing business Historical Tables for Risk Free Rate Bonds Large Stocks Small Stocks REITS Small business - greater risk - greater expected return New worksheets for Partnership & Proprietorship may use for calculating & supporting personal compensation deduction Not required at this time For Taxpayer convenience Would not take other deductions without supporting documentation Rev 303.01 Compensation for Personal Services of Proprietor, Partner or Member language clarification concerning the Personal Compensation Deduction Proprietor or Partners. In considering the reasonableness of a deduction, the commissioner shall consider compensation for employees in positions of similar responsibility, devotion of time, education, and experience. Business owners from varying backgrounds, education levels, and industry measure Return using varying measures RO Assets RO Employees Assets � tangible or intangible i.e.: $100,000 construction equipment, Bank loan 16%, owner investor would expect return greater than that on asset. Methods for considering ROA & Employees What is the Expected Rate of Return, Internal Rate of Return, what Capitalization Rate used in valuing business Historical Tables for Risk Free Rate Bonds Large Stocks Small Stocks REITS Small business - greater risk - greater expected return New worksheets for Partnership & Proprietorship may use for calculating & supporting personal compensation deduction Not required at this time For Taxpayer convenience Would not take other deductions without supporting documentation

7. 77-A:4 III � permit deduction from gross business profits of a proprietorship or partnership only of such amounts as are fairly attributable to the personal services of the proprietor or partners who are natural persons, but not to permit deduction of any amounts as are fairly attributable to a return on business assets or the labor of non-owner employees of the business organization. 77-A:4 III � permit deduction from gross business profits of a proprietorship or partnership only of such amounts as are fairly attributable to the personal services of the proprietor or partners who are natural persons, but not to permit deduction of any amounts as are fairly attributable to a return on business assets or the labor of non-owner employees of the business organization.

8. Comparative Compensation Data, 303.01(e) NH Occupational and Employment Wages NH Department of Employment Security www.nhes.state.nh.us/elmi/oesfiles.htm  Additional Resource: Occupational Outlook Handbook US Dept. of Labor Statistics http://www.bls.gov/oco/home.htm Slight variation in title of data sourceSlight variation in title of data source

9. NH Business TaxesBPT Rev 303.03 Net Operating Loss 3 year carryback of NOL no longer required The amount of carryover is limited to $1,000,000 per year NOL carried forward for 10 taxable periods, following the year of the loss changes previously enacted, taking affect 7/1/05 up from $750,000 previously 5 years misc info form DP132, NOL Deduction form instructions for help with compiling prior year NOL�s changes previously enacted, taking affect 7/1/05 up from $750,000 previously 5 years misc info form DP132, NOL Deduction form instructions for help with compiling prior year NOL�s

10. NH Business Taxes  BET No change to rate or filing threshold Still � Gross business receipts in excess of $150,000 or Enterprise value tax base > $75,000 0.75% of taxable, enterprise value tax base NEXT SLIDENo change to rate or filing threshold Still � Gross business receipts in excess of $150,000 or Enterprise value tax base > $75,000 0.75% of taxable, enterprise value tax base NEXT SLIDE

11. NH Business Taxes BET Interest Paid or Accrued Compensation Paid or Accrued Dividends paid Refer to instructions or RSAs & rules for what factors contribute to a particular category.Interest Paid or Accrued Compensation Paid or Accrued Dividends paid Refer to instructions or RSAs & rules for what factors contribute to a particular category.

12. Business Related TaxesM&R RSA 78-A, Rev Rule 700 8% on meals, motor vehicle rental, or room rentals Commission - retain 3% of the taxes due  Return & payment timely filed Maintain appropriate records Telefile if prior year >$25,000 Rev Rules updated June 2006 8% tax on meals, motor vehicle rental, or room rentals Commission � 3% of the taxes due Return & Payment timely filed Maintain appropriate records Telefile if prior year >$25,000 Rev Rules updated June 2006 8% tax on meals, motor vehicle rental, or room rentals Commission � 3% of the taxes due Return & Payment timely filed Maintain appropriate records Telefile if prior year >$25,000

13. RSA 77, Rev Rule 900 Gross interest & dividend income > $2,400 5% of taxable interest & dividends Individuals who are inhabitants of NH Entities with non-transferable sharespossibly - Partnership, LLC, Association, Trust Business Related TaxesI&D 5% of taxable interest & dividends Individuals who are inhabitants of NH Entities with non-transferable shares (may be partnership or trust) Fiduciaries whose appointments are from NH court5% of taxable interest & dividends Individuals who are inhabitants of NH Entities with non-transferable shares (may be partnership or trust) Fiduciaries whose appointments are from NH court

14. RSA 78-B, Rev Rule 800 $0.75 per $100 of valuation of sale granting transfer of real estate and any interest therein, buyer and seller both Like-kind exchange � RETT implications Change in entity type Entity to owner Entity to entity Business Related Taxes  RETT Flag should go up with client question on RETT if dealing with rental property, If filing thresholds met, Prop. Return required Like-kind exchange � RETT implications, 1-2 transfers for each side, using intermediary taking title, straight swap If title changes RETT due Flag should go up with client question on RETT if dealing with rental property, If filing thresholds met, Prop. Return required Like-kind exchange � RETT implications, 1-2 transfers for each side, using intermediary taking title, straight swap If title changes RETT due

15. BPT & BETEstimate, Extension, Return Payment, Amended Return Payment,& Tax Notice Payments I&D, Returns and Payments M&R, Returns and Payments DEMO Mode efile (payment)

16. efile (payment)

