State files brief against internet sales tax

BY TIMOTHY LAROCHE
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CLAREMONT — As the U.S. Supreme Court continues to wrestle over rules that exempt online businesses from collecting sales taxes in states where they lack a physical location, New Hampshire is wading into the fight.

Gov. Chris Sununu and Attorney General Gordon MacDonald filed an amicus brief with the high court last week in the case of South Dakota v. Wayfair, Inc. The case deals with questions of whether a business that does not have a physical presence in a state should be required to collect taxes on the state’s behalf.

Although the case has its origins across the country, state officials argue that if historical decisions of the lower courts on the matter are overturned, New Hampshire residents could be vulnerable to paying out-of-state sales taxes on online purchases.

“It is unacceptable that New Hampshire businesses may be forced to act as tax collectors for other states,” Sununu said in a statement released Thursday. “We will not sit idly by while Washington, D.C. and sales-tax reliant states try to raid the pockets of Granite Staters and increase the price of retail goods in New Hampshire.

“Overturning existing precedent in this case will put the nation on a fast-track towards unbridled taxation of the Internet and may force certain businesses and persons to cease doing business over the internet altogether,” the governor said.

Under historical rulings, states are restricted from imposing sales taxes on businesses that operate outside of their borders. However, South Dakota passed legislation in March 2017 that requires businesses without a physical location in the state to collect sales taxes from customers on the state’s behalf.

Several other states subsequently passed similar legislation to impose sales taxes on out-of-state online businesses. Almost immediately, the laws sparked court challenges from online retailers.

In New Hampshire’s amicus brief, MacDonald argues that the legislation was intended to elicit a court response, allowing the South Dakota to challenge a 1967 precedent that barred states from imposing sales taxes on businesses without a physical presence within the state.

“New Hampshire’s citizens have chosen through their elected representatives not to impose a sales tax on retail goods and should not be forced to shoulder the burden of other state sales taxes,” MacDonald said. ”It is manifestly unreasonable and unfair for these businesses to have to invest in expensive software and professional services in order to collect, account for, and remit sales taxes to other States and localities or otherwise subject themselves to potential civil and criminal penalties.”

 

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