State & Local Tax Impacts of COVID-19 for New Hampshire

Thoughtware Alert Published: Dec 11, 2020
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Information current as of January 31, 2021.

The SARS-CoV-2 virus and the incidence of COVID-19 are changing life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to New Hampshire

  • New Hampshire extended the deadline to file and pay corporate income and individual income tax until June 15 without penalties or interest. The extension is only valid for business taxpayers who owed $50,000 or less in taxes (BPT and BET tax liability) and I&D taxpayers who owed $10,000 or less in taxes for tax year 2018.
  • All other taxpayers need to file an extension by April 15 and pay in no less than their 2018 tax liability and the Department of Revenue Administration will grant an automatic seven-month extension and waive any applicable interest or penalties.
    • New Hampshire Technical Information Release 2020-001, March 30, 2020.
  • New Hampshire is authorizing municipalities and counties to use their abatement authority to grant blanket abatements of interest charged on taxes not paid after their assessment and suspending foreclosure proceedings related to late payment of property taxes.
    • Governor’s Emergency Order No. 25, effective April 3, 2020, through the duration of the State of Emergency declared in Executive Order 2020-04.
  • New Hampshire guidance on the taxability of COVID-19 financial relief distributed to New Hampshire business profits tax (BPT) and business enterprise tax (BET) taxpayers. All state-level relief distributed to taxpayers required to file a BPT return from the state of New Hampshire’s portion of the federal CARES Act funds must be included as income for BPT purposes. However, any state-level relief taking the form of a loan should not be included as income for BPT purposes, unless that loan is forgiven or otherwise discharged. Taxpayers can continue to take deductions for deductible expenses of operating their business, even when those expenses are paid for with state-level relief. Therefore, only the portion of these funds that are not spent on deductible business expenses will ultimately be subject to taxation. Expenses that are generally not deductible include distributions made to owners or shareholders, the payment of personal expenses of owners, or certain disallowed entertainment and meal expenses. In addition, any state-level relief received by taxpayers required to file a BET return that is used to pay wages or other compensation to employees, interest, or dividends must be included in the enterprise value tax base of the business and is subject to the BET. 
    • New Hampshire DOR Release, August 18, 2020.  
  • New Hampshire has filed suit in the U.S. Supreme Court challenging a Massachusetts rule that imposes Massachusetts income tax on New Hampshire residents working from home for Massachusetts companies. 
    • New Hampshire Attorney General Gordon MacDonald and Gov. Chris Sununu will make the filing official on October 19, 2020.
  • New Hampshire issued guidance about the taxability of certain COVID-19 financial relief programs under the business profits tax (BPT) and business enterprise tax (BET). All federal- and state-level relief distributed to taxpayers required to file a BPT return must be included as income for BPT purposes. However, any relief taking the form of a loan shouldn’t be included as income for BPT purposes unless that loan is forgiven or otherwise discharged as per the Internal Revenue Code (IRC). Taxpayers can continue to take deductions for deductible expenses of operating their business, even when those expenses are paid for with state-level relief. In addition, any federal- or state-level relief received by taxpayers required to file a BET return that’s used to pay wages or other compensation to employees, interest, or dividends must be included in the enterprise value tax base of the business and subject to the BET. In some instances, the federal tax treatment of federal-level relief will be different from the state-level tax treatment of those same funds because the BPT statute references a version of the IRC in existence prior to the CARES Act and the Coronavirus Response and Relief Supplemental Appropriations Act. For example, federal PPP loans that are ultimately forgiven in accordance with the terms of that program may not be taxable federally but should be included as income for BPT purposes, subject to the exclusions in IRC §108. Schedule IV of the BPT return specifically identifies several areas where taxpayers may need to make adjustments to their taxable income for BPT purposes to account for the different state and federal tax treatment of COVID-19 relief.
    • New Hampshire Technical Information Release No. 2021-001; January 20, 2021.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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