Bill Text: NH SB134 | 2019 | Regular Session | Amended


Bill Title: Relative to the administration of the meals and rooms tax.

Spectrum: Bipartisan Bill

Status: (Enrolled) 2019-07-12 - Enrolled 06/27/2019 [SB134 Detail]

Download: New_Hampshire-2019-SB134-Amended.html

SB 134-FN - AS AMENDED BY THE HOUSE

 

8May2019... 1709h

2019 SESSION

19-0525

10/04

 

SENATE BILL 134-FN

 

AN ACT relative to the administration of the meals and rooms tax.

 

SPONSORS: Sen. Giuda, Dist 2; Sen. Reagan, Dist 17; Sen. Hennessey, Dist 5; Sen. Carson, Dist 14; Sen. Watters, Dist 4; Sen. Dietsch, Dist 9; Sen. Rosenwald, Dist 13; Sen. Ward, Dist 8; Rep. Abrami, Rock. 19; Rep. Almy, Graf. 13; Rep. Major, Rock. 14; Rep. Ulery, Hills. 37

 

COMMITTEE: Ways and Means

 

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ANALYSIS

 

This bill modifies the definitions applicable to the meals and rooms tax and clarifies provisions of the meals and rooms tax law administered by the department of revenue administration.

 

This bill is a request of the department of revenue administration.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

8May2019... 1709h 19-0525

10/04

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT relative to the administration of the meals and rooms tax.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Title.  Amend RSA 78-A:1 to read as follows:

78-A:1  Title.  This [act] chapter may be known and cited as the "Meals and Rooms Tax Law."

2  Meals and Rooms Tax; Definitions.  RSA 78-A:3 is repealed and reenacted to read as follows:

78-A:3  Definitions.  In this chapter:  

I.  "Commissioner" means the commissioner of the department of revenue administration.

II.  "Department" means the department of revenue administration.

III.  "Electronic data submission" means the use of either the telephone or computer to transmit information.

IV.  “Food products” means food or beverages sold for off-premises consumption which are reasonably and commonly considered groceries, including fruits, vegetables, candy, flour, nuts, dairy products, meat, poultry, fish, and eggs.  The term shall not include meals as defined in paragraph VIII, whether or not consisting of any such items.

V.  "Gratuity" means a gift of money in return for a service.

VI.  "Gross rental receipts" means value received or promised as consideration to the owner of a motor vehicle for rental of the vehicle, but shall not include:

(a)  Separately stated charges for insurance;

(b)  Charges for damages to the motor vehicle occurring during the rental agreement period;

(c)  Separately stated charges for motor fuel sold by the owner of the motor vehicle.

VII.  "Hotel" means an establishment which holds itself out to the public by offering sleeping accommodations for rent, whether or not the major portion of its operating receipts is derived from sleeping accommodations.  The term includes, but is not limited to, inns, motels, tourist homes and cabins, ski dormitories, ski lodges, lodging homes, rooming houses, furnished room houses, boarding houses, private clubs, hostels, cottages, camps, chalets, barracks, dormitories, and apartments.

VIII.  "Meal'' means any food or beverage, or both, including food products, prepared for human consumption and provided by a restaurant in such form as to be available for immediate consumption without further significant preparation, whether the food or beverage is provided for consumption on or off the restaurant premises.  The term "meal'' includes food or beverages sold on a "take out'' or "to go'' basis, whether or not they are packaged or wrapped and whether or not they are taken from the premises of the restaurant.  The term "meal'' excludes any food or beverage wholly packaged off the premises except:  (1) sandwiches of all kinds; (2) beverages in unsealed containers; and (3) catered meals or meals which are delivered to the location where the meal is consumed.  The term shall not include food products provided by a store or bakery products when sold in units of 6 or more.  Beverage includes an alcoholic beverage provided with or without food.

IX.  "Motor vehicle" means a self-propelled vehicle designed to transport persons or property on a public highway that is required by law to be registered for operation on public highways.

X.  “Nonprofit organization” means an organization that is exempt from federal income taxation under section 501(c)(3), (4), (5), (6), (7), (8), (10), or (19) of the Internal Revenue Code, and any municipality of this state.  The term includes “nonprofit corporation or association.”

XI.  "Occupancy" means the use or possession, or the right to the use or possession, of any room in a hotel for any purpose, or the right to the use or possession of the furnishings or to the services and accommodations accompanying the use and possession of a room.

XII.  "Occupant" means any person who, for rent paid, uses, possesses, or has a right to use or possess any room in a hotel under any lease, concession, permit, right of access, license, or agreement.  The term does not include a permanent resident.

XIII.  "Operator" means any person operating a hotel, charging for a taxable meal, or receiving gross rental receipts, whether as owner or proprietor or lessee, or otherwise.

XIV.  "Owner of a motor vehicle" means a person named in the certificate of title as the owner of the vehicle or a person who has the exclusive use of a motor vehicle by reason of rental and holds the vehicle for re-rental.

XV.  "Permanent resident" means any occupant who has occupied any room in a hotel for at least 185 consecutive days.

XVI.  "Person'' means any individual, combination of individuals, member, firm, partnership, society, association, joint stock company, limited liability company, corporation, or any of the foregoing acting in a fiduciary or representative capacity, whether appointed by court or otherwise.

XVII.  "Rent" means:

(a)  The consideration received for occupancy valued in money, whether received in money or otherwise, including all receipts, cash, credits, and property, or services of any kind or nature, and also any amount for which the occupant is liable for the occupancy without any deduction of any kind; and

(b)  Any monies received in payment for time-share rights at the time of purchase.  Provided, however, that such money received shall not be considered rent and thus not taxable if a deeded interest is granted to the purchaser for his time-share rights.

XVIII.  "Rental agreement" means an agreement by the owner of a motor vehicle to provide, for not longer than 180 days, the exclusive use of that motor vehicle to another for consideration.

XIX.  "Renter" means any person who, for consideration paid to another, is provided a vehicle under a rental agreement.

XX.  "Restaurant" means an eating or drinking establishment that is primarily engaged in the business of providing meals for which a charge is made.  The term includes, but is not limited to, a restaurant portion as defined in paragraph XXI, cafe, lunch counter, private or social clubs, cocktail lounges, hotel dining rooms, catering business, tavern, diner, snack bar, dining room, food vending machine, booth at a fair or festival, coffee shop, food truck, ice cream stand, salad bar, street cart, and any other eating place or establishment primarily engaged in the business of providing meals whether stationary or mobile, temporary or permanent.  The term includes fairs and festivals where the price of admission entitles the purchaser to food or beverages, or both, including alcoholic beverages.

XXI.  “Restaurant portion” means an area, section, or counter, within a store that provides meals.

XXII.  "School" means an educational institution which has a regular faculty, curriculum, and organized body of pupils or students in attendance.  No part of the earnings of the institution may inure to the benefit of any individual.

XXIII.  "Short-term rental" means the rental of one or more rooms in a residential unit for occupancy for tourist or transient use for less than 185 consecutive days.

XXIV.  “Store” means an establishment that is not primarily engaged in the business of providing meals.  The term includes, but is not limited to, convenience stores, gas stations, and retail food stores.  

XXV.  "Taxable meal" means any meal for which a charge is made that is purchased from a person in the business of operating a restaurant, and which is subject to a tax under RSA 78-A:6.

3  Meals and Rentals Licenses.  Amend RSA 78-A:4, I to read as follows:

I.  Each operator shall register with the department the name and address of each place of business within the state where it operates a hotel, sells taxable meals, or rents motor vehicles.  The operator shall complete a registration, upon receipt of which the department shall issue a meals and rentals license for each place in such form as it determines, attesting that the registration has been made, provided that a license shall not be issued or renewed if the operator owes unpaid taxes, interest, or penalties from any tax administered by the department.  A license may be denied if the commissioner has reason to believe that the registration is filed by a person as a subterfuge for the real person in interest whose license has been previously been revoked, suspended, or not renewed for cause.  Licenses shall expire on June 30 in each odd-numbered year, unless the business ceases operation, a change in ownership occurs, or the license is revoked or suspended by the department prior to expiration of the license.

I-a.  The license shall be conspicuously posted in a public area upon the premises to which it relates.  Violation of the posting requirement in this paragraph may result in a warning from the department that the operator's license may be revoked, suspended, or denied.  The warning shall include notification to the operator of his or her obligation to obtain a meals and rooms license and pay the meals and rooms tax under this chapter.  Subsequent violations of the provisions of this section may constitute sufficient cause for revocation, suspension, or denial of license.

4  Reference Amended.  Amend RSA 78-A:4-a to read as follows:

78-A:4-a  Advertisements of Short-Term Rentals.  Any advertisement for a short-term rental by print, display, publication, distribution, or online listing offering a short-term rental shall include the meals and rooms license number of the operator, as defined in RSA 78-A:3[, IV].  Violation of the provisions of this section may result in a warning from the department of revenue administration that the operator's license may be revoked, suspended, or denied.  The warning shall include notification to the operator of his or her obligation to obtain a meals and rooms license and pay the meals and rooms tax under this chapter.  Subsequent violations of the provisions of this section may constitute sufficient cause for revocation, suspension, or denial of license.  Nothing in this section shall be construed to change or alter the nature of the use of a property for the purpose of determining compliance with a local zoning ordinance.

5  Appeal of Commissioner's Ruling.  Amend RSA 78-A:5, II to read as follows:

II.  Any operator aggrieved by a suspension, revocation or refusal of the commissioner may appeal from the ruling either by application to the board of tax and land appeals or by petition to the superior court in the county in which he or she resides or conducts his or her operation within [10] 15 days after receiving written notice of the commissioner's ruling in the manner prescribed in RSA 78-A:15.  The board of tax and land appeals or the court, as the case may be, shall hear the appeal forthwith.  If the appealing operator files a bond running to the state in an amount fixed by the board of tax and land appeals or the court, with a surety company authorized to do business in the state as surety, conditioned on the payment of taxes due and to become due during the pendency of the appeal, the ruling appealed from is inoperative if it is a ruling of suspension or revocation.  If the ruling appealed from is a refusal to renew an existing license, the existing license shall remain valid during the pendency of the appeal if the appeal bond is given.

6  Gratuity Charges; Auxiliary Charges.  Amend RSA 78-A:6-a to read as follows:

78-A:6-a  Exception to Tax; Gratuity Charges.

I.  [Advance deposits which are forfeited by a prospective occupant shall not be taxed under this chapter.  However, if such advance deposit is a payment in full for a room rent, including tax, and is retained by the operator, the operator shall remit that portion of the payment which represents the meals and rooms tax to the state.

II.]  Gratuity charges added to the charge for a taxable meal or taxable room shall not be taxed under this chapter if:

(a)  The gratuity is not used by the operator in lieu of the tipped employee minimum wage requirements of RSA 279:21, or as a pool from which bonuses are paid to managerial personnel;

(b)  The gratuity is paid to the service personnel providing the service for which the gratuity is charged;

(c)  The amount of the gratuity does not exceed 18 percent of the charge for the taxable meal and/or rent imposed on each occupancy;

(d)  The gratuity exceeds the percentage specified in subparagraph (c) and the amount is not separately stated, the exception from tax shall be limited to the percentage enumerated and the additional gratuity shall be subject to tax; and

(e)  The payroll or other business records of the operator substantiate the distribution of the gratuity to the service employees as a payment that does not supplement wages or is not in lieu of wages.

[III.] II.  Gratuity charges arranged by written contract between operators and motorcoach service providers or other businesses making group purchases on behalf of purchasers or occupants shall not be taxed under this chapter if the requirements of RSA 78-A:6-a, [II] I are met.

[IV.] III.  Gratuity charges included in package arrangements offered by hotels to purchasers or occupants, which are not arranged by written contract between operators and motorcoach service providers or other businesses making group purchases on behalf of purchasers or occupants, shall not be taxed under this chapter if the requirements of RSA 78-A:6-a, [II] I are met.

[V.] IV.  The amount of any gratuity charge excepted from tax by RSA 78-A:6-a, [II, III, or IV] I, II, or III shall be limited to that amount actually received by the service personnel providing the service for which such gratuity is charged.

78-A:6-b  Exception to Tax; Auxiliary Charges.

[VI.] I.  Any auxiliary charges, not including gratuity charges, such as, but not limited to, service charges, house charges, management fees, or housekeeping charges, added to the charge for a taxable meal or taxable room, shall not be taxed under this chapter if:

(a)  The taxable meal or taxable room rental may be purchased without such auxiliary charges at the option of the purchaser or occupant; and

(b)  The amount of the auxiliary charge is separately stated on the contract or receipt.

[VII.] II.  The portion of a single aggregate charge allocated to items which are not customarily associated with the purchase of a taxable room or taxable meal, including but not limited to ski lift tickets, boat ride fees, amusement park admission tickets, theater tickets, or other similarly packaged items shall not be taxable if:

(a)  The packaged item or service is not part of the operator's standard room rental or meal and the allocated cost of the package item or service is equal to the amount paid to an outside vendor or the allocated cost of the package item or service is the amount over and above the amount which a consumer would be ordinarily charged for the room rental and/or meal had the consumer purchased the room or meal without the packaged item or service;

(b)  The allocated cost of the package for gratuities meets the requirements of RSA 78-A:6-a, [II] I; and

(c)  The operator's business records provide the documentation necessary for the department to determine the allocation of costs and the proper application of the tax.

III.  Admission charges shall not be taxed under this chapter if:

(a)  The charge is paid for admission only, and not for any food or beverages, including alcoholic beverages; and

(b)  The amount of the admission charge is separately stated on the contract or receipt.

