Plymouth LLC-5% tax-public hearing

fatlazyless · 01-04-2010, 09:09 PM

In case you missed the Women's Pro Wrestling event-Plymouth which was held in the Plymouth Senior Center last month, here's another opportunity to witness all sorts of acting out and self-posturing.

Thursday, January 7, 6:00 pm, Plymouth State University - Hyde Hall, 17 High St, Plymouth NH: High St is directly off the roundabout, up the hill, and straight across the Plymouth roundabout from Rt 175A and Rt 93-Exit 25. Seems like it could be a large crowd for a public hearing due to all the publicity this new llc-tax has received?

A public hearing for informational purposes held by your New Hampshire state government officials to get some public input on the proposed 5% tax on dividends paid out by limited liability corporations.

Should be a hot topic!

Ok, so since it is perfectly acceptable for NH to hit up the old-folks with a 5% tax on their interest and dividends, then why the huge uproar over taxing the working LLC's at the same 5% rate where the LLC are not 92 years old, retired, and living on a fixed income. The LLC, by definition, have the ability to go out and make new business while the old folks just have to make do! How is that Fair?

BroadHopper · 01-04-2010, 11:32 PM

Quote:

Originally Posted by fatlazyless

Ok, so since it is perfectly acceptable for NH to hit up the old-folks with a 5% tax on their interest and dividends,

Am I missing something here? Is this a joke? First time I heard of it.

dpg · 01-05-2010, 07:05 AM

Quote:

Originally Posted by BroadHopper

Am I missing something here? Is this a joke? First time I heard of it.

First time for what the LLC or wrestling?

tis · 01-05-2010, 07:10 AM

No, it's not a joke. The LLC people are very upset about it. It is an expansion of the interest and dividends tax. They figure they can get around 30 million in taxes in two years from it. always looking for more money-----

DickR · 01-05-2010, 10:34 AM

Well, that's the "tax-free NH" way. It seems ok to tax some folks' income, as long as you don't tax everyone's income. One's not an income tax, the other is, somehow, or, uh, ......

LIforrelaxin · 01-05-2010, 12:35 PM

When it comes to interest and dividends why should a LLC or any bussiness for that matter be sheltered when the common Joe is not. That just tells me if I am going to move to NH, I want to start my own little family bussiness, and make sure it holds all my assetts that generate interest and dividend income. In short I believe the state is trying to close a loop hole it created.........

BroadHopper · 01-05-2010, 12:42 PM

Quote:

Originally Posted by LIforrelaxin

When it comes to interest and dividends why should a LLC or any bussiness for that matter be sheltered when the common Joe is not. That just tells me if I am going to move to NH, I want to start my own little family bussiness, and make sure it holds all my assetts that generate interest and dividend income. In short I believe the state is trying to close a loop hole it created.........

That may be true. I have a lot of dividends coming from my IRA and 401K. Technically most of my pension is from dividends and interests accumulated through the years. I will be damn if the state decides to put 5% on my pension as well as IRA and 401K. My retirement calculation does not factor the 5% in.

SumoDog · 01-05-2010, 01:03 PM

Quote:

Originally Posted by LIforrelaxin

When it comes to interest and dividends why should a LLC or any bussiness for that matter be sheltered when the common Joe is not. That just tells me if I am going to move to NH, I want to start my own little family bussiness, and make sure it holds all my assetts that generate interest and dividend income. In short I believe the state is trying to close a loop hole it created.........

I think you may be mis-understanding the issue - the issue is that the State of NH - in the middle of 2009 - established a tax on LLC's and Partnerships - retroactive to 01/01/09 that taxes LLC's and Partnerships on the "distributions" that the owner's take in excess of what the State of NH deems is reasonable compensation for the owners. So if you owned an LLC that say made $100,000 for 2009, and as an owner you distributed the $100,000 to yourself - then the State of NH comes in and says well your reasonable compensation is only $50,000. Suddenly under the new law - your pay 8.5% business profits tax on the $50,000 - and you pay a 5% interest and dividends tax on the $50,000 excess you distributed from your business to yourself. So under the new law - NH allows you a "reasonable deduction" of $50,000 - you pay $4,250 in BPT tax and $2,500 in I&D tax - thats 13.5% rate on your $50,000 of "profit". This is a very simplified example - but shows the punitive nature of the new rules - also I do not know of any other state un USA that taxes its business's at a potential rate of 13.5%.

fatlazyless · 01-06-2010, 06:36 PM

So, it seems to me that a good way to avoid the 8.5% business profits tax, and the newly proposed 5% dividend tax would be to do business as a d/b/a.

For example, FatLazyLess d/b/a Fatlazyless Island Services, "I paint the islands+". By working as a d/b/a, which is a sole proprietor, you avoid all the 13.5% tax hastles of a LLC. For a small business of one individual, doesn't that make good business sense? And, to protect yourself from liabillty, you work carefully, responsibly, and purchase an insurance liability policy from a responsible insurance company.

The business is included within your form 1040 federal tax form, and no NH filing is required because NH has no personal income tax. This seems too simple(?)...

So, what makes an LLC so much better than a DBA, that it has become so much in use since its NH inception in aproximately 1992?

LIforrelaxin · 01-07-2010, 09:12 AM

Quote:

Originally Posted by SumoDog

I think you may be mis-understanding the issue - the issue is that the State of NH - in the middle of 2009 - established a tax on LLC's and Partnerships - retroactive to 01/01/09 that taxes LLC's and Partnerships on the "distributions" that the owner's take in excess of what the State of NH deems is reasonable compensation for the owners. So if you owned an LLC that say made $100,000 for 2009, and as an owner you distributed the $100,000 to yourself - then the State of NH comes in and says well your reasonable compensation is only $50,000. Suddenly under the new law - your pay 8.5% business profits tax on the $50,000 - and you pay a 5% interest and dividends tax on the $50,000 excess you distributed from your business to yourself. So under the new law - NH allows you a "reasonable deduction" of $50,000 - you pay $4,250 in BPT tax and $2,500 in I&D tax - thats 13.5% rate on your $50,000 of "profit". This is a very simplified example - but shows the punitive nature of the new rules - also I do not know of any other state un USA that taxes its business's at a potential rate of 13.5%.

Ok, so this actually isn't really an "intrest and dividends" tax..... I hate to brake it to people but this is actually a income tax. The state of NH came play games with wordings etc. but considering most LLC are owned and operatored by the same people, this is really an income tax. Now I have to agree here that if the the rate can
get as high as 13.5 percent that is a bit high..... What they are trying to institute here is
a graduated income tax, the more your business earns (the more you pay yourself) the more you pay. The question with these ideas is always what is fair.... this doesn't seem fair.... I have to agree.... I think this will be a hard sell....

BroadHopper · 01-07-2010, 09:20 AM

Since the owners of LLC pension plans are those who contributed to the pension plans, that means we are taxed. Yes! This is a form of income tax! The democrats have a sneaky way of getting to us. What is sad in retirees are on fixed income and it is not fair to add to the burden.

jmen24 · 01-07-2010, 09:28 AM

This is a corporate business tax paid to the state, I have not heard of any other person being affected by this other than LLC business's. If you receive a draw or distribution of profits into a owner's pocket (100% shareholder) than why shouldn't the business pay taxes on that draw. The idea is to use your profits to grow your company (write off expenses), not take company profits and go buy a boat or toys or a second home. Use the money to grow your business and increase your salary as the business makes more profit. Everyone makes noise at the salaries of CEO's for major corps, but when the ratio of pay to company income is put into perspective with LLC's, I think you would fall on the floor.

