Rep. Jackie Cilley, National Assoc. of Professional Employer Organizations applaud SB 211 signing

(Rep. Jackie Cilley addresses the New Hampshire House during the Spring 2014 session.)

(July 16th, 2015) In a House session marked by sharply partisan business tax proposals, one bipartisan business tax reform, signed into law last week by Gov. Hassan, has gone largely unnoticed. SB 211 could provide a model for relieving business tax burdens without either slashing revenues for pro-business programs or providing tax give-aways to out-of-state corporations. This measure stands in stark contrast to the across-the-board (and largely unpaid for) cuts to the state’s largest sources of revenue, BET and BPT, passed by party-line GOP House and Senate majorities as part of their budget proposal recently vetoed by Gov. Maggie Hassan.

Due to how New Hampshire’s Business Enterprise Tax (BET) and Business Profits Taxes (BPT) were calculated, about 250 businesses in New Hampshire were essentially being taxed twice for their employees. The BET paid by every business in New Hampshire is calculated as a percentage of employee payroll. Businesses can then apply the amount paid to the state in BET as a tax credit against profits taxes by the business in BPT.

About 250 businesses in New Hampshire, however, use professional employer organizations to manage their staffing. Since PEOs in New Hampshire are considered the employer of record, only they have been able to take the credit against profits, while the NH companies with whom they work were barred from claiming any credit for their business enterprise tax against their business profits tax, something allowed to virtually any other business in our state who has employees. The businesses that work with PEOs will now be able to take advantage of a policy designed with all businesses in mind.

The National Association of Professional Employer Organizations (NAPEO) hailed the enactment of a New Hampshire bill that will allow small business clients of professional employer organizations (PEOs) to take advantage of the state’s business enterprise tax (BET) credits. Governor Maggie Hassan (D) signed it into law last week.

“This legislation is a tremendous victory for New Hampshire businesses because it allows them to reap both the benefits of working with a PEO and the benefits of the state’s BET credit,” said NAPEO President & CEO Pat Cleary in a statement last week. “We truly commend Governor Hassan, Senate President Pro Tempore Sharon Carson (R-Londonberry), Senate Majority Leader Jeb Bradley (R-Wolfeboro), and Rep. Jackie Cilley (D-Barrington) for working together in a bipartisan manner to get this done.”

House sponsor Rep. Jackie Cilley echoed these comments.

“I’m delighted that a very pro-business bill has been supported by a bipartisan majority of legislators and has now been signed into law by Gov. Hassan. SB 211 allows our New Hampshire small businesses to do what they do best -- providing products and services to customers – while avoiding unintended tax liabilities for applying the expertise of PEOS to their staffing challenges.”

“This is the type of bi-partisan, pro-growth legislation that I welcome working on and seeing implemented in our state. This contrasts sharply with the tactics we have seen recently from one specific business willing to use blackmail of threatening to move out of state if not given special tax advantages,” said Cilley, referring to recent lobbying efforts by fmr. GOP Gov. Craig Benson to secure a tax loophole for Planet Fitness, a business in which he has a significant interest.

“From the beginning, this has been a fairness issue. The tax credits were intended to help businesses in New Hampshire grow and thrive, and those growing businesses shouldn’t be penalized for partnering with a PEO for payroll, benefits and other HR services,” said Bob Burbidge, chairman of NAPEO’s New England Leadership Council and CEO of Genesis HR Solutions in last week’s statment. “We’re thrilled that this wrong has been righted.”