CLT UPDATE
Wednesday, August 26, 2009
High court kills out-of-state sales tax collection
The Supreme Judicial Court on Tuesday
struck down the Department of Revenue’s attempt to stick a
Connecticut-based tire company with a $108,947 tax bill.
The DOR had sought the assessment on Town Fair Tire Centers Inc., which
has 60 stores in New England – including 18 in Massachusetts – arguing
that the company should have assessed taxes on Massachusetts residents
who purchased their tires in New Hampshire.
State House News Service
Tuesday, August 25, 2009
SJC strikes down agency's attempt
to tax New Hampshire tire sales
The unanimous ruling by the Supreme Judicial Court found that
the Department of Revenue, which initiated the case in 2003 while Mitt Romney
was governor, overreached in its interpretation of state law, and failed to
prove it had the right to collect taxes on tires sold by Connecticut-based Town
Fair Tire Centers.
The Boston Globe
Wednesday, August 26, 2009
State can’t collect tax on sales in N.H.
SJC blocks Mass. in case seen as bid to expand authority
Under Massachusetts law, companies engaged in business here
are required to collect the use tax - at a rate equal to the state sales tax -
from customers who purchase items or services out of state for storage or use in
Massachusetts. The law is designed to prevent Bay Staters from avoiding state
taxes by making purchases in states with no or lower sales taxes.
The Boston Herald
Wednesday, August 26, 2009
Tire co. can’t be charged for selling to Bay Staters
Court reins in Taxachusetts
New Hampshire officials are delighted with yesterday's
Massachusetts Supreme Court ruling that the state cannot collect taxes from a
retail tire chain that sells tires to Massachusetts residents in New Hampshire.
"This decision is founded in the principle that unless you can really be sure
that the item is used in the taxing state, then you can't tax," Assistant
Attorney General Glenn Perlow said.
"We certainly think the court got it right," he said. "It certainly resolves the
issue." ...
Earlier this year, the New Hampshire Legislature passed a bill making it harder
for Massachusetts revenue officials to go after businesses with stores in both
states after Massachusetts attempted to collect $108,000 in unpaid use taxes
from Town Fair Tire.
Gov. John Lynch signed the new law last month.
"I think that the Massachusetts Supreme Court decision further strengthens our
ability to remain a state that doesn't charge a sales tax," state Sen. Margaret
Wood Hassan, D-Exeter, said. Hassan sponsored Senate Bill 5, which protected New
Hampshire businesses from being forced to collect Massachusetts sales taxes.
"It remains very important that we maintain our ability to set our own tax
policy and to be a state where shoppers know that they can shop tax-free and
won't have their privacy invaded," she said....
Colin Manning, spokesman for Gov. John Lynch, said, "The
governor is very pleased. He thinks this is a good decision for New Hampshire."
The New Hampshire Union-Leader
Wednesday, August 26, 2009
Bay State tax collectors dealt a blow
Prior to the ruling, experts such as University of Georgia
tax law professor Walter Hellerstein warned it was possible that state residents
would not just pay taxes on everything they buy in New Hampshire, but that
neighboring higher sales tax states like Connecticut and Rhode Island would try
to recover revenues lost when their residents shopped in Massachusetts.
Hellerstein said Tuesday that the case ended with "a whimper, rather than a
bang" because the high court was able to avoid any constitutional questions.
"They didn't want to step into kind of a hornet's nest," Hellerstein said. "They
don't want a war with New Hampshire, I assume." ...
Though lawmakers could try to change the law, [Town Fair Tire's attorney David
Nagle] said it won't be easy because retailers would have a tough time avoiding
privacy issues when they tried to find out where customers were going to use an
item.
"It's one thing to have a tax assessed that doesn't depend on anything other
than the merchandise you're buying," Nagle said. "It's another to have a
retailer asking background questions about where you're from and where you're
planning to use property."
Associated Press
Wednesday, August 26, 2009
Mass. can't collect taxes on tires sold in N.H.
Let the border wars begin!
Yes, the state’s highest court yesterday gave Massachusetts taxpayers a reprieve
from state efforts to collect taxes on items bought in New Hampshire. But it may
not last long.
This could just be one small taxpayer victory in a much larger war....
So the Massachusetts Legislature, which seems intent on squeezing every last
penny out of Bay State taxpayers, can indeed “fix” the law. But lawmakers would
do so at their own political peril (not that that’s ever stopped them before) -
and set the stage for the inevitable return of the issue to the courts.
