Law to stall internet sales tax
CONCORD – States or other taxing entities trying to collect sales taxes for internet purchases through New Hampshire will have a tough time, pending adoption of the proposed law up for consideration at Wednesday’s special legislative session.
“We’re going to make it as difficult as hell for any entity to force us to collect taxes on their behalf,” said state Rep. Richard Hinch, R-Merrimack.
“The state of New Hampshire does not recognize the obligation to collect and report sales taxes for any other entity,” he added.
Hinch, the House majority leader, is one of the many legislators promoting the bill, SB 1, created to fight back against the U.S. Supreme Court decision of South Dakota v. Wayfair. This ruling struck down legal precedent to allow for states and other taxing entities to collect sales taxes for online purchases.
New Hampshire, of course, has no sales tax of its own. However, the ruling could force businesses in the state to collect sales taxes on behalf of states that do apply sales taxes.
Gov. Chris Sununu reacted by calling for the special session to deal with the change that could result from the Wayfair ruling, vowing to protect the state’s businesses.
“The Wayfair decision has created enormous uncertainty, and it is critical that we come together on a bipartisan basis to provide as much protection as we can for our businesses,” Sununu said Friday regarding SB1. “I thank the Joint Legislative Task Force for their work, and for their unanimous vote to recommend adoption of a strong piece of legislation.”
“Our businesses are counting on us, and we must not let them down,” Sununu added.
U.S. law previously allowed businesses in non-sales tax states that sold products online to skip collecting and paying sales taxes when doing business with a customer from a sales tax state. Now, states such as California or Massachusetts can conceivably require New Hampshire businesses to collect sales taxes from California or Massachusetts customers and send that money to those states.
Under the proposed SB 1, any state or entity that imposes a sales tax must register with the New Hampshire Attorney General’s Office and apply for approval to be able to collect sales taxes. Hinch said those applications will be placed under review before the state moves forward and allows the collection of sales taxes. The length of the time it will take for the review process to be complete may be indefinite, Hinch said.
“We are not a tax collector, and we don’t want to be a tax collector,” Hinch said.
The law also prohibits New Hampshire businesses from sharing private customer information with out-of-state taxing agencies, while it creates a commission to continue studying the issue of internet sales taxes.
Hinch said the Wayfair decision isn’t the end of the story. The U.S. Supreme Court sent the case back to South Dakota, so there are many unknowns about the future of taxing on the internet.
The legislative session is slated to start for the state Senate at 10 a.m. Wednesday in the Legislative Office Building, and at 10:30 a.m. for the House of Representatives.
Damien Fisher can be reached at 594-1245 or email@example.com or @Telegraph_DF.