On July 6, 2015, Governor Maggie Hassan signed into law Senate Bill 211 which could benefit businesses that lease their employees.
Old Law: Businesses that lease employees (such as from ADP TotalSource) are not eligible to claim a NH Business Enterprise Tax (BET) credit on the wages paid to those leased employees.
New Law: For taxable periods beginning on or after January 1, 2016, businesses that lease their employees can elect to include in their calculation of the NH Business Enterprise Tax (BET) wages that are paid to those leased employees.
Who Benefits: Businesses that are currently paying NH Business Profits Tax (BPT) or anticipate paying this tax in the future that can utilize BET credits to offset their BPT. BET credits also allow for more flexibility with tax planning.
How it Works: If a leased employee provider and a business agree to make this election, then the business will pay the BET and will have the ability to utilize the resulting BET credit against any BPT.
Action Item: Interested businesses should contact their leased employee provider about this election and then negotiate a reduced fee since the provider will no longer be required pay the BET.
Businesses thinking about making this election in 2016 should start discussions with their leased employee provider now. There are benefits for both parties involved and time will be needed for negotiations. The leased employee provider will no longer have to pay BET on its employees leased out to your business which should result in lower leasing fees. This is great news for businesses that lease their employees as they can now start accumulating BET credits to use now and in the future.
If you have any questions, please don’t hesitate to contact the team at Howe, Riley & Howe about this potential tax benefit.
This information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Any tax advice contained in this communication is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties.