The proposed bill, HB 417, seeks to significantly alter the Communications Services Tax (CST) by first reducing the tax rate from 7 percent to 4 percent effective July 1, 2025, as indicated by the insertions in RSA 82-A:3 and RSA 82-A:4. Following this reduction, the bill aims to completely repeal the CST starting July 1, 2026, as reflected in the repeal of RSA 82-A. This repeal is accompanied by various amendments throughout the law that eliminate references to the CST, indicating a comprehensive phase-out of this tax structure. The Department of Revenue Administration has noted that the CST generated approximately $30.6 million in revenue for fiscal year 2024, suggesting that the repeal could lead to a significant decrease in General Fund revenue, estimated at $7.7 million in FY 2026 and $30.6 million in FY 2027 and beyond.

In addition to the tax rate reduction and repeal, the bill also modifies related statutes by removing references to the CST from the Department of Revenue Administration's regulations and reporting requirements, as seen in amendments to RSA 21-J:33-a and RSA 71-C:4. The bill outlines that CST returns must be filed monthly, with taxpayers having a monthly liability exceeding $10,000 required to make estimated payments. While the Department of Revenue Administration will need to update tax forms and electronic systems to accommodate these changes, it is expected that these updates can be managed within the existing operating budget without incurring additional administrative costs. Overall, HB 417 represents a significant shift in tax policy regarding communications services, with notable implications for state revenue and administrative processes.

Statutes affected:
Introduced: 82-A:3, 82-A:4, 21-J:33-a, 71-C:4, 72:12, 106-H:9