No Sales Tax FAQ
Frequently Asked Questions
What did the U.S. Supreme Court’s decision South Dakota v. Wayfair, Inc. change?
The Wayfair decision overturned the long standing physical presence rule, which had prohibited a state (or other taxing jurisdiction) from imposing sales and use tax collection obligations on a business unless that business had a physical presence in the state. The Court did acknowledge that there may be other Constitutional protections against a state’s attempt to impose sales and use tax obligations on businesses with no physical presence within that state.
Despite other Constitutional arguments that may yet be available, the overturning of the physical presence rule makes New Hampshire businesses significantly more vulnerable to other taxing jurisdictions who may now seek to require New Hampshire businesses to collect and remit sales and use taxes even if a business has no physical presence within that taxing jurisdiction.
What should retail businesses expect to happen now that over 10,000 taxing authorities across the US are in position to enforce their taxes on sales tax-free NH businesses?
Until there is action by Congress, clarification by courts, or other state legislation, New Hampshire businesses may be legally required to submit to demands for certain records and payment from other states, counties, or cities who collect a sales and use tax.
Those taxing authorities may contact individual businesses in New Hampshire and demand records of remote sales into their jurisdictions. Upon review of those records, those authorities may demand tax payments from the retailer regardless of the lack of physical presence in that jurisdiction.
What should a business do if they hear from an out-of-state taxing authority?
The business should alert their accountant, attorney, and other advisors to determine a course of action. The business should also notify the New Hampshire Department of Justice (DOJ) by calling the DOJ’s Consumer Information Line at 888-468-4454 or 603-271-3643. DOJ’s first course of action will attempt to determine whether the contact is legitimate.
What types of sales are subject to potential taxation by an out-of-state taxing authority?
Any sales that do not occur in-person in New Hampshire are sales potentially subject to another state’s sales tax.
Can the State of New Hampshire provide businesses assistance to fight these demands for payment?
The New Hampshire Department of Justice cannot represent or give legal or tax advice to individuals or businesses. If you receive a communication from a governmental entity outside of New Hampshire seeking to impose a sale and use tax obligation, you should alert the New Hampshire Department of Justice but also consult your own attorney or tax professional.
What is the State of New Hampshire doing to address this situation?
The New Hampshire Legislature recently met in special session to consider legislation to provide some protection against improper attempts by other taxing authorities to impose sales and use tax collection obligations on New Hampshire businesses. While the Legislature was unable to agree on and pass legislation, it is possible that legislation will be considered later this year or in future legislative sessions.
The New Hampshire Department of Justice (DOJ) is seeking to track all attempts by other taxing authorities to impose sales and use tax collection obligations on New Hampshire businesses. To facilitate this effort, the DOJ is asking any businesses who receives a new communication from an out of state tax authority related to sales and use taxes to immediately contact the DOJ’s Consumer Information Line at 888-468-4454 or 603-271-3643. The Department of Justice will also be monitoring all relevant legal developments across the country to assist the State with doing everything in the State’s power to protect New Hampshire’s businesses.
The Department of Business and Economic Affairs has established a single website, nheconomy.com/nosalestax, that is intended to serve as a central clearinghouse for all information about developments in the wake of the Wayfair decision. The website will be updated regularly with content and information provided by all agencies of State Government, including the Departments of Justice, Business and Economic Affairs, and Revenue Administration.