New Hampshire does not levy a general sales tax or personal income tax, but it does impose business taxes on organizations operating in the state. The two major taxes are the Business Enterprise Tax (BET) and the Business Profits Tax (BPT). The BET applies to all entities, including corporations, partnerships, proprietorships, fiduciaries, trusts, non-profits, and LLCs, based on the enterprise value tax base. The BPT applies to business organizations with gross business income exceeding USD 92,000, with rates set at 7.6% for 2022 and 7.5% for 2023 onwards.
Both taxes require timely filing, estimated payments, and compliance with due dates. Penalties and interest are imposed for non-compliance, while extensions are available under specific conditions.
This blog explains the BET and BPT in detail, including rates, filing deadlines, extensions, estimated payments, penalties, and interest obligations.
Business Enterprise Tax
The Business Enterprise Tax (BET) is imposed on the enterprise value tax base, which includes:
- Compensation paid or accrued to employees.
- Interest paid or accrued.
- Dividends paid to shareholders.
Entities Subject to BET:
- Corporations.
- Partnerships.
- Limited Liability Companies (LLCs).
- Proprietorships.
- Fiduciaries and Trusts.
- Non-Profits.
- Combined Groups.
BET Rate:
- Currently set at 0.55%.
Filing Thresholds:
- For tax periods beginning on or after December 31, 2022, entities with:
- Gross receipts over USD 250,000, or
- Enterprise value tax base greater than USD 250,000,
are required to file BET returns.
Due Dates (after close of taxable period):
- Partnerships: 15th day of the 3rd month.
- Corporations, proprietorships, fiduciaries, and combined returns: 15th day of the 4th month.
- Non-profits: 15th day of the 5th month.
Form Used:
- Form BET must be filed by all entities subject to the tax.
Extensions:
- Automatic 7-month extension: Granted if 100% of the BET owed is paid by the original due date. No application is required.
- Payment and Extension Request: If less than 100% of the tax is paid, entities may file Form BT-EXT with the required payment by the original due date to request a 7-month extension.
Estimated Tax Payments:
- Required quarterly for entities subject to BET, unless the annual estimated tax liability is less than USD 260.
- If at the end of any quarter the estimated tax exceeds USD 260, entities must file estimated payments.
- Quarterly installments equal 25% of the estimated annual liability.
Penalties and Interest:
- Failure to pay: A penalty of 10% of unpaid or underpaid tax applies. If non-payment is due to fraud, the penalty increases to 50% of the amount.
- Failure to file: A penalty of 5% of the tax due or USD 10 (whichever is greater) is charged for each month the return is late or incomplete. The maximum is 25% of the tax due or USD 50 (whichever is greater).
- Interest: Charged on unpaid balances from the original due date until payment is made, using the formula:
Tax Due × Number of Days × Daily Rate Decimal Equivalent.
Business Profit Tax
The Business Profit Tax (BPT) applies to all organizations carrying on business activity in New Hampshire, including:
- Corporations.
- Fiduciaries.
- Partnerships.
- Proprietorships.
- Limited Liability Companies.
- Combined Groups.
- Homeowners’ Associations.
Filing Threshold:
- Organizations must file if gross business income exceeds USD 92,000.
BPT Rates:
- 7.6% for taxable periods ending on or after December 31, 2022.
- 7.5% for taxable periods ending on or after December 31, 2023.
Due Dates:
- Partnerships: 15th day of the 3rd month after close of taxable period.
- Corporations, proprietorships, fiduciaries, combined returns: 15th day of the 4th month.
- Non-profits: 15th day of the 5th month.
Estimated Tax Payments:
- Required quarterly unless annual estimated liability is less than USD 200.
- If liability exceeds USD 200 at the end of any quarter, estimated payments must be made.
- Quarterly installments equal 25% of estimated annual liability.
Extensions, Penalties, and Interest:
- Rules for extensions, penalties, and interest are the same as those under the Business Enterprise Tax.
Filing Requirement:
- All entities must file the Business Profits Tax Return – Form BPT.
Conclusion
New Hampshire’s tax system for businesses centers on the Business Enterprise Tax and Business Profit Tax.
- The BET applies broadly to all types of entities based on compensation, interest, and dividends, with a rate of 0.55% and filing thresholds of USD 250,000.
- The BPT applies to organizations with income over USD 92,000, with rates of 7.6% for 2022 and 7.5% from 2023 onwards.
- Both taxes require quarterly estimated payments if liability exceeds USD 260 for BET or USD 200 for BPT.
- Extensions are available, but timely payment is necessary to avoid penalties and interest.
- Penalties for non-compliance range from 5% to 50%, depending on the nature of the violation, with interest accruing until full payment.
By staying mindful of due dates, thresholds, and estimated payment requirements, businesses in New Hampshire can meet their tax obligations effectively while avoiding unnecessary penalties.