Even they couldn’t be that stupid - or greedy.
A Boston Herald editorial
Wednesday, August 26, 2009
Taxpayers win one
OK, you revenuers, just keep your hands off my Bombay
Sapphire gin.
Sure, I bought it in Hooksett - just like the thousands of other Massachusetts
folks rolling into the parking lot of the best known of New Hampshire’s state
liquor stores....
So thanks to yesterday’s ruling by the Supreme Judicial Court, Massachusetts
taxpayers are still safe from the long arm of state tax auditors attempting to
enlist cross-border retailers in their collection efforts....
Meanwhile our Revenue Department in a statement issued yesterday has fallen on
its sword, saying this is “the end of the line for this case.” But it also
issued a reminder that “Massachusetts residents who purchase items in a no-tax
state for use in Massachusetts are as a matter of law supposed to report the use
tax, equivalent to the Massachusetts sales tax, on their state income tax.”
Is that enough to make you want to mix up a good martini or what!
The Boston Herald
Wednesday, August 26, 2009
New tax-free tires: We’ll drink to that
By Rachelle Cohen
|
 |
|
The Boston
Herald =
August 26, 2009
By Jerry Holbert |
Gov. John Lynch doesn't have a problem with
Massachusetts having a sales tax, but vowed New Hampshire businesses
won't be collecting it on behalf of their southern neighbor.
Lynch traveled to Rockingham Electrical Supply on Thursday to sign
into law Senate Bill 5, which prevents New Hampshire businesses from
having to collect sales taxes from customers who hail from
Massachusetts or any other state.
"We've chosen not to have a sales tax," Lynch said, adding, "If
Massachusetts wants to have one, that's their prerogative."
Foster's Daily Democrat
Dover, NH
Friday, July 10, 2009
Gov. Lynch tells Mass. to collect its own sales tax
Chip Ford's CLT
Commentary
I'm somewhat surprised that
our state's highest court decreed that Taxachusetts tax-collectors
cannot force out-of-state businesses to become tax-collection agents for
the Commonwealth. Though I couldn't see how the justices could
possibly rationalize such a self-serving decision, they've managed to
stun me before. Apparently it was too much of a reach even for our
Supreme Judicial Kangaroo Court, though it did extend itself to provide
state government with a means to circumvent its ruling, an unusual
action by any court.
The SJC's solution for
chasing the additional out-of-state revenue is for the Legislature to
create a new law, one that establishes "a presumption" that any purchase
made outside Massachusetts by one of its citizens will be used inside
our borders. That's quite a leap of presumption.
But still, Taxachusetts
revenuers still have to identify which among us has shopped in the "Live
Free Or Die" state and how much we spent, and they're not going to get
any assistance from New Hampshire merchants -- thanks to the Granite
State's legislature and governor. Last month New Hampshire passed
a law that protects its businesses. "We've chosen not to have a
sales tax," Governor John Lynch said upon signing it into law, adding,
"If Massachusetts wants to have one, that's their prerogative."
In the CLT Update of Feb. 7
("Another
Border War Ahead?") I wrote:
During the last
Taxachusetts border war incursion in the late-70s, the first Dukakis
administration inserted its troopers undercover to capture and
subject to rendition any subjects of His Commonwealth who crossed to
smuggle back contraband -- cheaper liquor and cigarettes, and
fireworks! It took then-governor Meldrin Thomson's NH state troopers
to launch a counter-offensive. He ordered his troopers to arrest and
detain this state's armed forces to halt their forays into his
sovereign state. Michael Dukakis backed off, blinked first --
withdrew his troops.
Don't expect Gov. Patrick's
revenue agents to get any better treatment north of our border. It
doesn't seem like New Hampshire's attitude has changed.
In that CLT Update, I also
noted:
Bacon Hill can't grab
enough from us, is thwarted. It is frustrated with the tax-free
sovereign state of New Hampshire so nearby. Were it not for New
Hampshire, Taxachusetts would by now have a 10 percent sales tax or
higher. Sales tax-free New Hampshire proscribes this extension of
Bay State lawmakers' natural urges. Even the pols recognize that
Taxachusetts does not exist in a vacuum, that its subjects can too
easily vote with their wallets and feet, slip over the border.
You and I recognized this
inconvenient reality, but then we're not as dumb as those who allege to
represent us. They went ahead and jacked up the state sales tax by
25 percent, from 5 to 6.25 percent: "The New Hampshire Economic
Stimulus Plan."