This is to fill in a loop hole that bring LLC's in line with S-corps and other similar setups. The only people making noise are the ones that have been taking advantage of this for years. Welcome to the world of the big dogs, pay up like the rest of the corporate world does. You will figure it out or maybe you won't, either way it levels the field for those of us that have been paying this for years. I will agree that the percentage is to high but not to much is going to happen about that. We all complain about the politicians getting these loop hole tax breaks, granted they are not losing theirs.

You will also start to see the DBA's being phased out as well, it is already next to impossible to get a bank to set up an account for a DBA (sole proprietorship). To many (not all, but many) DBA's don't pay taxes correctly, if at all.

SumoDog · 01-07-2010, 09:41 AM

Quote:

Originally Posted by BroadHopper

Since the owners of LLC pension plans are those who contributed to the pension plans, that means we are taxed. Yes! This is a form of income tax! The democrats have a sneaky way of getting to us. What is sad in retirees are on fixed income and it is not fair to add to the burden.

Pension plan distributions are not taxed by NH - nor will they be taxed under the new law - Remember NH has no state income tax (except I think interest and dividends and gambling winnings are income - but the DRA does not agree with me). The only tax increase to retirees under the new law would be if you enjoyed gambling and won - your pension plans will not be taxed.

fatlazyless · 01-07-2010, 09:59 AM

[QUOTE=jmen24;11583To many (not all, but many) DBA's don't pay taxes correctly, if at all.[/QUOTE]

Hey.....correct me on this......as I seem to recall....a dba files federal taxes with form 1040 and pays the 7.65% share of the fica/medicare, while an LLC has to pay in both halfs of the 7.65% or 15.3% on the approximately first $100,000./year of wages. An LLC operates basically like a type c corp.

So, what is the big problem for a self-employed person to do business as a dba? A dba cannot purchase workers comp ins for himself and should definately have good liability insurance coverage appropriate to a painter.

jmen24 · 01-07-2010, 10:13 AM

Less, I was not completely clear on my stance of the Dba, I do not personnally care if they are allowed to operate or not, but the state and IRS do.
Most new startup companies (especially in the industry I am in) start as Dba's, they talk about how much money they make and at the end of the year when the tax bill is due they freak, because that money got spent on something other than what it should have been saved for. So, some of the ones that find themselves in this position, do not file their taxes, and they tell the IRS that they were an employee of the last company that they did work for (like me). Well we paid them without taking taxes out because they are a 1099 sub, so we get left with the bag to pay the taxes to the IRS, along with a 100% penalty and get a charge of tax evasion. Dba's create this type of mess all the time, especially in the contruction industry, Luckily our records are deep and well managed, so proving our case is not overly difficult, but it is an additional expense and headache that is caused almost solely by this one entity. Obviously not everyone operates this way and with us it has only been a certain few that we no longer work with, but the game continues. You want to talk about tax loop holes, thats the best game in town right now.

And it was a State Auditor that explained to us about the phasing out of Dba's.

And Less the reason a Dba does not carry workman's comp is the same reason that the owner of an LLC or S-corp does not get workmans comp, it is because they are covered under the general liability insurance. Only employees receive workmans comp insurance because they do not have the assets of a company to bail them out if they get injured and cannot work for a period of time. That is the cost of owning your own business.

LIforrelaxin · 01-07-2010, 10:21 AM

Quote:

Originally Posted by jmen24

This is a corporate business tax paid to the state, I have not heard of any other person being affected by this other than LLC business's. If you receive a draw or distribution of profits into a owner's pocket (100% shareholder) than why shouldn't the business pay taxes on that draw. The idea is to use your profits to grow your company (write off expenses), not take company profits and go buy a boat or toys or a second home. Use the money to grow your business and increase your salary as the business makes more profit. Everyone makes noise at the salaries of CEO's for major corps, but when the ratio of pay to company income is put into perspective with LLC's, I think you would fall on the floor.

This is to fill in a loop hole that bring LLC's in line with S-corps and other similar setups. The only people making noise are the ones that have been taking advantage of this for years. Welcome to the world of the big dogs, pay up like the rest of the corporate world does. You will figure it out or maybe you won't, either way it levels the field for those of us that have been paying this for years. I will agree that the percentage is to high but not to much is going to happen about that. We all complain about the politicians getting these loop hole tax breaks, granted they are not losing theirs.

You will also start to see the DBA's being phased out as well, it is already next to impossible to get a bank to set up an account for a DBA (sole proprietorship). To many (not all, but many) DBA's don't pay taxes correctly, if at all.

Jmen, while I agree with what you are saying here, and I need to admit I am learning a lot here..... I think if Summo Dogs interpretation of the law is correct, the problem here really is a determination on that states part as to what a fair draw is for the owners of a LLC to make.

Well I will admit that quite often self employed people pay themselves to much. How on an idividual case by case bases can that line be drawn of when the extra penalty gets drawn into the equation. The amount of reinvestment into a company from it profits veries greatly by business type. A fence company vs. a computer repair company on a year to year basis could have the same profits, but one probably needs to reinvest into his business more then the other, thus making his salary lower.... So should the guy that can draw a larger salary suffer because he is able to pay himself more?

fatlazyless · 01-07-2010, 10:31 AM

Thanks for your comments....appreciate that....and a dba is the most basic and simply way to be self-employed. Instead of having an employer who withdraws, pays and files one's federal tax & soc sec, it becomes the responsibility of the individual working as a dba. As everyone knows, New Hampshire does not have a personal income tax, so there's no NH income tax on dba's. Just the federal...

Returning to the topic of this thread, tonight's 6pm hearing on LLC's held in Plymouth: it has been getting some publicity in the state's biggest newspaper, the Union Leader, so could be there will be a big turn-out?

jmen24 · 01-07-2010, 11:04 AM

LI, you are correct and I do not think that there is any real fair way to determine that and the state should not be the one to decide.

The main detail of the law is bring the LLC's onto the same tax field as corporations, when an owner takes a draw above their salary it is a dividend and gets taxed as such, LLC's did not have to do that before. As an S-Corp, the owner takes a normal salary as the rest of the employees which allows for SS to build up for tomorrow. Anything above that is a dividend, much like an investment in a company's stock, and is required to pay a tax to the state on that dividend income, this is not new.

I have not read the law word for word as we are not directly affected, so there may be some wording in there that describes how this will be directly applied based on profit and payout.

WeirsBeachBoater · 01-07-2010, 09:45 PM

Just got back from the hearing. Pretty sure I spotted FLL... Can't wait to hear his take on it.

fatlazyless · 01-07-2010, 10:01 PM

...okey-dokey...I attended tonight's three hour long LLC hearing that was held by the Dept of Revenue Administration in a lecture hall at Plymouth State University.....and here's my two cents.

It ran from 6 to 9-pm, was attended by aprox 200 in the audience, with the three DRA employees, two men and a woman, all three attorneys, including the DRA commissioner sitting up front on the podium or stage. Aproximately 25 different people had the opportunity to express their opinion from the podium up front and every single speaker was vigorously opposed to the LLC-5% tax on their dividend pay-outs.

For me, the most interesting speaker was a fellow from Plymouth who owns the deer farm south of town. He said that while he had been considering making his business an LLC, as a way to limit his liability while doing business as a deer meat exporter to China, he was now happy that he had not, and as a d/b/a is not subject to the 5% tax. To which, one of the DRA's attorneys agreed.

Most all of the speakers were small business - LLC people who spoke very very strongly against this LLC tax and related it angerly to their specific businesses.

A couple-three political types got up and spoke: former State Rep Paul Mirski, (R) Enfield, former State Rep Bob Guida, (R) Warren, State Rep Fran Wendleboe, (R) New Hampton and Tom Thomson, the red plaid shirt guy from Orford.

