New Hampshire v. Wayfair

  • September 11, 2019

A new law in the Granite State takes a hard stance against Wayfair, raising the question of whether other non-sales tax states – Alaska, Delaware, Montana, and Oregon – will follow suit.

State Protection for Online Sellers

In July, New Hampshire finalized Senate Bill 242, legislation that prohibits “foreign taxing jurisdictions” (i.e., tax authorities located outside of New Hampshire) from imposing sales and use tax collection requirements on New Hampshire businesses without first providing written notice to the New Hampshire attorney general. The new law tasks the New Hampshire Department of Justice with determining whether the laws of the foreign taxing jurisdiction are “unconstitutional” because they create an undue burden on the state’s retailers. It also prohibits New Hampshire online retailers from providing any customer or sales information to outside tax authorities.

While the other non-sales tax states have yet to signal whether they plan to pursue similar legislation, they likely share a similar desire to protect their own online sellers to what the New Hampshire legislation describes as “assertions by thousands of foreign taxing jurisdictions of various collection and remission requirements on remote retail businesses that were previously protected by the longstanding physical presence rule.”

New Hampshire on sales tax changes since Wayfair

New Hampshire's Governor is Ready for the Challenge 

It also remains to be seen, as this RSM analysis notes, whether states with post-Wayfair sales tax rules may challenge New Hampshire’s law in state or federal court. For his part, New Hampshire Governor Chris Sununu appears ready for any and all challenges “As Governor,” he asserted in a press release announcing the legislation’s passage, “I am going to do everything in my power to fight any attempt to force New Hampshire's businesses to collect out of state taxes in violation of the United States or New Hampshire Constitutions.”

If you dig into the final legislation, Sections VI and VII are worth a look. These passages describe two ways New Hampshire differs from other states, including those that do not collect sales tax.

First, New Hampshire adopted a consumption tax imposed on the retailer, not the consumer, thereby rejecting undue administrative burdens of traditional sales and use tax and third-party collection requirements.

Second, New Hampshire states it has a “compelling governmental interest in providing for the continuing protection of these retailers, especially relatively small retailers, from any unlawful imposition of the burden of compliance with sales and use tax requirements for out of state sales. Since the state does not have a sales tax, the cost to its retailers to comply with post-Wayfair rules is disproportionately negative and New Hampshire believes it’s paramount to protect their interests.


About this Contributor

Bernadette Pinamont Headshot
Bernadette Pinamont
Vice President, Tax Research

Bernadette Pinamont is Vice President of Tax Research responsible for leading a global team of 85 tax professionals who contribute subject matter and technical expertise to build and maintain content for all products, powering millions of effective tax rate determinations for customers in over 19,000 global jurisdictions.

Prior to joining Vertex, Bernadette was Vice President of Tax for Endo Pharmaceuticals. Bernadette's 30 plus year tax career also includes the corporate tax departments of AstraZeneca, DuPont, Syngenta, Tyco Toys, and, initially, EY. When Bernadette joined Vertex in 2013, she was a thought leader in the Chief Tax Office and engaged both industry and clients on the trends, patterns, and emerging solutions to address the global challenges associated with regulatory compliance and tax technology.

Bernadette regularly speaks at local and industry events about tax and the importance of technology, including the annual International Tax Review’s (ITR) Women in Tax Forum. She leads the Philadelphia Women’s Tax Network and is a graduate of Seton Hall University, from which she earned both a B.S. in Accounting, Summa Cum Laude, and her Juris Doctor. Bernadette is also a licensed attorney and a CPA.

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