Senate panel: N.H. shouldn’t tax businesses for employees’ tips
The Senate will decide next week whether to try to block the state from taxing restaurants and other businesses for the tips collected by their employees.
The Department of Revenue Administration says cash tips totaling more than $20 a month have been part of the statutory definition of employee compensation under the Business Enterprise Tax since it was created in 1993. But from 1994 to 2008, the related administrative rule indicated tips didn’t count as compensation, which is taxed by the BET.
Republican leaders and restaurant owners said last week the DRA’s push this year to uniformly enforce the tips rule amounts to a new tax.
The Senate Ways and Means Committee voted this morning, 5-0, to modify the BET law to state the tax on compensation applies to money “paid directly or accrued by the business enterprise,” and specifically exempt “any tips required to be reported by the employee to the employer” under federal tax law.
It was attached as an amendment to an unrelated bill establishing a committee to study Keno. Sen. Bob Odell, a Lempster Republican and the committee’s chairman, said the bill will head to the Senate floor next week.
“Creating new taxes on employers based on dollars their businesses do not count as income is the wrong approach to take towards the state’s hospitality industry, particularly as we near the summer tourism season,” Odell said in a news release. “Today’s vote establishes a clear statutory guideline against this sort of taxation and I look forward to a strong, bipartisan vote in support of the bill on the floor next week.”
The Keno bill passed the House in March on a voice vote. If the Senate approves the bill with the BET amendment, it’ll go back to the House.
(Ben Leubsdorf can be reached at 369-3307 or firstname.lastname@example.org or on Twitter @BenLeubsdorf.)