Bar News - February 19, 2014
Tax Law: New Commissioner Sees Audits, Recovery in NH’s Future
The New Hampshire Department of Revenue Administration, which is responsible for collecting state taxes and supporting municipal governments in financial, budget and appraisal matters, has a new commissioner. NH Bar News recently interviewed DRA Commissioner John Beardmore to find out about his prioritiese and his approach to his new position. Beardmore, who was nominated by Gov. Maggie Hassan and confirmed as DRA commissioner by the governor and NH Executive Council last spring, has held multiple state government jobs, including director of administration at the Department of Safety and budget director under Gov. John Lynch.
How do you approach your position? What is your philosophy?
Beardmore, commissioner of the NH Department of Revenue Administration.
My approach is primarily focused around strong communication and a fair and consistent application of the state’s tax laws. Communication with taxpayers, taxpayer representatives in the Bar and in the accounting profession, the governor and legislators, and within the department is extremely important and will be an ongoing commitment for me and the department. Also, fairness has to be central to everything we do, and that fairness needs to be applied consistently to all taxpayers.
What are your enforcement priorities?
Enforcement through auditing should be a tool to ensure fairness among all taxpayers through compliance with our self-reporting tax laws. For the most part, the DRA does not send taxpayers a bill; we expect the taxpayers to let us know what they owe. The audit function lets the public know there is a chance someone will double-check, and it allows the state to identify non-filers and entities that may not be fully in compliance to bring fairness to the vast majority of taxpayers who always comply. When we do have an audit issue with an entity that has a history of compliance we should be able to resolve those issues without heavy-handedness.
What’s new and different in 2014?
I’m new – I’m still in my first year. We have a new assistant commissioner, attorney Kate Skouteris. Staffing overall is different. In a short period of time, the DRA went from an agency of more than 200 employees to an agency of 112 employees, and despite the amazing resilience of the staff, internal operations suffered. The most recent operating budget allows us to start rebuilding, to bring staffing to a more appropriate number between 140 and 150, and that is a slow process. It is important that we bring the right people on board due to the important and sensitive nature of the work we do.
Operationally, what is new is that we’re processing the tax documents we receive faster than we have in the past couple of years, in part due to increased staffing, and in part due to working through some of the growing pains with new technology and procedures. That’s good news for taxpayers and their representatives.
Do you have any advice about how lawyers representing taxpayers can do a better job making their cases?
Lawyers should be aware of the Rev 200 rules when practicing before the DRA’s Hearings Bureau. The DRA’s administrative hearings process is different than the court process. For example, any evidence and argument that the lawyer would like to present on behalf of his or her client, including written briefs, exhibits, affidavits or other documentation, must be submitted no less than 30 days prior to the hearing. It is important to properly prepare for hearings and to be knowledgeable of the Rev 200 rule provisions to ensure that lawyers present the best case possible for their taxpayer clients.
What are some of the most misunderstood aspects of the DRA or its programs/taxes?
A commonly misunderstood aspect of the DRA is its statutory responsibility to ensure the confidentiality of its records and files and to protect the disclosure of the taxpayer’s information, which is found in RSA 21-J:14. To carry out its statutory duties, the DRA requires a Power of Attorney form to be executed by a taxpayer to allow anyone other than the taxpayer to review any of the taxpayer’s confidential information. This requirement applies to lawyers, as well as any other taxpayer representative, and is commonly misunderstood. If a lawyer seeks access to their client’s confidential taxpayer information, even just to have a verbal discussion about the information with the DRA, the lawyer must secure an original signed Power of Attorney from their client and provide it to the DRA.
A commonly misunderstood tax at the DRA is the Meals and Rooms Tax (M&R). The M&R tax is collected by operators, who are licensed by the DRA, pursuant to certain statutory provisions in RSA 78-A:4. Therefore, the M&R tax is a trustee tax. The licensed operator is responsible for collecting the tax and remitting it to the DRA. The M&R tax is not a tax on the operator, but rather is a tax on the occupant, purchaser or renter.
To what degree is the state tax picture we have now a reflection of the economy? Do you see indications about New Hampshire’s economic future based on collection rates?
The two tax types I look to first to get a read on the economy are the real estate transfer tax and the M&R tax. When people spend money at restaurants and on lodging, when people buy a home or businesses relocate, they are more likely to have money to spend, more likely to be confident that they will have a job for a while, more confident that their business is improving. So far this year and last, those indicators are moving in the right direction. I think they are a stronger indicator of where we are and where we are going economically in the near term than in the long term.
How do you think your past positions helped prepare you for your work at the DRA?
I served as a non-partisan budget analyst for the Legislature, budget director for Governor Lynch, and director of administration at the Department of Safety. I have had a unique perspective from which to learn how our government makes policy, how the budget is built and executed, and how a state agency operates, which are all helpful to me in my current position.
Also, I have been very fortunate to work with many strong mentors in state government who have taught me a lot about hard work, honesty, respect, and communication. Those lessons have been even more helpful in preparing me for the leadership position I now hold.