Planet Fitness' request to change a provision in New Hampshire's tax law is headed to Governor Maggie Hassan's desk.
The New Hampshire House approved a compromise plan for House Bill 550 on Wednesday. The plan amends the state's business profits tax to exempt stock sales or other events from increasing a company's value, and the company is barred from depreciating or amortizing the increase in basis in the future.
Planet Fitness has threatened to move its Newington, New Hampshire-based headquarters out of state if the step-up provision in the business profits tax is not changed. Under current law, a company is required to pay New Hampshire's 8.5 percent business profits tax on its increase in value.
Planet Fitness registered for an initial public offering (IPO) on the New York Stock Exchange with the Securities and Exchange Commission (SEC) on Monday. The IPO date, amount of shares to be offered and the price per share have yet to be determined.
CEO Chris Rondeau and former New Hampshire Governor Craig Benson, a former Planet Fitness board member and current franchisee, supported an amendment to change the law in front of the Senate Finance Committee on May 28.
The Senate approved the bill on a party-line 14-10 vote on June 4, a negotiating committee approved the bill last week and the House passed the bill 202-145. If Hassan signs the bill, the law would go into effect on July 1. If it is vetoed, lawmakers would have until the end of the session on June 30 to make a change.
“I’ve been very concerned about the process behind that bill. It came in literally at the 11th hour in the legislative process,” Hassan told the Union Leader last week. “What I am not hearing from supporters of that bill is how they plan to pay for the lost revenues that bill entails.”
Democratic Senator Dan Feltes said the change in House Bill 550 would cost New Hampshire $8 million in revenue.
“What began as a special, 11th hour tax loophole for one company and one former governor with a profit-sharing interest in that company, has evolved into a major tax loophole that could allow all stock transactions by businesses and corporations in New Hampshire to be entirely tax-free,” Feltes told the Union Leader.
Republican Senator Andy Sanborn supports the bill.
“You cannot be pro-job if you are not pro-business," Sanborn told the Union Leader. "We need to be competitive, but how can we be competitive if we’re the only state in the country with this punitive tax?”
Planet Fitness, which ranked No. 7 on Club Industry's Top 100 Clubs list in 2014, reported $279.8 million in total revenue for 2014. It operated 976 clubs as of March 31 and has 154 employees at its Newington headquarters, according to its IPO registration statement.