17. Forms Package X, pdf file, online, free Power of Attorney Check BoxDP-10 I&D Tax FormBT Summary SMLLC � same form as its member Member is a Corp. use Form NH-1120 Member is a Prop. use Form NH-1040 Member is a Part. use Form NH-1065 Member is a Trust use Form NH-1041 Power of Attorney Check Box on both BT Summary and I&D DP-10 Box must be checked off Preparer information must be filled in properly POA only for that return SMLLC files its business tax returns using: Form NH 1120, �Corporate Business Profits Tax Return�, if the member is a corporation; Form NH 1040, �Proprietorship Business Profits Tax Return�, if the member is an individual; Form NH 1065, �Partnership Business Profits Tax Return�, if the member is a partnership; or Form NH 1041, �Fiduciary Business Profits Tax Return�, if the member is a trust. New form DP-87 replaces old ROC-BT Summary & Amended Return filing requirement when receive Revenue Agent Report federallyPower of Attorney Check Box on both BT Summary and I&D DP-10 Box must be checked off Preparer information must be filled in properly POA only for that return SMLLC files its business tax returns using: Form NH 1120, �Corporate Business Profits Tax Return�, if the member is a corporation; Form NH 1040, �Proprietorship Business Profits Tax Return�, if the member is an individual; Form NH 1065, �Partnership Business Profits Tax Return�, if the member is a partnership; or Form NH 1041, �Fiduciary Business Profits Tax Return�, if the member is a trust. New form DP-87 replaces old ROC-BT Summary & Amended Return filing requirement when receive Revenue Agent Report federally

18. Forms out of sequence No signature No BT Summary, neglect Step 2 box Failure to attach federal forms & schedules Failure to correctly report prior payments I&D � Failure to code non-taxable income Section 4 Filing Errors These types of issues either delay date recognized as received by DRA, or cause internal processing hold-ups, could result in penalties because not received until last required form received Schedules can be sent in digitally in Excel format, everything federal EXTENSION, no money due - if 100% of liability paid no Extension form required, it is automatic Amended return for refund when SOL � can not do, once Statute of Limitations occurs, TP lost the right RSA 21-J:29, later of 3 years from original due date of original return or 2 years from tax paidThese types of issues either delay date recognized as received by DRA, or cause internal processing hold-ups, could result in penalties because not received until last required form received Schedules can be sent in digitally in Excel format, everything federal EXTENSION, no money due - if 100% of liability paid no Extension form required, it is automatic Amended return for refund when SOL � can not do, once Statute of Limitations occurs, TP lost the right RSA 21-J:29, later of 3 years from original due date of original return or 2 years from tax paid

19. Filing Errors Estimate payments made under different ID, and failure to report estimates made Extension, no money due Amended return for refund when SOL Spouses filing joint return for 1 proprietorship Apportionment/Separate Accounting SMLLC � DIN or FEIN (no SSN) Joint return for one proprietorship � file only as 1 Proprietor, unless federally recognized as Partnership then use NH-1065, Part. Return Apportionment/Separate Accounting - Rev. Rule 302.04, businesses shall not determine NH business activity by separately computing Net Income/Loss for business locations in NH Appropriate Return � SMLLC DIN or FEIN (if proprietorship return filed do not use SSN) S-Corp � recognized as C-Corp, plus DP120 Computation of S-Corp Gross Bus. Profits reconciles from Fed 1120S to NH-1120Joint return for one proprietorship � file only as 1 Proprietor, unless federally recognized as Partnership then use NH-1065, Part. Return Apportionment/Separate Accounting - Rev. Rule 302.04, businesses shall not determine NH business activity by separately computing Net Income/Loss for business locations in NH Appropriate Return � SMLLC DIN or FEIN (if proprietorship return filed do not use SSN) S-Corp � recognized as C-Corp, plus DP120 Computation of S-Corp Gross Bus. Profits reconciles from Fed 1120S to NH-1120

20. Other Issues Separate Entity �Business Organization� - Each enterprise under this definition shall be subject to taxation under RSA 77-A:2 as a separate entity� Tax Preparation SoftwareComputational errors When evaluating circumstances remember NH taxes at the entity level. Proprietor, partnership, trust � Preparation Software � we get calls periodically concerning computational errors in tax software, be aware that they do occurWhen evaluating circumstances remember NH taxes at the entity level. Proprietor, partnership, trust � Preparation Software � we get calls periodically concerning computational errors in tax software, be aware that they do occur

21. Other Issues Definitions Example 77-A:1 I. "Business organization" means any enterprise, whether corporation, partnership, limited liability company, proprietorship, association, business trust, real estate trust or other form of organization; organized for gain or profit, carrying on any business activity within the state, except such enterprises as are expressly made exempt from income taxation under the United States Internal Revenue Code as defined in RSA 77-A: 1, XX. Each enterprise under this definition shall be subject to taxation under RSA 77-A:2 as a separate entity� XII. "Business activity" means a group of actions performed by a business organization for the purpose of earning income or profit from such actions and includes every operation which forms a part of, or a step in, the process of earning income or profit from such group of actions. The actions ordinarily include, but are not limited to, the receipt of money, property, or other items of value and the incurring or payment of expenses. Notwithstanding any other provision of this paragraph, a holder of an ownership interest in a qualified investment company as defined in RSA 77-A:1, XXI, shall not be deemed to be carrying on any business activity within this state due solely to its holding an ownership interest in such qualified investment company� 1 piece of advice advice whatever the issue read the definitions in the Rules or RSAs that pertain to it example: BPT statute RSA 77-a:1 1 piece of advice advice whatever the issue read the definitions in the Rules or RSAs that pertain to it example: BPT statute RSA 77-a:1

22. Thank You