All four were some good effective speakers who all have the gift of gab and that must go a long way in winning political elections. Probably, the best political speaker was Fran Wendleboe; she sounded and had the right personality to be a movie character actress. You had to be there and hear her give her spiel......very entertaining..... a Betty Davis knock-off, for sure!

Amoung the politicos who were present in the audience and chose not to speak were Senators Bob Letourneau, Maggie Hassan and Deb Reynolds.

I personally must have been among a small handfull of people there who are pretty much in favor of the LLC tax. What the heck, I get zapped big-time with the property tax and dividends tax, so why should the LLC's get a free ride on my nickel? Besides, if they don't like the LLC they can always switch to a d/b/a.

......

If you is look'n for journalis'm, suggest you check out tomorrow's January 8 www.citizen.com, & www.unionleader.com NH newspapers for their take on the public hearing.

January 9 opinion article www.concordmonitor.com ......".GOP is unfairly scaring businesses" State Rep Tom Katsiantonis (D) Manchester

January 10, Sunday's editorial www.concordmonitor.com
"Limited liability, but not for taxes"

..........

Just don't tax me!

Just go tax that other guy!

Just welcome to New Hampshire!

SumoDog · 01-09-2010, 03:30 PM

FLL - I understand your comments about dba's and you are correct - but my my two biggest issues surrounding the new law - a)it is retroactive to 010109 and b) say you and I each own a strip mall across the street from each other - you are richer than me so you bought yours for cash and hold the property in your own name - I am not as fortunate as you and needed a loan - and the bank wanted me to hold the property in an LLC - we both make $100,000 profit from our rental of the properties and we both take the $100,000 out of the business - also the State of NH allows each of us a $25,000 reasonable compensation deduction. Since you are DBA you are not subject to 5% tax -I get to pay 5% on the $75,000 I took out that wasn't deemed to be reasonable compensation. While we both pay 8.5% on the 75k in profit - I have to pay more - I have to raise my rent and you steal my tenants because your rent is lower. Is that fair?

fatlazyless · 01-10-2010, 07:19 PM

Why not shop around for another bank willing to loan to a dba? Having a dba business liabilty insurance policy and/or using another property like your primary residence as collateral could end up having you living homeless, and under a Rt 93 bridge.

No, just kidding on the homeless bridge stuff, but the difference between an LLC and a DBA w/ insurance seems like it does not translate as to how well the mortgagor can repay the mortgagee.

.....correctimundo ?

brk-lnt · 01-10-2010, 07:52 PM

I haven't followed all of the details on this, but some questions:

Does this relate to LLC's *incorporated* in NH or with nexus/investors in NH?

Also, does this bring the LLC tax burden in-line with C-Corp's? (S Corps are kind of irrelevant for this, as far as what I can tell from what I've read).

I am an investor in a couple of non-NH LLC's and S Corps (and they don't pay out enough on a yearly basis for me to really be concerned at this point).

I have heard, though not fully investigated, that NH's tax burden on corporations is kind of extreme, which is part of the reason most venture companies operate in MA instead of in NH.

ITD · 01-11-2010, 08:57 AM

This is a perfect way for Plymouth to drive LLCs out of town, way to go Plymouth!!!! Just like NYC's tax on millionaires, libs thought it was a great idea, most of the millionaires, many of them probably libs, thought otherwise and moved away....

tis · 01-11-2010, 09:56 AM

You mean out of STATE, ITD. It is the state that is doing this. The hearing was in Plymouth. There are other hearings in other towns.

fatlazyless · 01-11-2010, 11:44 AM

Here's part of one paragraph from the Sunday Jan 10 www.concordmonitor.com editorial. It's definately worth reading the whole editorial even if you have dislike & distrust for the Concord Monitor!

"....very few of the state's thousands of LLC's will pay the tax since they do not distribute dividends, nor will the change put New Hampshire LLC's at a disadvantage. The extension of the tax to LLC's like law firms, accounting firms, dental practices and the like merely makes the tax more fair by putting LLC's on an equal footing with other businesses." (quote by some NH attorney)

Now, go read the whole January 10 www.concordmonitor.com editorial......and you'll be a more informed person for it......

!

ITD · 01-11-2010, 03:03 PM

Quote:

Originally Posted by tis

You mean out of STATE, ITD. It is the state that is doing this. The hearing was in Plymouth. There are other hearings in other towns.

I stand corrected, thank you tis...

Little Bear · 01-11-2010, 08:29 PM

Quote:

Originally Posted by fatlazyless

Here's part of one paragraph from the Sunday Jan 10 www.concordmonitor.com editorial. It's definately worth reading the whole editorial even if you have dislike & distrust for the Concord Monitor!

"....very few of the state's thousands of LLC's will pay the tax since they do not distribute dividends, nor will the change put New Hampshire LLC's at a disadvantage. The extension of the tax to LLC's like law firms, accounting firms, dental practices and the like merely makes the tax more fair by putting LLC's on an equal footing with other businesses." (quote by some NH attorney)

Now, go read the whole January 10 www.concordmonitor.com editorial......and you'll be a more informed person for it......

!

Here's the link to the article referenced in the Concord Monitor, which was written by Attorney Richard Samuels of The McLane Law firm. The biggest issue, in my opinion, is with the State deciding what is "reasonable" compensation. It's that amount, over and above the State's determination of reasonable compensation, which will be taxed as interest and dividends. BIG PROBLEM.

http://www.mclane.com/newsroom/artic...idends-Tax.php

Little Bear · 01-13-2010, 09:26 AM

There is another hearing on the LLC Tax tomorrow morning at 9:00am in Concord. As you'll see from the attachment, this tax is being proposed not just for LLC's, but also for partnerships and proprietorships.

I urge all business owners to attend this hearing and stop this illegal money grab by the State. Also, to all non-business owners that think the State is doing the right thing by taking money from us big, mean, non-caring business owners, think again. What's to stop the State from deciding what's reasonable compensation for someone like you, then taxing any earnings over and above this point? It's coming, so wake up now.

Following are the details of the hearing:

Stop The LLC Tax Update

Do you want the State Determining How Much Money You Can Make?

Please come to the Public Hearing on
Thursday at 9:00am in Concord

New Law HB1607 will allow the State to determine your reasonable compensation
and trigger the 13.5% tax

Hello Everyone!

Again, thank all of you for joining in this fight against the 13.5% Small Business Income Tax. As we have discussed, this new tax on small business owners income is the result of 2 separate laws that come together and attack our income. All of this is based upon the State of NH, through the Department of Revenue Administration (DRA) being able to tell Small Business Owners how much money they can make. Last week, the DRA and the Chair of the House Ways and Means Committee brought forth a new Bill (HB 1607), to expand just how much they can limit us and establishing rules to cost us significantly more money in reporting.

On Thursday, the State will hold the only public hearing on this issue, so PLEASE make every effort to come and help us tell the State, that it cannot continue to attack Small Business Owners!

It is actually this Bill HB1607 that triggers all the stuff. We need to fight for an outright repeal of this Bad, anti business legislation, so we can create jobs and expand our economic base in New Hampshire.

So, how will this Bill Affect you?

There a number of things, but in general:
First the Bill gives the DRA the power to say you make too much money
Bill requires you to keep a massive amount of new record keeping to fight back
The State is trying to eliminate "loss carry forwards" or allowing you to recoup your investment for creating things
The Bill requires significant new record keeping if you or your company makes over $50,000.
The State mandates that you are not allowed to loose money......
The State is dictating a "percentage" on the sale of assets, as to the limit you can claim, all up to the DRA determining it.
They offer a paperwork safe harbor then a paragraph later take it back at their discretion

This Bill only effects LLC's, Partnerships, and now Sole Proprietorships too!

Even the DRA, in a letter we have obtained states that they will be very aggressive and conservative in what they allow.

