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Senate bill proposes tax credit for documented tariff costs; DRA flags administration questions
Summary
Senate Bill 636 would create a tax credit to offset documented tariff-related cost increases for qualifying New Hampshire small businesses. Sponsor narrowed the proposal in an amendment to one credit with eligibility limits; the Department of Revenue Administration asked for clearer audit and reporting authority and the business community described uneven supplier transparency.
Senate Bill 636, introduced by Senator Donovan Fenton, would create a tax credit to offset tariff-related cost increases for qualifying New Hampshire operating businesses. The sponsor described an amendment that narrows eligibility to New Hampshire businesses, prevents "entity-splitting" abuse, creates a single primary credit that can flow between business enterprise tax and business profits tax, and gives the Department of Revenue Administration (DRA) authority to manage documentation and audits.
Fenton told the committee the credit would use invoices, tariff classification codes or supplier certifications as evidence that increased costs were ‘‘directly attributable to federal tariffs imposed under the Harmonized Tariff Schedule.’’ He said the amendment also limits credits to one $7,500 cap per operating business and treats controlled groups as single taxpayers for cap purposes.
DRA’s senior financial analyst, Lauren O. Sullivan, said the amendment addressed many prior concerns but raised administrative questions: how DRA will verify supplier certifications and invoices, how proration and timing across taxable years will be handled, and whether an additional tax-expenditure reporting requirement should be added into existing reporting statutes. She said DRA takes no position on policy but asked for clarifying technical language to reduce administrative complexity.
Small retailers described real impacts on margins and inventory decisions. Jody, who owns a 47-year-old book-and-toy store, said tariff-driven cost increases and supplier behavior reduced profit margins and forced lower inventory purchases; she estimated a 2.3% cost increase that translated to roughly $8,600 in additional product costs for her business this year.
Committee questions focused on proof standards for tariff-related cost increases, how to handle businesses that are not direct importers, and whether supplier documentation will be sufficient and administrable. The sponsor and DRA agreed to work on technical administration details before the committee acts.
