I. The commissioner may disallow any sham transaction in ascertaining any taxpayer’s tax liability. With respect to transactions between members of a controlled group, the taxpayer shall bear the burden of establishing by a preponderance of the evidence that a transaction or a series of transactions between the taxpayer and one or more members of the controlled group was not a sham transaction. For all other taxpayers, the commissioner shall bear the burden of establishing by a preponderance of the evidence that a transaction or series of transactions was a sham transaction.
II. In administering any tax, the commissioner may apply the doctrines of economic reality, substance over form, and step transaction.
III. If the commissioner disallows a sham transaction under paragraph I, the applicable limitation period for assessing the tax, together with applicable penalties, charges, and interest, shall be extended for a period equal to the applicable limitation period. Nothing in this paragraph shall be construed as extending an applicable limitation period for claiming any refund of a tax.
IV. The commissioner may adopt rules under RSA 541-A that are necessary to administer this section, including rules establishing criteria for identifying sham transactions.
V. In this section:
(a) "
Controlled group
" means 2 or more person related in such a way that one person directly or indirectly owns or controls the business operation of another member of the group.
(b) "
Sham transaction
" means a transaction or series of transactions without economic substance because there is no business purpose or expectation of profit other than obtaining tax benefits.
(c) "
Tax
" includes any tax administered by the commissioner.
(d) "
Taxpayer
" includes any person or entity subject to a tax.
Source. 2005, 177:139, eff. July 1, 2005.