Ladies and gentlemen, this Bill is what we are all fighting for and against. If this Bill is repealed, we will be able to work hard, reward ourselves, create jobs and help this great State pull out of the recession. We can do this, but everyone needs to participate.

Please show up Thursday 9:00am, LOB (the building behind the Capitol)

Again, thank you all for your efforts!
Andy Sanborn
Laurie Sanborn
Andrew Hemingway

fatlazyless · 01-13-2010, 10:18 AM

As you most likely know, the NH 5% tax on dividends & interest has been around since 1923. In about 1978, Gov Mel 'Ax the tax' Thomson successfully got the rate increased from three to five percent.

As a result, what New Hampshire has is a 5% tax on savings invested into bank accounts, cd's and stocks frequently held by retired older folks.

Hey Andy Sanborn, why should the LLC's who are working and making a living, or at least trying to, go and get a free ride on the 5% tax paid from older peoples savings and stocks accounts?

Not exactly a fair shake there!

Little Bear · 01-13-2010, 10:35 AM

Quote:

Originally Posted by fatlazyless

As you most likely know, the NH 5% tax on dividends & interest has been around since 1923. In about 1978, Gov Mel 'Ax the tax' Thomson successfully got the rate increased from three to five percent.

As a result, what New Hampshire has is a 5% tax on savings invested into bank accounts, cd's and stocks frequently held by retired older folks.

Hey Andy Sanborn, why should the LLC's who are working and making a living, or at least trying to, go and get a free ride on the 5% tax paid from older peoples savings and stocks accounts?

Not exactly a fair shake there!

Hey Less,

Why should a business owner be subjected to INCOME TAX, when a non-business owner's earned income is INCOME TAX FREE? A business owner also has to pay the 5% tax on savings, interest and dividends. Where is the incentive to work hard (harder) to get ahead?

fatlazyless · 01-13-2010, 11:02 AM

Hey Andy,

Because the savings in bank deposits and stocks was put away mostly by older folks who worked for years to save it. In New Hampshire older folks gets wacked by both their increasing property taxes, and the 5% tax on interest.

As you know very well, NH has no tax on personal income, so by changing a business from an LLC to a DBA, it will become state tax exempt.

The LLC plan was hatched in about 1992 to be somewhat similar to the 'in common use' property tax exemption. Have a piece of land, ten acres or larger, and you pay basically peanuts in prop taxes.

The LLC plan was cooked up as a way to avoid taxes, simlar to 'in common use.'

It all adds up to that well known NH tax game:
.........

Just don't tax me!

Just go tax someone else!

Just welcome to New Hampshire!

Little Bear · 01-13-2010, 11:41 AM

Quote:

Originally Posted by fatlazyless

Hey Andy,

Because the savings in bank deposits and stocks was put away mostly by older folks who worked for years to save it. In New Hampshire older folks gets wacked by both their increasing property taxes, and the 5% tax on interest.

As you know very well, NH has no tax on personal income, so by changing a business from an LLC to a DBA, it will become state tax exempt.

The LLC plan was hatched in about 1992 to be somewhat similar to the 'in common use' property tax exemption. Have a piece of land, ten acres or larger, and you pay basically peanuts in prop taxes.

The LLC plan was cooked up as a way to avoid taxes, simlar to 'in common use.'

It all adds up to that well known NH tax game:
.........

Just don't tax me!

Just go tax someone else!

Just welcome to New Hampshire!

Less, come on. LLC is a legal entity, not a tax entity. It took the "more simplistic" business structure of a partnership and gave the owner(s) the liability protection of a corporation. There is no legal business structure in NH called a DBA. A business has to be a proprietorship, partnership, LLC or Corporation. Any one of these can utilize the DBA function. DBA stands for "Doing Business As". For example: I can have a company called Fat Lazy Less Productions. This company can be set up as any one of the above mentioned business structures, but for the sake of discussion we chose an LLC. Fat Lazy Less Productions, LLC wants to operate a boat tour business on the lake, so it sets up Marker 3 Tours as a trade name, which belongs to Fat Lazy Less Productions, LLC. Now the official entity is Fat Lazy Less Productions, LLC D/B/A Marker 3 Tours.

Businesses chose the LLC option not as a "Tax Avoidance" mechanism, but rather as a liability protection mechanism. According to the information about this new HB 1607 (which I have not verified) this increased tax will now be applied to partnerships as well as proprietorships. So the state will effectively be imposing an INCOME TAX on any owner of either of these types of business entities.

Here's some good info on business structures from the Secretary of State's website:

http://www.nheconomy.com/business-se...ies-in-nh.aspx

tis · 01-13-2010, 12:16 PM

Quote:

Originally Posted by Little Bear

Hey Less,

Why should a business owner be subjected to INCOME TAX, when a non-business owner's earned income is INCOME TAX FREE? A business owner also has to pay the 5% tax on savings, interest and dividends. Where is the incentive to work hard (harder) to get ahead?

And don't forget a business has to pay a business profits tax and also whatever the owner takes out for salary has to pay a business enterprise tax. Doctors, lawyers, accountants etc. have to pay the business enterprise tax also.

Little Bear · 01-13-2010, 01:06 PM

Quote:

Originally Posted by tis

And don't forget a business has to pay a business profits tax and also whatever the owner takes out for salary has to pay a business enterprise tax. Doctors, lawyers, accountants etc. have to pay the business enterprise tax also.

Correct. Businesses also pay property taxes directly (if they own their property) or pay indirectly to their landlord if they rent or lease. Nobody in business is getting a free ride in NH (sorry FLL). Tell Concord to control the spending and things wouldn't be so bad "on the Walmart side"...

Gearhead · 01-13-2010, 01:10 PM

Who is John Galt?

ITD · 01-13-2010, 03:53 PM

Quote:

Originally Posted by Gearhead

Who is John Galt?

Prophetic or what????!!!!!

fatlazyless · 01-14-2010, 10:49 AM

For all the anti-LLC-5% tax opinions here, today's NH House schedule has HB-642 scheduled for a house role call vote, today January 13. HB 642 would have some major effects on the NH tax structure. It will lower items like the business enterprise tax, business profits tax, the 5% dividends & interest tax and start up a state wide income tax to pay for education funding. At the same time it will give homeowners a $200,000 exemption if you really live in that house.

Suggest you go take 30-minutes to read through the entire HB 642 if you want to get a good headache.

TomC · 01-14-2010, 11:09 AM

Quote:

Originally Posted by fatlazyless

For all the anti-LLC-5% tax opinions here, today's NH House schedule has HB-642 scheduled for a house role call vote, today January 13.

was the vote yesterday?

Rattlesnake Guy · 01-14-2010, 07:25 PM

Les,
I did a bit of fact checking on you assertion that older folks are the owners of most of the savings. According to 2 year old numbers from the conservative organization "The Los Angles Times", it breaks down about like this. I guess it depends on what you consider older.

Folks 55 years and older account for about 38% of savings.
Folks 45 years and older account for about 70% of savings.

I consider your assertion "reasonable".

I could not find any good defense of your concept that taxing LLCs would be a good way to make the tax on the interest more fair.

Somehow I have a feeling that LLCs might be owned by the same people who get older and save money....

fatlazyless · 01-14-2010, 07:52 PM

HB-642 was voted 'inexpediant to approve' or something by the NH House on January 13, 2010, by a vote of 244-72, so the income tax is now dead for another year. If by some long shot chance, Gov Lynch wins his fourth two-year term in November, then who know's maybe he'll change his tune on an income tax.

In the meantime, there's still the LLC-5% tax, alive and kicking for 2010.

Hey Rattlesnake Guy......come on.....just don't get me all confused with any research or facts.....

