In November, we reported in this space that an initiative was being launched in New Hampshire to address a “fairness issue” for companies who choose to partner with Professional Employer Organizations (PEOs). In What Genesis and the PEO Industry is doing about New Hampshire’s Business Enterprise Tax (BET) Credit, we spoke about the efforts that Genesis HR Solutions and other member companies of the National Association of Professional Employer Organizations (NAPEO) were doing to promote tax fairness.
In New Hampshire, all businesses must pay a Business Enterprise Tax which is calculated as 0.75% of all employee payroll. In turn, businesses can apply the amount paid as a tax credit against business profits. Since PEOs in New Hampshire are considered the employer of record, present legislation allows the PEOs to take the credit against profits, but the companies they serve are unable to do so. Given that this potential tax credit was intended for the business who partners with the PEO, the industry has been working tireless over the past few months to right this wrong. And the efforts are beginning to pay off.
As of this writing, the New Hampshire Senate has already voted for the measure (Senate Bill 211), and the House Ways and Means Committee approved it as well. A full vote by the House is expected very soon and the bill could well be on its way to Governor Maggie Hassan to be signed.
Once approved, if your company is partnering with a PEO in New Hampshire, there are some things you should know:
- The bill allows for the option of either the PEO or the client business to pay the tax and take any potential credit.
- The party paying the tax (PEO or client business) is the entity that will receive the credit.
- While PEOs may not act as an agent for the client business, they can assist in the process by providing the necessary information once the law is enacted.
- For those client businesses who want this option, their invoice payments should reflect a credit of 0.75% of payroll since the PEO will no longer pay the tax and will have no need to charge their clients accordingly.
- Client businesses are encouraged to contact their PEO partner for more information. Genesis clients affected by this legislation will be informed shortly after passage and well prior to enactment.
To learn more about the effects of the Business Enterprise Tax, please reach out to Genesis HR Solutions at AskUs@genesishrsolutions.com or 800-367-8367.
Genesis HR Solutions is the premier PEO provider for Massachusetts based businesses.