The Associated Press
reported:
Though lawmakers could try to change the law, [Town Fair Tire's attorney David
Nagle] said it won't be easy because retailers would have a tough time avoiding
privacy issues when they tried to find out where customers were going to use an
item.
"It's one thing to have a tax assessed that doesn't depend on anything other
than the merchandise you're buying," Nagle said. "It's another to have a
retailer asking background questions about where you're from and where you're
planning to use property."
He underestimates the
insatiable greed of Bacon Hill, the limitless lust for more, more, ever
more -- and the power and resources of the state. For some years
now the Massachusetts Department of Revenue has used credit card online
purchases of cigarettes from out-of-state and from tax-exempt Indian
reservations to track down citizens then demand retroactively the unpaid
taxes, with penalties and interest.
Of course, buying online
requires a credit card. Driving up to New Hampshire and paying
with cash leaves no trail.
With yesterday's ruling by
our state's highest court that New Hampshire merchants cannot be
compelled to collect the Massachusetts sales tax, the NH governor and
legislature last month adopting an emergency law protecting its
merchants from such an absurd expectation, and a former governor of the
"Live Free Or Die" state having arrested and expelled undercover
Taxachusetts revenue spies within NH, all that remains for our greedy
state government is roadblocks at the border, searches of every vehicle
entering our state. Do they dare that, even here in The People's
Republic?
 |
TO READ THE FULL
Massachusetts Supreme Judicial Court Decision
CLICK HERE |
|
Chip Ford |
State House News Service
Tuesday, August 25, 2009
SJC strikes down agency's attempt to tax New Hampshire tire sales
By Kyle Cheney
The Supreme Judicial Court on Tuesday struck down the Department of
Revenue’s attempt to stick a Connecticut-based tire company with a
$108,947 tax bill.
The DOR had sought the assessment on Town Fair Tire Centers Inc., which
has 60 stores in New England – including 18 in Massachusetts – arguing
that the company should have assessed taxes on Massachusetts residents
who purchased their tires in New Hampshire.
A DOR auditor found in 2003 that the company’s three New Hampshire
stores completed 313 sales in one month to purchasers with Massachusetts
addresses, many with Massachusetts phone numbers and Bay State driver’s
licenses appended.
As a result, the tax-collecting agency inferred that the cars were
intended for use in Massachusetts, and use taxes should be assessed for
the Commonwealth.
That decision was upheld by the Appellate Tax Board. But the SJC found
the arguments of DOR Commissioner Navjeet Bal flawed.
“There is no evidence that any of the tires sold in the 313 transactions
under review were actually stored or used in Massachusetts, the board
made no such finding, and the commissioner does not argue otherwise,”
the court argued, in an opinion written by Chief Justice Margaret
Marshall. “For her part, the commissioner acknowledges that ‘intent’ to
use the goods in Massachusetts is not sufficient to trigger the use tax.
In her view, ‘compelling circumstantial evidence’ that the tires were
sold to Massachusetts residents and installed on vehicles registered in
Massachusetts leads, in her words, ‘to the presumption’ that the tires
‘indeed were used in Massachusetts.’ Her argument fails.”
Town Fair’s attorney, David Nagle, a tax partner at the Boston office of
Sullivan & Worcester, said the company was pleased that the court
concluded “that Town Fair Tire and other retailers making over the
counter sales” outside of Massachusetts, “are not required under statute
to collect Massachusetts use tax.”
“I think that both sides acknowledge, there was no evidence of actual
use in the commonwealth. There’s no statutory basis for such a
presumption,” Nagle said.
In a statement, DOR didn’t acknowledge the defeat, citing only the
portion of the ruling that affirmed that Massachusetts residents who
make purchases in a no-tax state for use in Massachusetts must report
those purchases on their state income tax forms.
“Today's SJC decision clearly answers the questions posed in the Town
Fair Tire case, which has always been in DOR's view a case with a narrow
set of facts and scope,” according to the statement. “The SJC decision
is the end of the line for this case, since it does not involve
constitutional issues that might require the attention of a higher
court.”
The SJC did leave open the possibility that the Legislature could
revisit the law to include a provision that goods sold outside of
Massachusetts but intended for use in the Bay State could be taxed.
“We will not recognize a presumption that the Legislature has not
established,” Marshall wrote. “The absence of a statutory presumption
... is particularly significant because Legislatures in other States
have enacted just such a presumption. The Legislature may, of course,
enact such a presumption, but in the absence of any such statutory
authorization, it is error to rely on a presumption that tires sold to a
Massachusetts resident outside the Commonwealth were actually used in
the Commonwealth. ”
The ruling brings resolution to a case that sparked controversy earlier
this year, as retailers and consumer groups worried that state tax
collectors would follow consumers seeking better deals across the state
line, into states like New Hampshire, which has no sales tax.
