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RSA 72-B
The State of New Hampshire has a real estate tax and earth (sand, gravel, loam, stone, etc) is considered to be part of the real estate, therefore taxable. Due to the difficulty of determining the market value of the earth products, and to deter the premature removal of earth products to avoid taxation, the legislature exempted earth from the real estate tax in 1998 and created the Excavation Tax under RSA 72-B. Earth, as defined in RSA 155-E:1, I, is only taxed at the time it is excavated at a rate of $.02 (two cents) per cubic yard. The Excavation Tax is paid to the municipality in which the excavation took place.
In order for the municipal assessing officials to be aware of the excavation operation they must be notified of the excavation by the owner by filing a notice of intent to excavate. The notice of intent to excavate is required by law and notifies both the assessing officials and the NH Department of Revenue (DRA). Every owner who intends to excavate earth must file a notice of intent to excavate and the $100.00 administration and enforcement fee. The only exceptions are as follows:
- 1. Excavated earth that is put back on the parcel, or other contiguous parcel in common ownership, in the construction, reclamation, reconstruction or alteration of such parcel of land within the same tax year. (RSA 72-B:1 I (a) )
- 2. Excavated earth that is used exclusively by the owner for agricultural or forest management on their land. (RSA 72-B:1 I (b) )
- 3. Excavations not exceeding 1000 cubic yards must file a notice of intent to excavate but are exempt from the $100.00 filing fee and the $.02 per cubic yard excavation tax. (RSA 72-B:1 I (c) )
- 4. Excavation that is exclusively incidental to construction projects that does not remove more than 1000 cubic yards from the parcel. (RSA 72-B:1 I (d) )
- 5. Excavation by government agencies, cities, towns, school districts, that remove earth for their own use on lands under their ownership and jurisdiction. (RSA 72-B:1 I (e) )
Before any excavation can take place, a separate notice of intent to excavate must be fully completed by the owner for each parcel of land on which excavation will take place, each intent must be accompanied with an administration and enforcement fee (if applicable) and, the intent to excavate must be signed by the assessing officials. The original volume estimate cannot be exceeded without filing a supplemental notice of intent to excavate for the additional volumes (RSA 72-B:8-a). The notice of intent to excavate form is available at the municipality or from DRA.
The assessing officials have 30 days in which to sign the notice intent to excavate form. The assessing officials may decline to sign the intent for the following reasons (RSA 72-B:8 & Excavation Tax Administrative Rule 504.01):
- 1. The form is incomplete and improperly filled out.
- 2. Not all owners have signed the intent.
- 3. The form was not accompanied with the required $100.00 administration and enforcement fee.
- 4. Noncompliance with local regulation of earth excavation pursuant to RSA 155-E.
- 5. Noncompliance with RSA 485-A:17 relative to terrain alteration permit from the NH Department of Environmental Services.
- 6. Noncompliance with current use (RSA 79-A).
- 7. A excavation tax bond is required but has not been posted (RSA 72-B:5).
If the assessing officials have not signed the intent to excavate, or notified the owners of their denial to sign within 30 days of receipt of the intent, the owners should contact the DRA. The DRA will inquire with the municipality as to the status of the paperwork.
Who Must File and When: (RSA 72-B:8)
The responsibility for the excavation tax depends upon the type of ownership and must be one of the following:
- Landowners with excavation rights on their own land.
- Persons with deeded excavation rights on land they previously owned or persons who have purchased excavation rights and have registered the claim with the registry of deeds.
- Persons who has purchased excavated earth or excavation rights on public lands, or removes earth from a public right of way.
- The intent to excavate must be filed at the beginning of the tax year (April 1) and prior to excavating.
Excavation Tax Bond: (RSA 72-B:5)
Owners that own land within the municipality where the excavation is to take place and are current on property taxes and timber taxes cannot be required to post an Excavation Tax bond. All other owners must post an Excavation Tax bond before the notice of intent to excavate is signed. Excavation Tax bonds are usually equal to the expected Excavation Tax.
Report of Excavated Material: (RSA 72-B:9)
The DRA sends a report of excavated material form to each owner that has filed a notice of intent to excavate. In addition, a certificate to excavate is sent along with the report and must be posted in a conspicuous place within the area of excavating.
The report of excavated material must be filed with the municipality and the DRA within 30 days following the completion of the excavation. If the excavation is still in progress at the end of the tax year (March 31), the report must be filed no later than the following April 15. The report of excavated material serves as the basis for determining the amount of Excavation Tax to be assessed.
Appeal Process: (RSA 72-B:13)
An owner may, within 90 days of the notice of the Excavation Tax, appeal to the assessing officials in writing for an abatement from the original assessment. If the assessing officials neglect or refuse to abate, the owner may appeal to the NH Board of Tax and land appeals or superior court. Please refer to the law.
Enforcement:
The DRA administers and enforces RSA 72-B and has the authority and right to stop any excavation in violation with RSA 72-B pursuant to RSA 72-B:17.
Penalties for Non-compliance
Violation:
- Excavation without signed intent (RSA 72-B:8)
- Failure to post certificate on site (RSA 72-B:8)
- Failure to file a supplemental intent (RSA 72-B:8-a)
- Failure to provide the required enforcement fee (RSA 72-B:8-a)
Misdemeanor:
- Failure to notify town and DRA of change of ownership within 15 days after an intent has been filed (RSA 72-B:5, III)
- Excavating with furnishing required Excavation Tax bond (RSA 72-B:5, IV)
- Failure to file report of excavated material (RSA 72-B:9)
- Falsifies a report of excavated material (RSA 72-B:9)
- Failure to comply with a cease and desist order from DRA (RSA 72-B:17)
This is only a brief synopsis of the law. For further clarification, refer to the New Hampshire statutes or call the Department of Revenue Administration, Community Services Division at (603) 271-2687
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