7  New Sections; Exceptions to Tax; Meals; Occupancy.  Amend RSA 78-A by inserting after section 6-b the following new sections:

78-A:6-c  Exception to Tax; Meals.  The following are not taxable meals:

I.  Meals provided on the premises of a nonprofit corporation or association organized and operated exclusively for religious or charitable purposes, in furtherance of any of the purposes for which it was organized; with the net proceeds of the meals to be used exclusively for the purposes of the corporation or association;

II.  Meals provided by an organization operated for educational purposes, which organization is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code, either directly through facilities owned and operated by such organization or indirectly through a catering or food service enterprise under contract with such organization, but only if such meals are provided:

(a)  To students regularly attending the organization;

(b)  To employees, faculty members or administrative officers of the organization;

(c)  To volunteers providing services in connection with the organization; or

(d)  To persons other than individuals described in subparagraph (a), (b), or (c), but only if the meals are provided pursuant to an activity which is related to educational purposes and the sponsor of such activity is an organization exempt from federal income taxation under section 501(c) of the Internal Revenue Code or the federal or state government of an instrumentality thereof.  For purposes of this subparagraph, "educational purposes'' means:

(1)  The instruction or training of an individual for the purpose of improving or developing the individual's capabilities;

(2)  The instruction of the public on subjects useful to the individual and beneficial to the community; or

(3)  With respect to a specific educational organization, the conduct of alumni, student or athletic functions or events.

(e)  The exemptions provided by subparagraphs (b) and (d) shall not apply if the meals are provided at a location where meals are offered to the general public on a regular and continuous basis without regard to an activity which is related to educational purposes.

III.  Meals provided on the premises of any institution of the state, political subdivision of the state, or of the United States, to inmates and employees of the institutions;

IV.  Meals provided only to patients and employees of the hospital on the premises of any hospital licensed under RSA 151, or of a convalescent home, nursing home, or home for the aged;

V.  Meals provided by any person while transporting passengers for hire by train, bus, or airplane if provided on any train, bus, or airplane;

VI.  Meals provided by any person while operating a seasonal camp for children under the age of 18 years, to the campers under the age of 18, and to employees, but to no others;

VII.  Meals prepared and sold by a nonprofit organization other than an educational institution, in furtherance of any of the purposes for which it was organized; with the net proceeds of the meals to be used exclusively for the purposes of the organization.  However, if the nonprofit organization is required to have a license issued by the liquor commission, other than licenses issued pursuant to RSA 178:22, V(l) for 3 or fewer days per year, the meals are taxable meals;

VIII.  Meals provided to any employee of an operator as pay for his employment.

IX.  Dispensing of a beverage by a single serving beverage machine where not used in conjunction with other food vending machines such as, but not limited to, commissaries.  A single serving beverage machine used to dispense a beverage consumed in conjunction with a meal under the definition of restaurant shall, as to the beverage being dispensed, constitute a taxable meal;

X.  In accordance with federal law, meals purchased with nutrition assistance benefits issued pursuant to a program that prohibits the assessment of a state tax on items purchased; provided, however, that when a meal is purchased in part with nutrition assistance benefits, then only that part of the meal purchased with  nutrition assistance benefits is not a taxable meal.

78-A:6-d  Exception to Tax; Occupancy.  The following are not taxable occupancies:

I.  Occupancy at a hospital licensed under RSA 151, or a convalescent home, nursing home, or home for the aged.

II.  Occupancy at any establishment operated by any state or United States agency or institution, except the New Hampshire department of resources and economic development.

III.  Occupancy at an establishment owned by a nonprofit corporation or association operated exclusively for religious or charitable purposes, and which does not offer sleeping accommodations to the general public.

IV.  Occupancy by a permanent resident, or by an employee of an operator when the occupancy is granted to the employee as pay for his employment.

V.  Occupancy furnished in a seasonal camp for children under the age of 18 years.

VI.  Occupancy at a facility or establishment owned or leased pursuant to a long-term agreement by an organization operated for educational purposes, which organization is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code, but only if occupancy at such facility or establishment is provided:

(a)  To students regularly attending the organization;

(b)  To employees, faculty members or administrative officials of the organization, but only if occupancy at such facility or establishment is provided in connection with responsibilities performed for the organization;

(c)  To volunteers providing services in connection with the organization; or

(d)  To any person, but only if occupancy at such facility or establishment is provided pursuant to an activity which is related to educational purposes and the sponsor of such activity is an organization exempt from federal income taxation under section 501(c) of the Internal Revenue Code or the federal or state government or an instrumentality thereof.  The exemption provided by this subparagraph shall not apply if occupancy at the facility or establishment is offered to the general public on a regular and continuous basis without regard to an activity which is related to educational purposes.  For purposes of this subparagraph  "educational purposes'' means:

(1)  The instruction or training of an individual for the purpose of improving or developing the individual's capabilities;

(2)  The instruction of the public on subjects useful to the individual and beneficial to the community; or

(3)  With respect to a specific educational organization, the conduct of alumni, student or athletic functions or events.

