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Should NH’s online retailers be required to collect sales taxes for other states?

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New Hampshire recently filed a legal brief in the U.S. Supreme Court case South Dakota V. Wayfair. South Dakota is challenging the rule that online retailers aren't required to charge sales taxes unless they have a "physical presence" - like a warehouse or brick-and-mortar shop – in the state that levies the tax.

This precedent has been in place since the 1960s, when it was applied to mail order catalog purchases. Now, in the internet age, states with a sales tax believe they are missing out on billions in tax revenue.

New Hampshire's legal brief argues against changing this precedent, saying it will unjustly force New Hampshire retailers to collect sales tax on behalf of other states.

A legislative solution?

Meanwhile, there is a similar effort underway in the U.S. Congress called the Marketplace Fairness Act. This measure would also require internet retailers to collect sales tax on behalf of sales tax states, even if the retailer is located in a state that doesn’t impose sales tax.

For example, if someone from Maine purchased an item from a retailer based in New Hampshire, that retailer would have to collect a sales tax for Maine.

Unfair for New Hampshire businesses

Senators Maggie Hassan and Jeanne Shaheen both oppose the bill, saying it would be unfair to New Hampshire businesses. Governor Chris Sununu also said in a recent statement:

“It is unacceptable that New Hampshire businesses may be forced to act as tax collectors for other states. 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.”

Time to update the law

Proponents of requiring online retailers to charge sales tax on behalf of sales tax states say that the current legal precedent is outdated and doesn’t reflect the modern business environment. With more and more sales moving online, it is important that the law reflect how people shop in the 21st century. Requiring online retailers to collect sales tax will also benefit brick-and-mortar stores, which have trouble competing with tax-free internet retailers.

What do you think? Should NH’s online retailers be required to collect sales taxes for other states? Let us know in the comments below.

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