Most likely, you are something like 49.5% correct and it's all somewhat hypothetical.

In 2009, this two-year NH legislature sent a shockwave throughout the NH campground businesses when it extended the 9% lodging tax to include renting a site with a picnic table and a spot to park your camper or tent. Similarly, the same legislature seems like it could send another shockwave throughout the LLC's. It's time for the LLC's to share some of the pain. Will the legislature do it? The answer is "yes, they can!

As the voice of the NH Republican Party, it looks like the Union Leader is playing the LLC tax for all it can what with one congressional seat and a US Senate seat very much up in the air.

fatlazyless · 01-21-2010, 09:10 AM

"When you get to the point that after you've taken a reasonable salary and you've got profit and you take something out of that profit to give to yourself on top of that it, then you're going to be taxed, because that's the dividend."

Last paragraph from today's Jan 21 Laconia Daily Sun article on the llc 5% dividend tax. It's a quote from the DRA commissioner (& attorney), Kevin Clougherty.

This one sentence seems to answer the question of "What is a dividend for a NH llc?"

Suggest you read it slowy once, then read it slowly again, then think about it and then read it for a third time, slowly.

Any thoughts or suggestions here? ... ...

AB_Monterey · 01-29-2010, 04:59 PM

I have thought.

"It's the spending, stupid".

Stop looking for more revenue and try living within our means.

Little Bear · 02-17-2010, 12:26 PM

http://www.theunionleader.com/articl...b-6d28641c0283

Time to contact our reps and tell them to support this bill. NO LLC TAX! It's co-sponsored by a DEMOCRAT, so maybe they are starting to wake up and smell the coffee. We can only hope.

SAMIAM · 02-18-2010, 09:17 AM

Besides........it'd not 5%......it is a whopping 13.5% because these "newly discovered" profits will also be considered business profits. This bill would discourage growth and business.

Irish mist · 02-18-2010, 06:11 PM

This bill is a killer. Since the 60s NH has been one of the very few northeast states & rust-belt states that kept growing.......until the last 6 or 7 year and the 41 nex taxes the dems anf Lynch have dumped on the state. This LLC tax will be a death blow. Can't wait until November.

John A. Birdsall · 02-20-2010, 12:56 PM

I have been in business as a d/b/a, and my understanding of the basic difference is in liability. as a dba someone gets hurt at where I am conducting business they can come not just after the business, but can come after my personnel property where as a LLC they can only attach to the business.

Now as for the state taxing my income if I were a LLC and not as a d/b/a or as an employee I don't think that is fair. If they are gonna have a state income tax then all should be paying it. But start with the state legislature pay.

fatlazyless · 02-20-2010, 09:18 PM

"New N.H. LLC Tax Now in Effect" as reported in today's Feb 20 Nashua Telegraph by Kevin Landrigan because a legislative committee voted 6-4, along party lines, to give it 'the big green light' on Friday, February 19.

Bad news; the tax is retroactive back to January 1, 2009.

Not so bad news but definately not good news; first $50,000 in LLC distributions paid out are exempt. (me-thinks !?)
......

So, what if anything will the Sunday Union Leader, the voice of the NH Republican Party, have to say about this. It should be all over the Sunday front page. Time to put on my dark sunglasses & go take a peek at today's U-L ....
.....

From Tom Fahey's column in today's U-L. ...

"Marlene Gazda, chief executive of the NH Society of Public Accountants, said her members have been following the issue and are ready to work with DRA on final details in the rules.

Although time is short she said 'we make it happen. We have to. It's not as if this comes as a surprise, and now we have the green light.'"

..........

...you gotta read this!

Feb 21 www.concordmonitor.com front page

Defining 'reasonable compensation'
state taxes profits but not salaries
by Shira Schoenberg

& e-mail comments
......

LLC Tax LLC Tax LLC Tax LLC Tax LLC Tax

Say it loud! : LLC Tax-5%

...hey, misery luvs company!

fatlazyless · 02-25-2010, 09:03 AM

Holy smokes...Lynch & the Democrats are strongly thinking about abandoning the LLC-tax.....read all about it in today's LaDaSun

!

01-04-2010, 09:09 PM	#1
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	Plymouth LLC-5% tax-public hearing In case you missed the Women's Pro Wrestling event-Plymouth which was held in the Plymouth Senior Center last month, here's another opportunity to witness all sorts of acting out and self-posturing. Thursday, January 7, 6:00 pm, Plymouth State University - Hyde Hall, 17 High St, Plymouth NH: High St is directly off the roundabout, up the hill, and straight across the Plymouth roundabout from Rt 175A and Rt 93-Exit 25. Seems like it could be a large crowd for a public hearing due to all the publicity this new llc-tax has received? A public hearing for informational purposes held by your New Hampshire state government officials to get some public input on the proposed 5% tax on dividends paid out by limited liability corporations. Should be a hot topic! Ok, so since it is perfectly acceptable for NH to hit up the old-folks with a 5% tax on their interest and dividends, then why the huge uproar over taxing the working LLC's at the same 5% rate where the LLC are not 92 years old, retired, and living on a fixed income. The LLC, by definition, have the ability to go out and make new business while the old folks just have to make do! How is that Fair? __________________ ... down and out, liv'n that Walmart side of the lake! Last edited by fatlazyless; 01-05-2010 at 09:40 PM.

01-05-2010, 10:34 AM	#5
DickR Senior Member Join Date: Apr 2008 Location: Moultonborough Posts: 738 Thanks: 4 Thanked 256 Times in 168 Posts	Taxing old folks' income Well, that's the "tax-free NH" way. It seems ok to tax some folks' income, as long as you don't tax everyone's income. One's not an income tax, the other is, somehow, or, uh, ......

01-05-2010, 12:35 PM	#6
LIforrelaxin Senior Member Join Date: May 2006 Location: Long Island, not that one, the one on Winnipesaukee Posts: 2,836 Thanks: 1,019 Thanked 885 Times in 518 Posts	When it comes to interest and dividends why should a LLC or any bussiness for that matter be sheltered when the common Joe is not. That just tells me if I am going to move to NH, I want to start my own little family bussiness, and make sure it holds all my assetts that generate interest and dividend income. In short I believe the state is trying to close a loop hole it created......... __________________ Life is about how much time you can spend relaxing... I do it on an island that isn't really an island.....

01-06-2010, 06:36 PM	#9
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	So, it seems to me that a good way to avoid the 8.5% business profits tax, and the newly proposed 5% dividend tax would be to do business as a d/b/a. For example, FatLazyLess d/b/a Fatlazyless Island Services, "I paint the islands+". By working as a d/b/a, which is a sole proprietor, you avoid all the 13.5% tax hastles of a LLC. For a small business of one individual, doesn't that make good business sense? And, to protect yourself from liabillty, you work carefully, responsibly, and purchase an insurance liability policy from a responsible insurance company. The business is included within your form 1040 federal tax form, and no NH filing is required because NH has no personal income tax. This seems too simple(?)... So, what makes an LLC so much better than a DBA, that it has become so much in use since its NH inception in aproximately 1992? __________________ ... down and out, liv'n that Walmart side of the lake!

01-07-2010, 09:20 AM	#11
BroadHopper Senior Member Join Date: Oct 2004 Location: Laconia NH Posts: 5,528 Thanks: 3,137 Thanked 1,091 Times in 785 Posts	Penson plans Since the owners of LLC pension plans are those who contributed to the pension plans, that means we are taxed. Yes! This is a form of income tax! The democrats have a sneaky way of getting to us. What is sad in retirees are on fixed income and it is not fair to add to the burden. __________________ Someday may never be an actual day.

