N.H. moves to block Mass. tax
New Hampshire legislators are trying to make it more difficult for neighboring states to collect taxes from residents who cross the border to make tax-free purchases in the Granite State.
The New Hampshire Senate yesterday unanimously passed a bill, SB 5, that would prohibit retailers from disclosing private customer information to other states for the purpose of collecting certain taxes for those states. New Hampshire, which doesn't have a general sales tax, attracts out-of-town shoppers who don't want to pay taxes.
"It's not something that's really the vendor's job, to find out where someone is going to use something they buy," said New Hampshire Senator Peter Bragdon, who added that the bill is meant to protect the local retail trade, which he called a "critical part" of the state's economy.
The bill follows a move by Massachusetts officials to try to force a New England tire chain to charge Bay State residents a 5 percent tax on items purchased in New Hampshire. In 2003, the Massachusetts Department of Revenue audited several Town Fair Tire stores in New Hampshire after hearing that Massachusetts residents were driving up to buy tires from the Connecticut-based chain, which also operates stores in the Bay State.
Using invoices that contained addresses and some phone numbers, Massachusetts officials identified 313 sales made to Bay State residents. The state argues that the tire chain should have charged those customers a 5 percent "use tax" because the tires were likely to be used or stored in Massachusetts, not New Hampshire.
Town Fair Tire is fighting back, and its case is expected to be heard by the Massachusetts Supreme Judicial Court this spring. David Nagle, a lawyer at Sullivan & Worcester LLP in Boston, which is representing Town Fair Tire, said he hopes for a decision by the end of the summer.
Neither Nagle nor state officials would comment on the New Hampshire bill.
The bill establishes certain conditions for other states to meet before New Hampshire retailers would have to hand over information about shoppers or collect taxes, such as "carefully developed information and documentation that demonstrates conclusively that a business knew, based on information provided by a customer, that such customer has stored, consumed, or used a purchased item" within another state. The bill is expected to make its way through the state House in the next several weeks and if passed there, will then go to the New Hampshire governor's office.
Erin Ailworth can be reached at email@example.com.