New Hampshire calls special session to respond to remote sellers sales tax ruling
New Hampshire has no sales tax, so the recent U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. — that physical presence is no longer a prerequisite for taxation — has set off alarms in the Live Free or Die State. New Hampshire-born General John Stark wrote, after the memorable words that became the state motto, “Death is not the greatest of evils.” To many New Hampshirites, it seems sales tax might be.
Shortly after learning of the Supreme Court decision, Governor Chris Sununu said anyone who tries to impose a tax obligation on New Hampshire businesses should prepare for “the fight of your life.” He then called for a special session of the legislature to try to put some weight behind those words.
In his letter to the Executive Council requesting the special session, the governor explained the South Dakota v. Wayfair decision “could require New Hampshire businesses to collect sales and use taxes for over 10,000 state and local jurisdictions where they have no physical presence.” He wants the legislature to pass legislation that “takes every feasible and legally permissible step to protect New Hampshire citizens and businesses from any and all attempts to impose sales and use tax obligations on New Hampshire” (agenda item #21A).
The council approved the governor’s request for a special session 4-1, with Andru Volinsky voting against it. The session is set to convene July 25 and will last one day only. Volinsky worries New Hampshire businesses could end up paying a high price if they rely on a New Hampshire law to avoid collecting sales taxes as required in other states. If the law is challenged and the state loses, New Hampshire businesses could be liable for back taxes, plus interest and penalties: “We’re asking our local businesses to go out on a limb for what is a stretch legally.”
His concerns may be valid, but many in the state — including the governor — insist now is the time to act. Legislation that would make it onerous for other taxing jurisdictions to require New Hampshire businesses to collect and remit tax is currently being drafted.
The Supreme Court decision in South Dakota v. Wayfair, Inc. could indeed affect New Hampshire businesses that sell into other states. Learn more about it and its potential impact here.
The 2021 sales tax changes report: midyear update
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