01-05-2010, 07:10 AM	#4
tis Senior Member Join Date: Jan 2006 Posts: 6,482 Thanks: 729 Thanked 1,398 Times in 969 Posts	No, it's not a joke. The LLC people are very upset about it. It is an expansion of the interest and dividends tax. They figure they can get around 30 million in taxes in two years from it. always looking for more money-----

01-07-2010, 09:28 AM	#12
jmen24 Senior Member Join Date: Feb 2009 Posts: 1,139 Thanks: 223 Thanked 319 Times in 181 Posts	This is a corporate business tax paid to the state, I have not heard of any other person being affected by this other than LLC business's. If you receive a draw or distribution of profits into a owner's pocket (100% shareholder) than why shouldn't the business pay taxes on that draw. The idea is to use your profits to grow your company (write off expenses), not take company profits and go buy a boat or toys or a second home. Use the money to grow your business and increase your salary as the business makes more profit. Everyone makes noise at the salaries of CEO's for major corps, but when the ratio of pay to company income is put into perspective with LLC's, I think you would fall on the floor. This is to fill in a loop hole that bring LLC's in line with S-corps and other similar setups. The only people making noise are the ones that have been taking advantage of this for years. Welcome to the world of the big dogs, pay up like the rest of the corporate world does. You will figure it out or maybe you won't, either way it levels the field for those of us that have been paying this for years. I will agree that the percentage is to high but not to much is going to happen about that. We all complain about the politicians getting these loop hole tax breaks, granted they are not losing theirs. You will also start to see the DBA's being phased out as well, it is already next to impossible to get a bank to set up an account for a DBA (sole proprietorship). To many (not all, but many) DBA's don't pay taxes correctly, if at all.

01-07-2010, 09:59 AM	#14
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	[QUOTE=jmen24;11583To many (not all, but many) DBA's don't pay taxes correctly, if at all.[/QUOTE] Hey.....correct me on this......as I seem to recall....a dba files federal taxes with form 1040 and pays the 7.65% share of the fica/medicare, while an LLC has to pay in both halfs of the 7.65% or 15.3% on the approximately first $100,000./year of wages. An LLC operates basically like a type c corp. So, what is the big problem for a self-employed person to do business as a dba? A dba cannot purchase workers comp ins for himself and should definately have good liability insurance coverage appropriate to a painter. __________________ ... down and out, liv'n that Walmart side of the lake!

01-07-2010, 10:13 AM	#15
jmen24 Senior Member Join Date: Feb 2009 Posts: 1,139 Thanks: 223 Thanked 319 Times in 181 Posts	Less, I was not completely clear on my stance of the Dba, I do not personnally care if they are allowed to operate or not, but the state and IRS do. Most new startup companies (especially in the industry I am in) start as Dba's, they talk about how much money they make and at the end of the year when the tax bill is due they freak, because that money got spent on something other than what it should have been saved for. So, some of the ones that find themselves in this position, do not file their taxes, and they tell the IRS that they were an employee of the last company that they did work for (like me). Well we paid them without taking taxes out because they are a 1099 sub, so we get left with the bag to pay the taxes to the IRS, along with a 100% penalty and get a charge of tax evasion. Dba's create this type of mess all the time, especially in the contruction industry, Luckily our records are deep and well managed, so proving our case is not overly difficult, but it is an additional expense and headache that is caused almost solely by this one entity. Obviously not everyone operates this way and with us it has only been a certain few that we no longer work with, but the game continues. You want to talk about tax loop holes, thats the best game in town right now. And it was a State Auditor that explained to us about the phasing out of Dba's. And Less the reason a Dba does not carry workman's comp is the same reason that the owner of an LLC or S-corp does not get workmans comp, it is because they are covered under the general liability insurance. Only employees receive workmans comp insurance because they do not have the assets of a company to bail them out if they get injured and cannot work for a period of time. That is the cost of owning your own business.

01-07-2010, 10:31 AM	#17
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	Thanks for your comments....appreciate that....and a dba is the most basic and simply way to be self-employed. Instead of having an employer who withdraws, pays and files one's federal tax & soc sec, it becomes the responsibility of the individual working as a dba. As everyone knows, New Hampshire does not have a personal income tax, so there's no NH income tax on dba's. Just the federal... Returning to the topic of this thread, tonight's 6pm hearing on LLC's held in Plymouth: it has been getting some publicity in the state's biggest newspaper, the Union Leader, so could be there will be a big turn-out? __________________ ... down and out, liv'n that Walmart side of the lake!

01-07-2010, 11:04 AM	#18
jmen24 Senior Member Join Date: Feb 2009 Posts: 1,139 Thanks: 223 Thanked 319 Times in 181 Posts	LI, you are correct and I do not think that there is any real fair way to determine that and the state should not be the one to decide. The main detail of the law is bring the LLC's onto the same tax field as corporations, when an owner takes a draw above their salary it is a dividend and gets taxed as such, LLC's did not have to do that before. As an S-Corp, the owner takes a normal salary as the rest of the employees which allows for SS to build up for tomorrow. Anything above that is a dividend, much like an investment in a company's stock, and is required to pay a tax to the state on that dividend income, this is not new. I have not read the law word for word as we are not directly affected, so there may be some wording in there that describes how this will be directly applied based on profit and payout.

01-07-2010, 09:45 PM	#19
WeirsBeachBoater Senior Member Join Date: Apr 2004 Posts: 709 Blog Entries: 9 Thanks: 39 Thanked 148 Times in 65 Posts	Just got back from the hearing. Pretty sure I spotted FLL... Can't wait to hear his take on it.

01-07-2010, 10:01 PM	#20
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	...okey-dokey...I attended tonight's three hour long LLC hearing that was held by the Dept of Revenue Administration in a lecture hall at Plymouth State University.....and here's my two cents. It ran from 6 to 9-pm, was attended by aprox 200 in the audience, with the three DRA employees, two men and a woman, all three attorneys, including the DRA commissioner sitting up front on the podium or stage. Aproximately 25 different people had the opportunity to express their opinion from the podium up front and every single speaker was vigorously opposed to the LLC-5% tax on their dividend pay-outs. For me, the most interesting speaker was a fellow from Plymouth who owns the deer farm south of town. He said that while he had been considering making his business an LLC, as a way to limit his liability while doing business as a deer meat exporter to China, he was now happy that he had not, and as a d/b/a is not subject to the 5% tax. To which, one of the DRA's attorneys agreed. Most all of the speakers were small business - LLC people who spoke very very strongly against this LLC tax and related it angerly to their specific businesses. A couple-three political types got up and spoke: former State Rep Paul Mirski, (R) Enfield, former State Rep Bob Guida, (R) Warren, State Rep Fran Wendleboe, (R) New Hampton and Tom Thomson, the red plaid shirt guy from Orford. All four were some good effective speakers who all have the gift of gab and that must go a long way in winning political elections. Probably, the best political speaker was Fran Wendleboe; she sounded and had the right personality to be a movie character actress. You had to be there and hear her give her spiel......very entertaining..... a Betty Davis knock-off, for sure! Amoung the politicos who were present in the audience and chose not to speak were Senators Bob Letourneau, Maggie Hassan and Deb Reynolds. I personally must have been among a small handfull of people there who are pretty much in favor of the LLC tax. What the heck, I get zapped big-time with the property tax and dividends tax, so why should the LLC's get a free ride on my nickel? Besides, if they don't like the LLC they can always switch to a d/b/a. ...... If you is look'n for journalis'm, suggest you check out tomorrow's January 8 www.citizen.com, & www.unionleader.com NH newspapers for their take on the public hearing. January 9 opinion article www.concordmonitor.com ......".GOP is unfairly scaring businesses" State Rep Tom Katsiantonis (D) Manchester January 10, Sunday's editorial www.concordmonitor.com "Limited liability, but not for taxes" .......... Just don't tax me! Just go tax that other guy! Just welcome to New Hampshire! __________________ ... down and out, liv'n that Walmart side of the lake! Last edited by fatlazyless; 01-11-2010 at 11:23 AM.

