The Department of Revenue Administration has opened its public hearing into the proposed rule changes on tax treatment of limited liability corporations, or LLC’s. An overflow crowd has packed the auditorium at the State Office Park in Concord. Such rules hearings rarely draw such large public interest, but the LLC tax was passed without the public hearings that usually happen before laws are passed.

Restaurant owner Andy Sanborn just received a prolonged standing ovation from the crowd for his remarks. Sanborn says the DRA has failed to give consideration to the 55,000 New Hampshire residents who are currently unemployed, and the thousands of New Hampshire small business owners who worked for years without taking any money out of their businesses, only to be taxed now for their success.

“The small business community defines us. It’s how we live. It’s who we are,” Sanborn added.

Representative David Hess argues that any change in the tax treatment of LLC’s can not take effect until after July 1, 2009, when the law was passed. The DRA is seeking to tax dividends from LLC’s going back to the beginning of the year, and possibly for past year. Hess argues that would be a retroactive tax increase in violation of good practice and the law.

Check for updates at the New Hampshire Watchdog blog page.