New Hampshire Protects Its Businesses and Customers

July 14, 2009

New Hampshire Governor John Lynch has signed a bill that will protect New Hampshire businesses from being forced to collect use taxes for other states or share information with other states regarding purchases made in New Hampshire by residents of other states. Senate Bill 5 became necessary when Massachusetts revenue officials started pressuring New Hampshire businesses to share personal information regarding Massachusetts residents who shop in New Hampshire. The issue arises in New Hampshire because the state levies no sales or use tax, while Massachusetts levies a 6.25% sales and use tax (recently increased from 5%, a move that will only increase the number of Massachusetts residents shopping in New Hampshire).

We wrote about this issue in April, saying that while states can choose to levy a use tax (essentially a tax on goods purchased out-of-state and brought back into the home state) they cannot force other states’ businesses to collect the tax, nor can they force other states’ businesses to collect or provide them with information regarding where the purchase will be used. If a state wants to levy a use tax it must administer the tax itself, not rely on other states to do the grunt work or share their customers’ personal information.

The New Hampshire bill claims that to for Massachusetts to require New Hampshire businesses to collect such information would violate constitutional protections that prohibit laws that “discriminate against interstate commerce by providing a direct commercial advantage to local businesses.” In this case, the New Hampshire businesses would be discriminated against if they were required to collect and share information while Massachusetts businesses were exempt from such requirements.

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