01-09-2010, 03:30 PM	#21
SumoDog Member Join Date: May 2009 Posts: 22 Thanks: 0 Thanked 4 Times in 3 Posts	FLL - I understand your comments about dba's and you are correct - but my my two biggest issues surrounding the new law - a)it is retroactive to 010109 and b) say you and I each own a strip mall across the street from each other - you are richer than me so you bought yours for cash and hold the property in your own name - I am not as fortunate as you and needed a loan - and the bank wanted me to hold the property in an LLC - we both make $100,000 profit from our rental of the properties and we both take the $100,000 out of the business - also the State of NH allows each of us a $25,000 reasonable compensation deduction. Since you are DBA you are not subject to 5% tax -I get to pay 5% on the $75,000 I took out that wasn't deemed to be reasonable compensation. While we both pay 8.5% on the 75k in profit - I have to pay more - I have to raise my rent and you steal my tenants because your rent is lower. Is that fair?

01-10-2010, 07:19 PM	#22
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	Why not shop around for another bank willing to loan to a dba? Having a dba business liabilty insurance policy and/or using another property like your primary residence as collateral could end up having you living homeless, and under a Rt 93 bridge. No, just kidding on the homeless bridge stuff, but the difference between an LLC and a DBA w/ insurance seems like it does not translate as to how well the mortgagor can repay the mortgagee. .....correctimundo ? __________________ ... down and out, liv'n that Walmart side of the lake!

01-10-2010, 07:52 PM	#23
brk-lnt Senior Member Join Date: Aug 2007 Location: South Down Shores Posts: 1,940 Thanks: 537 Thanked 568 Times in 334 Posts	I haven't followed all of the details on this, but some questions: Does this relate to LLC's incorporated in NH or with nexus/investors in NH? Also, does this bring the LLC tax burden in-line with C-Corp's? (S Corps are kind of irrelevant for this, as far as what I can tell from what I've read). I am an investor in a couple of non-NH LLC's and S Corps (and they don't pay out enough on a yearly basis for me to really be concerned at this point). I have heard, though not fully investigated, that NH's tax burden on corporations is kind of extreme, which is part of the reason most venture companies operate in MA instead of in NH. __________________ [insert witty phrase here]

01-11-2010, 08:57 AM	#24
ITD Senior Member Join Date: Apr 2004 Location: Moultonboro, NH Posts: 2,885 Thanks: 466 Thanked 677 Times in 376 Posts	This is a perfect way for Plymouth to drive LLCs out of town, way to go Plymouth!!!! Just like NYC's tax on millionaires, libs thought it was a great idea, most of the millionaires, many of them probably libs, thought otherwise and moved away....

01-11-2010, 09:56 AM	#25
tis Senior Member Join Date: Jan 2006 Posts: 6,482 Thanks: 729 Thanked 1,398 Times in 969 Posts	You mean out of STATE, ITD. It is the state that is doing this. The hearing was in Plymouth. There are other hearings in other towns.

01-11-2010, 11:44 AM	#26
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	Jan 10 Concord Monitor editorial Here's part of one paragraph from the Sunday Jan 10 www.concordmonitor.com editorial. It's definately worth reading the whole editorial even if you have dislike & distrust for the Concord Monitor! "....very few of the state's thousands of LLC's will pay the tax since they do not distribute dividends, nor will the change put New Hampshire LLC's at a disadvantage. The extension of the tax to LLC's like law firms, accounting firms, dental practices and the like merely makes the tax more fair by putting LLC's on an equal footing with other businesses." (quote by some NH attorney) Now, go read the whole January 10 www.concordmonitor.com editorial......and you'll be a more informed person for it...... ! __________________ ... down and out, liv'n that Walmart side of the lake!

01-13-2010, 09:26 AM	#29
Little Bear Senior Member Join Date: Jul 2006 Posts: 574 Thanks: 122 Thanked 245 Times in 131 Posts	There is another hearing on the LLC Tax tomorrow morning at 9:00am in Concord. As you'll see from the attachment, this tax is being proposed not just for LLC's, but also for partnerships and proprietorships. I urge all business owners to attend this hearing and stop this illegal money grab by the State. Also, to all non-business owners that think the State is doing the right thing by taking money from us big, mean, non-caring business owners, think again. What's to stop the State from deciding what's reasonable compensation for someone like you, then taxing any earnings over and above this point? It's coming, so wake up now. Following are the details of the hearing: Stop The LLC Tax Update Do you want the State Determining How Much Money You Can Make? Please come to the Public Hearing on Thursday at 9:00am in Concord New Law HB1607 will allow the State to determine your reasonable compensation and trigger the 13.5% tax Hello Everyone! Again, thank all of you for joining in this fight against the 13.5% Small Business Income Tax. As we have discussed, this new tax on small business owners income is the result of 2 separate laws that come together and attack our income. All of this is based upon the State of NH, through the Department of Revenue Administration (DRA) being able to tell Small Business Owners how much money they can make. Last week, the DRA and the Chair of the House Ways and Means Committee brought forth a new Bill (HB 1607), to expand just how much they can limit us and establishing rules to cost us significantly more money in reporting. On Thursday, the State will hold the only public hearing on this issue, so PLEASE make every effort to come and help us tell the State, that it cannot continue to attack Small Business Owners! It is actually this Bill HB1607 that triggers all the stuff. We need to fight for an outright repeal of this Bad, anti business legislation, so we can create jobs and expand our economic base in New Hampshire. So, how will this Bill Affect you? There a number of things, but in general: First the Bill gives the DRA the power to say you make too much money Bill requires you to keep a massive amount of new record keeping to fight back The State is trying to eliminate "loss carry forwards" or allowing you to recoup your investment for creating things The Bill requires significant new record keeping if you or your company makes over $50,000. The State mandates that you are not allowed to loose money...... The State is dictating a "percentage" on the sale of assets, as to the limit you can claim, all up to the DRA determining it. They offer a paperwork safe harbor then a paragraph later take it back at their discretion This Bill only effects LLC's, Partnerships, and now Sole Proprietorships too! Even the DRA, in a letter we have obtained states that they will be very aggressive and conservative in what they allow. Ladies and gentlemen, this Bill is what we are all fighting for and against. If this Bill is repealed, we will be able to work hard, reward ourselves, create jobs and help this great State pull out of the recession. We can do this, but everyone needs to participate. Please show up Thursday 9:00am, LOB (the building behind the Capitol) Again, thank you all for your efforts! Andy Sanborn Laurie Sanborn Andrew Hemingway

01-13-2010, 10:18 AM	#30
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	As you most likely know, the NH 5% tax on dividends & interest has been around since 1923. In about 1978, Gov Mel 'Ax the tax' Thomson successfully got the rate increased from three to five percent. As a result, what New Hampshire has is a 5% tax on savings invested into bank accounts, cd's and stocks frequently held by retired older folks. Hey Andy Sanborn, why should the LLC's who are working and making a living, or at least trying to, go and get a free ride on the 5% tax paid from older peoples savings and stocks accounts? Not exactly a fair shake there! __________________ ... down and out, liv'n that Walmart side of the lake!

