Dan St. Pierre of Nashua says that large corporations are structured differently than small businesses. He argues that the LLC tax targets small businesses, without the ability to defend themselves. He says if the tax is implemented, business owners will relocate outside of New Hampshire. He says small businesses earn what they generate.

Fred Brownson from Wentworth says he wants to speak for the 40,000 entities and hundreds of thousands of owners, investors, and employees who will be hit by the new tax, most of whom don’t know what it going to happen to them. He says his experience helping limited partnerships and LLC’s leads him to ask four questions.

1) Does the DRA address taxes paid by the LLC, and again taxed when dividends are distributed? Do LLC’s get a deduction from federal taxes?
2) How will the DRA determine “reasonable compensation”, anything beyond which will be taxed? He says business owners have never had to define how much of their pay or profits is “reasonable”.
3) How will the new LLC tax hit out of state LLC’s, which aren’t taxed the same way in the 49 other states?
4) What will be the compliance cost to LLC’s affected by the new tax?

Brownson says the LLC tax is a “silly income tax” on thousands of New Hampshire business owners.

Former State Representative Carolyn Virtue says as an LLC owner she is concerned that the DRA rules don’t allow business owners to account for the time, energy, and effort they’ve put into their business through the years, and instead taxes any profits as a windfall.

She says she and her sister worked more than 50 hours a week, in addition to weekend jobs elsewhere, and each earning just $10,000 per year from their LLC. She says that the business then has to pay extra taxes on that $20,000. She says if she had the resources or assets to form a C-Corporation, she would, but that the DRA shouldn’t treat LLC’s as if they were larger corporations.

Check for updates at the New Hampshire Watchdog blog page.