Week One - January 15, 2010

This electronic publication, known as The Advocate, is brought to you each Friday by your Greater Nashua Chamber of Commerce, in partnership with our friends at Devine Millimet & Branch, and ActiveEdge. Please use this piece to review what has happened in Concord this past week, read about our Chamber's lobbying efforts relating to those activities, and preview what we are doing on behalf of our Chamber members in the coming week.

This Week’s Update

Happy 2010 Everyone. The Advocate is back.

LLC Tax Update

Many of you are closely following the situation surrounding the proposed rules for the LLC tax, more technically known as the extension of the Interest & Dividends tax to Limited Liability Corporations.

The public hearings process has now closed for these rules, despite our strenuous efforts to have one public hearing held somewhere in the southern tier of the state. The rules will now be reviewed by the Joint Legislative Committee on Administrative Rules (JLCAR), which has to give final approval of those rules before this tax goes into effect.

While JLCAR is reviewing those rules, Councilor Deb Pignatelli has organized an information session for any LLC owners in the region who wish to come listen to how this new tax will be applied, and how you might be impacted. This is not a public hearing, but is at least an opportunity for us to hear from officials representing the NH Department of Revenue how this tax will impact us.

If you would like to attend this session, join us Thursday, January 21, in the auditorium of City Hall at 7pm. Thank you to Councilor Pignatelli for organizing this information session.

HB 1607

The business community, particularly those who own LLCs, were out in force at the State House this week. The big draw was HB 1607, which establishes certain requirements for the “reasonable compensation” deduction under the business profits tax. Chamber President Chris Williams made the drive to Concord to testify on behalf of the Nashua business community in opposition to HB 1607. The hearing literally went all day - a real marathon.

Finding common ground between the State and the private sector on the issue of reasonable compensation is of critical importance to our Chamber of Commerce, and one in which we have been very interested for several years. The approval by our State Legislature of an extension of the Interest & Dividends tax to Limited Liability Corporations in New Hampshire at the end of the 2009 session (commonly referred to as a LLC Tax) has placed this issue at the very top of our Chamber’s list of priorities that must have resolution in the 2010 session.

The Chamber acknowledges the fact that HB 1607 as introduced was merely intended to be a starting point in what will certainly be lengthy and in-depth discussions on this issue. In fact, the NH Dept. of Revenue Administration (DRA) in its opening testimony put forward an amendment to the bill that attempts to move the issue of reasonable compensation closer to a point of mutual comfort that can be shared by both the State and the private sector. We have major concerns with DRA’s amendment, but believe those concerns can be addressed during the coming work sessions.

We are anxious to engage in serious discussions with representatives from DRA and with state legislators who may be assigned to a subcommittee on this bill in the coming weeks. The Chamber is committed to working with the various stakeholders in this debate in order to achieve certainty with respect to business taxation during this legislative session.

HR 22

While in Concord, Chris also testified against a resolution “encouraging” Bank of America to change its business practices regarding identification and charging fees for the cashing of checks.

Chris stated the Chamber of Commerce is quite alarmed by the precedent set by this resolution, which seeks to bypass due process for overseeing business practices and instead uses public means to embarrass a private company that has not violated any ethical or legal regulations. In so doing, this resolution makes several statements that we believe are contradictory to the spirit of NH governmental principles:

1. The resolution references three different pieces of legislation introduced in the 2009 legislative session as justification for this resolution. Yet, none of those three bills were passed and/or signed into law. Two of the three bills were killed, and the third bill hasn’t even made it out of one of the legislative bodies. To reference those three pieces of legislation as justification for this resolution therefore makes no sense, and actually presents a strong case for killing the resolution.
   
2. The resolution repeatedly and vaguely references “traditional New Hampshire practices and values.” Nowhere in state statute is the phrase “New Hampshire practices and values” defined. Therefore, passing a resolution stating that a certain company does not follow or respect New Hampshire values is disingenuous.
   
3. It is very clear that Bank Of America has violated no legal or ethical regulations, either federal or state-oriented. This resolution blatantly ignores this fact, and instead is attempting to unfairly use the pressure of the state government to pressure a company to change its practices.

If the legislature were to approve this resolution, it would send a very clear message to private companies that it is not enough to follow the law; instead, companies must now expect to be held hostage by the opinions of state officials who happen to dislike a business’ practice regardless of that business’ legal compliance. This is an alarming precedent that will reach far beyond this one resolution if it is approved.

HB 1611

In addition to HB 1607 and HR 22, the Chamber once again opposed the creation of a sales and use tax, embodied in HB 1611. The bill imposes a 2.25% retail sales tax as well as a 2.25% use tax on the use or storage of property when no sales tax has been paid. The passage of this bill would be detrimental to our retail business engine. We would be very surprised to see this one pass in an election year.

HB 1604 & HB 1618

Our friend Representative Pete Hinkle of Merrimack was once again found trying to get New Hampshire back to being a business friendly state. He has introduced HB 1604 which creates a credit against the interest and dividends (I&D) tax for taxes paid to other states or distributions paid by out of state LLCs, S-Corporations, partnerships, estates and trust to New Hampshire residents; also HB 1618, exempting some federally tax-exempt transactions from the BPT. The Chamber loves to support Representative Hinkle in his pro-business initiatives. We will work hard this session to help Representative Hinkle with a few victories.

Final Note

It was a busy week for the Chamber. We expect the pace to continue to be at a sprint for a while, fighting on your behalf!

Acknowledgements

This weekly update is made possible by the generous support of Devine Millimet & Branch, one of the state’s top law firms and our Chamber’s contracted representative in Concord. If your business has a legislative or local issue that needs strategic consulting and attention, they are a valuable resource that can help navigate you through both local and state processes.

This weekly update is designed and maintained by our friends at ActiveEdge, and we thank them for their help in delivering this piece to your inbox every Friday!

If you have questions about this update, or comments to share with us about other issues in Concord, please email Chris Williams at cwilliams@nashuachamber.com. We want to be sure we're representing you to the best of our ability, so do not hesitate to reach out to us!

J. Christopher Williams
President & CEO
Greater Nashua Chamber of Commerce
151 Main St.
Nashua, NH 03060
Phone: 603.881.8333
Fax: 603.881.7323