Ayotte takes aim at Internet tax bill
If U.S. Sen. Kelly Ayotte gets her way, New Hampshire retailers that sell their goods online to residents of other states won’t have to collect and remit sales taxes back to those states.
That’s the gist of a new bipartisan resolution, jointly introduced this week by New Hampshire Republican Ayotte and Sen. Ron Wyden, D-Ore., which opposes requiring small online retailers to collect and remit sales taxes for out-of-state sales.
It’s perhaps no surprise that Ayotte and Wyden are behind the resolution, as New Hampshire and Oregon are among only five states in the country that don’t impose a state sales tax. The others are Alaska, Delaware and Montana.
Retailers in New Hampshire who sell their goods online “shouldn’t be forced to become sales tax collectors for other states,” said Bruce Berke, state director for the National Federation of Independent Business. “Small business owners in New Hampshire don’t want sales taxes of any kind in the Granite State.”
Under current law, retailers don’t have to collect sales tax in states in which they don’t have a physical presence.
That means that if a New Hampshire-based retailer sells a product to a South Carolina resident, the seller isn’t required to levy her state’s 6 percent sales tax on the purchase.
That law was a result of a 1992 U.S. Supreme Court ruling, Quill Corp. vs. North Dakota, which dealt with catalog companies but has since been applied to online sellers.
In July, Sen. Dick Durbin, D-Ill., introduced the Main Street Fairness Act, which would establish federal guidelines that would require online retailers to collect sales tax and pass it along to the state in which the consumer resides.
The stated purpose of that bill was to level the playing field for bricks-and-mortar retailers, and to bring in money to state and local governments that rely on sales tax revenues.
“As a matter of economic policy and basic fairness, similar sales transactions should be treated equally, without regard to the manner in which sales are transacted, whether in person, through the mail, over the telephone, on the Internet, or by other means,” reads the bill.
As laid out in that bill, any state that simplified its tax system by agreeing to the provisions laid out in the “Streamlined Sales and Use Tax Agreement” would have the authority to collect sales taxes owed to it by retailers in other states. So far, 24 states have begun that legislative process.
Large retailers, like Walmart and Target, support the online sales tax legislation because their large physical presence already requires them to levy sales tax on their websites.
Ayotte said introducing her resolution was an effort aimed at “protecting our state’s online retailers from the prospect of another heavy-handed Washington mandate.”
The resolution calls the legislation a scheme that “would adversely impact hundreds of thousands of jobs, reduce consumer choice, and impede the growth and development of interstate commerce.”
The Main Street bill is unlikely to find many, if any, supporters in New Hampshire, since its only impact in the state would be to require Granite State retailers to collect sales tax on behalf of other states.
Bill opponents say compliance with the new law would be difficult for small Internet retailers. The Main Street measure does include an exemption for small online retailers but does not define what makes a seller “small.”
“Allowing a scenario in which a small online retailer is forced to calculate, collect and remit thousands of different taxes for thousands of different tax jurisdictions is a barrier to entry that will discourage entrepreneurship,” said Wyden.
David Lahme is president of TradePort USA, a Somersworth-based Internet retailer that sells new and refurbished electronics. He said the Durbin bill would have a negative impact on his company and that lack of sales tax is one of the major reasons why they chose to locate their company in the state.
“It provides a clear advantage that has allowed TradePort USA to thrive in a competitive marketplace and create jobs,” said Lahme. — KATHLEEN CALLAHAN/NEW HAMPSHIRE BUSINESS REVIEW
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