VII.  Occupancy of living quarters, sleeping, or household accommodations to any student necessitated by attendance at a school as defined in RSA 78-A:3.

VIII.  Occupancy of living quarters, sleeping or household accommodations necessitated by the partial or complete destruction of a person's permanent residence.

IX.  Advance deposits which are forfeited by a prospective occupant shall not be taxed under this chapter.  However, if such advance deposit is a payment in full for a room rent, including tax, and is retained by the operator, the operator shall remit that portion of the payment which represents the meals and rooms tax to the state.

8  Collection of Tax.  Amend the introductory paragraph of RSA 78-A:7, I(a) to read as follows:

I.(a)  The operator shall either state the amount of the tax to each occupant, purchaser of a meal, or renter, or state that the tax is included in the price of the occupancy, meal, or gross rental receipts received.  If the amount of the [gratuity] tax is not separately stated, the purchaser's or occupant's contract or receipt shall include the following language:

9  Surety Bonds.  Amend RSA 78-A:8-b to read as follows:

78-A:8-b  Surety Bonds.

I.  When the commissioner or her or his designee, in her or his discretion, deems it necessary to protect the revenues to be obtained under this chapter, she or he may [, after notice and hearing,] require any operator required to collect the tax imposed by RSA 78-A:6 to file [with him] a bond issued by a surety company authorized by the New Hampshire insurance department to do business in this state, in an amount fixed by the commissioner or her or his designee, to secure the payment of any tax, interest or penalties due, or which may become due.  Surety bonds may be required in situations such as, but not limited to, failure to file returns, failure to make payments with returns at the time required by law, tender by an operator of checks returned for insufficient funds, failure to pay interest and penalties assessed, operators who are itinerant, transient, or temporary, and any other situation which, in the discretion of the commissioner or her or his designee, renders the collection of the tax in jeopardy.  If [, after a hearing,] the commissioner or the commissioner's designee [issues an order requiring] require an operator to file a surety bond with the department, the operator shall file such bond within 10 days [of the issuance of the order].

I-a.  [Repealed.]   

II.  The surety on such bond shall be discharged from the liability accruing on the bond after the expiration of 60 days from the date on which the surety shall have lodged with the department a written request to be so discharged; but such request shall not discharge such surety from any liability already accrued or which shall accrue before the expiration of said 60-day period.  The duration of surety bonds shall be for one year only, unless the requirement is canceled or revised by the commissioner or his designee before the expiration of the one-year period.

III.  In lieu of a bond, cash in an amount prescribed by the commissioner or her or his designee may be deposited with the state treasurer who may, at any time, upon instructions from the commissioner or her or his designee and without notice to the depositor, apply the cash deposited to any tax or interest or penalties due.  Cash deposited in lieu of a surety bond shall not earn interest.

IV.  Failure to comply with the provisions of this section [shall] may result in the revocation, suspension, or denial of the operator's license, as provided in RSA 78-A:5, I.

10  Reference Amended.  Amend RSA 287-E:1, VII to read as follows:

VII.  "Hotel" means "hotel" as defined in RSA 78-A:3[, III].

11  Repeals.  The following are repealed:

I.  RSA 78-A:7, IV,  relative the optional computing and recording of taxes.

II.  RSA 78-A:8-a, relative to applications for exemption from tax.

12  Effective Date.  This act shall take effect January 1, 2020.

 

LBAO

19-0525

1/8/19

 

SB 134-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to the administration of the meals and rooms tax.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

Indeterminable

Indeterminable

Indeterminable

Indeterminable

   Expenditures

$0

$0

$0

$0

Funding Source:

  [ X ] General            [    ] Education            [    ] Highway           [    ] Other

 

 

 

 

 

METHODOLOGY:

This bill simplifies, clarifies and modernizes the Meals and Rooms Tax law.  The Department of Revenue Administration states this bill does not affect taxability.  The Department states to the extent this bill provides clarity to operators with respect to certain aspects of the law or improves compliance and enforcement, there will be an indeterminable impact on General Fund revenues.

 

AGENCIES CONTACTED:

Department of Revenue Administration

 

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