01-13-2010, 11:02 AM	#32
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	Hey Andy, Because the savings in bank deposits and stocks was put away mostly by older folks who worked for years to save it. In New Hampshire older folks gets wacked by both their increasing property taxes, and the 5% tax on interest. As you know very well, NH has no tax on personal income, so by changing a business from an LLC to a DBA, it will become state tax exempt. The LLC plan was hatched in about 1992 to be somewhat similar to the 'in common use' property tax exemption. Have a piece of land, ten acres or larger, and you pay basically peanuts in prop taxes. The LLC plan was cooked up as a way to avoid taxes, simlar to 'in common use.' It all adds up to that well known NH tax game: ......... Just don't tax me! Just go tax someone else! Just welcome to New Hampshire! __________________ ... down and out, liv'n that Walmart side of the lake!

01-13-2010, 01:10 PM	#36
Gearhead Senior Member Join Date: Mar 2008 Location: Alton Posts: 166 Thanks: 13 Thanked 19 Times in 8 Posts	Who is John Galt?

01-14-2010, 10:49 AM	#38
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	For all the anti-LLC-5% tax opinions here, today's NH House schedule has HB-642 scheduled for a house role call vote, today January 13. HB 642 would have some major effects on the NH tax structure. It will lower items like the business enterprise tax, business profits tax, the 5% dividends & interest tax and start up a state wide income tax to pay for education funding. At the same time it will give homeowners a $200,000 exemption if you really live in that house. Suggest you go take 30-minutes to read through the entire HB 642 if you want to get a good headache. __________________ ... down and out, liv'n that Walmart side of the lake!

01-14-2010, 07:25 PM	#40
Rattlesnake Guy Senior Member Join Date: Sep 2004 Posts: 1,254 Thanks: 423 Thanked 366 Times in 175 Posts	Les, I did a bit of fact checking on you assertion that older folks are the owners of most of the savings. According to 2 year old numbers from the conservative organization "The Los Angles Times", it breaks down about like this. I guess it depends on what you consider older. Folks 55 years and older account for about 38% of savings. Folks 45 years and older account for about 70% of savings. I consider your assertion "reasonable". I could not find any good defense of your concept that taxing LLCs would be a good way to make the tax on the interest more fair. Somehow I have a feeling that LLCs might be owned by the same people who get older and save money....

01-14-2010, 07:52 PM	#41
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	HB-642 was voted 'inexpediant to approve' or something by the NH House on January 13, 2010, by a vote of 244-72, so the income tax is now dead for another year. If by some long shot chance, Gov Lynch wins his fourth two-year term in November, then who know's maybe he'll change his tune on an income tax. In the meantime, there's still the LLC-5% tax, alive and kicking for 2010. Hey Rattlesnake Guy......come on.....just don't get me all confused with any research or facts..... Most likely, you are something like 49.5% correct and it's all somewhat hypothetical. In 2009, this two-year NH legislature sent a shockwave throughout the NH campground businesses when it extended the 9% lodging tax to include renting a site with a picnic table and a spot to park your camper or tent. Similarly, the same legislature seems like it could send another shockwave throughout the LLC's. It's time for the LLC's to share some of the pain. Will the legislature do it? The answer is "yes, they can! As the voice of the NH Republican Party, it looks like the Union Leader is playing the LLC tax for all it can what with one congressional seat and a US Senate seat very much up in the air. __________________ ... down and out, liv'n that Walmart side of the lake! Last edited by fatlazyless; 01-15-2010 at 07:12 AM.

01-21-2010, 09:10 AM	#42
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	today's Jan 21 LaDaSun article "When you get to the point that after you've taken a reasonable salary and you've got profit and you take something out of that profit to give to yourself on top of that it, then you're going to be taxed, because that's the dividend." Last paragraph from today's Jan 21 Laconia Daily Sun article on the llc 5% dividend tax. It's a quote from the DRA commissioner (& attorney), Kevin Clougherty. This one sentence seems to answer the question of "What is a dividend for a NH llc?" Suggest you read it slowy once, then read it slowly again, then think about it and then read it for a third time, slowly. Any thoughts or suggestions here? ... ... __________________ ... down and out, liv'n that Walmart side of the lake! Last edited by fatlazyless; 01-21-2010 at 07:12 PM.

01-29-2010, 04:59 PM	#43
AB_Monterey Senior Member Join Date: Aug 2008 Location: Alton Bay Posts: 293 Thanks: 86 Thanked 78 Times in 49 Posts	I have thought. "It's the spending, stupid". Stop looking for more revenue and try living within our means.

02-17-2010, 12:26 PM	#44
Little Bear Senior Member Join Date: Jul 2006 Posts: 574 Thanks: 122 Thanked 245 Times in 131 Posts	New LLC Bill http://www.theunionleader.com/articl...b-6d28641c0283 Time to contact our reps and tell them to support this bill. NO LLC TAX! It's co-sponsored by a DEMOCRAT, so maybe they are starting to wake up and smell the coffee. We can only hope.

02-18-2010, 09:17 AM	#45
SAMIAM Senior Member Join Date: Apr 2004 Location: Moultonborough Posts: 2,854 Thanks: 329 Thanked 1,641 Times in 569 Posts	Besides........it'd not 5%......it is a whopping 13.5% because these "newly discovered" profits will also be considered business profits. This bill would discourage growth and business.

02-18-2010, 06:11 PM	#46
Irish mist Senior Member Join Date: Dec 2006 Posts: 682 Thanks: 123 Thanked 85 Times in 49 Posts	This bill is a killer. Since the 60s NH has been one of the very few northeast states & rust-belt states that kept growing.......until the last 6 or 7 year and the 41 nex taxes the dems anf Lynch have dumped on the state. This LLC tax will be a death blow. Can't wait until November.

02-20-2010, 12:56 PM	#47
John A. Birdsall Senior Member Join Date: Apr 2004 Location: Norwich, CT Posts: 599 Thanks: 27 Thanked 51 Times in 35 Posts	llc vs d/b/a I have been in business as a d/b/a, and my understanding of the basic difference is in liability. as a dba someone gets hurt at where I am conducting business they can come not just after the business, but can come after my personnel property where as a LLC they can only attach to the business. Now as for the state taxing my income if I were a LLC and not as a d/b/a or as an employee I don't think that is fair. If they are gonna have a state income tax then all should be paying it. But start with the state legislature pay.

02-20-2010, 09:18 PM	#48
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	"New N.H. LLC Tax Now in Effect" as reported in today's Feb 20 Nashua Telegraph by Kevin Landrigan because a legislative committee voted 6-4, along party lines, to give it 'the big green light' on Friday, February 19. Bad news; the tax is retroactive back to January 1, 2009. Not so bad news but definately not good news; first $50,000 in LLC distributions paid out are exempt. (me-thinks !?) ...... So, what if anything will the Sunday Union Leader, the voice of the NH Republican Party, have to say about this. It should be all over the Sunday front page. Time to put on my dark sunglasses & go take a peek at today's U-L .... ..... From Tom Fahey's column in today's U-L. ... "Marlene Gazda, chief executive of the NH Society of Public Accountants, said her members have been following the issue and are ready to work with DRA on final details in the rules. Although time is short she said 'we make it happen. We have to. It's not as if this comes as a surprise, and now we have the green light.'" .......... ...you gotta read this! Feb 21 www.concordmonitor.com front page Defining 'reasonable compensation' state taxes profits but not salaries by Shira Schoenberg & e-mail comments ...... LLC Tax LLC Tax LLC Tax LLC Tax LLC Tax Say it loud! : LLC Tax-5% ...hey, misery luvs company! __________________ ... down and out, liv'n that Walmart side of the lake! Last edited by fatlazyless; 02-21-2010 at 09:59 PM.

02-25-2010, 09:03 AM	#49
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,569 Blog Entries: 1 Thanks: 297 Thanked 960 Times in 701 Posts	Holy smokes...Lynch & the Democrats are strongly thinking about abandoning the LLC-tax.....read all about it in today's LaDaSun! __________________ ... down and out, liv'n that Walmart side of the lake!