AFP - NH to Impose 5% Income Tax on LLCs and Partnerships

Taxing NH Small Business Men & Women

Mark your calendar for December 16, 2009 and promise yourself that you and others will take the time to testify at the only public hearing for the 5% Tax on LLC’s and Partnerships which the Department of Revenue Administration (DRA) plans to hold at 10:00am at their Concord office on 109 Pleasant Street.

This past June, when the NH Legislature was voting on HB2, the state budget, some powerful Democrats decided to slip into the bill a 5 % interest and dividends tax on individuals for any distributions they receive from a Limited Liability Corporation (LLC) and Partnerships, this is an Income Tax!

Because this was slipped into HB 2 at the eleventh hour, there was no ability for our taxpayers to testify on this issue. Now, the DRA has written the rules for this 5% tax on all LLC’s and Partnerships throughout New Hampshire.

There are well over 10,000 LLC’s and Partnerships in New Hampshire made up of small business men and women who are about to get a wakeup call from big brother; “You owe us more money!” In full disclosure, I own an LLC.  However, this is shocking to me for two reasons:

1.       We are in a national recession with over 10% unemployment. No one can deny that our small business men and women are the backbone of our economy, they are ones that provide the jobs, yet this 5% tax will only help to kill jobs in New Hampshire.  This is not job creation in NH, it's job elimination! Yesterday, one owner of an LLC said to me, “I am working nearly 24/7 and there isn’t any more money to be made.  Any additional tax will force me to lay off employees or go out of business."

  • I have looked into what the DRA calls “more transparency” on this issue and I am appalled at what I have learned.

The DRA comment period for the LLC & Partnership 5% tax ends December 28 th, 2009, three days after Christmas.  Only after calling DRA and asking about public hearings did I learn that they will only have one public hearing on the rules on this important tax.  When implemented, this tax will cost LLC's and Partnerships $15 million dollars both in fiscal years 2010 and 2011. The only public hearing is scheduled for December 16 th, 2009 at 10am at DRA office located 109 Pleasant Street, Concord, NH.  You can review the proposed rules at

I have contacted both the Commissioner of DRA and Governor Lynch’s office and asked that these rules be pushed forward into January 2010.  I also requested that after the first of the year, a total of 5 public hearings be scheduled  across the state starting at 6pm so that our hard working men and women can attend. Ask yourself why DRA scheduled only one public hearing on December 16th with the comment period ending December 28th. To me the answer is simple; with family, Christmas and a recession going on no one will take the day off to come to Concord and testify.

This is a game that different state agencies play with public hearings on rule making; if you wrap the hearing around holidays no one will show up and the proposed rules will slide under the radar screen and be approved, which will carry the same impact as law. The state is not serving our taxpayers by allowing mischief like this to happen, it is wrong and must stop.

The taxpayers did not have the opportunity to testify on this issue last June. Governor Lynch, please give the 10,000 plus New Hampshire LLC small business men and women and Partnerships no less than 5 public hearings across New Hampshire as requested on this important issue. If you do, we will be serving our citizens.  If not, your message will be loud and clear, “The state of New Hampshire does not care about our small business men and women who are truly the backbone of our state’s economy." Please do the right thing!

Sincerely yours,

Thomas Thomson
Honorary Chairman AFP New Hampshire