On July 23, DOR posted an anonymous blog entry on its web site calling
the controversy overblown.
“To say there has been more heat than light generated in the ongoing
news coverage of the Town Fair Tire sales tax case would be an
understatement,” according to the blog, Commonwealth Conversations.
DOR’s rejection is its second before the SJC since June, when the court
denied the agency’s push to reclaim $4.8 million in tax credits from
Gillette.
The Boston Globe
Wednesday, August 26, 2009
State can’t collect tax on sales in N.H.
SJC blocks Mass. in case seen as bid to expand authority
By Casey Ross
Massachusetts’ highest court has ruled the state cannot collect sales
taxes from a New Hampshire retail store that sold tires to Bay State
customers, ending a case some tax specialists saw as an effort to
dramatically expand the state’s taxing authority.
The unanimous ruling by the Supreme Judicial Court found that the
Department of Revenue, which initiated the case in 2003 while Mitt
Romney was governor, overreached in its interpretation of state law, and
failed to prove it had the right to collect taxes on tires sold by
Connecticut-based Town Fair Tire Centers.
The Revenue Department had tried to collect $109,000 from Town Fair
after a review found 313 invoices in its three New Hampshire stores
listed Massachusetts addresses for buyers. New Hampshire does not have a
sales tax, but Massachusetts officials argued they were owed taxes
because those customers would have been charged here.
The court focused narrowly on the state’s application of the use tax
law, which requires Massachusetts residents to pay taxes on items bought
in other states but that are intended for use in the Massachusetts. The
court found the Revenue Department failed to introduce evidence proving
that the tires purchased in the New Hampshire stores were actually used
in Massachusetts.
Instead, the state used the invoices listing the addresses of
Massachusetts customers to infer the tires were used in Massachusetts.
But the court ruled the state’s use tax law does not grant room for
inference and requires the state to show actual proof the “storage, use,
or consumption of tangible personal property’’ occurs in Massachusetts.
“Because the statute is unambiguous, we follow the ordinary meaning of
the words,’’ the court wrote, quoting a similar case from 1990.
Some tax specialists saw the case as a way for Massachusetts to
significantly broaden its taxing power, thus increasing costs for
consumers and large retailers such as Best Buy and Sears, Roebuck and
Co., that sell expensive appliances and other goods in New Hampshire.
But the Department of Revenue issued a statement yesterday saying it had
always viewed the Town Fair case narrowly and does not intend to appeal.
“The SJC decision is the end of the line for this case, since it does
not involve constitutional issues that might require the attention of a
higher court,’’ the statement said.
“The decision also leaves intact the status quo ante; namely that those
Massachusetts residents who purchase items in a no-tax state for use in
Massachusetts are as a matter of law supposed to report the use tax,
equivalent to the Massachusetts sales tax, on their state income tax
form,’’ it added.
A spokesman for the Revenue Department, Robert Bliss, said the
department has no plans to step up enforcement of the law. In 2007, the
last year for which figures are available, more than 53,000
Massachusetts residents paid about $4.4 million in use taxes.
The purchasing of tax-free goods in New Hampshire is expected to
increase this year after Massachusetts raised its sales tax to 6.25
percent from 5 percent. “As a practical matter, there isn’t any way to
step up enforcement,’’ Bliss said. “Basically, you would be talking
about some kind of border patrol, and that’s just not going to happen.’’
The Boston Herald
Wednesday, August 26, 2009
Tire co. can’t be charged for selling to Bay Staters
Court reins in Taxachusetts
By Donna Goodison
The state’s highest court has ruled that Massachusetts can’t collect
“use taxes” from a retail chain that sold automobile tires to
Massachusetts residents at its three sales-tax-free New Hampshire
stores.
The Supreme Judicial Court yesterday said that, lacking direct evidence,
the Massachusetts Department of Revenue could not presume that the tires
sold by the Town Fair Tire Centers would be used in-state by the
Massachusetts customers.
Under Massachusetts law, companies engaged in business here are required
to collect the use tax - at a rate equal to the state sales tax - from
customers who purchase items or services out of state for storage or use
in Massachusetts. The law is designed to prevent Bay Staters from
avoiding state taxes by making purchases in states with no or lower
sales taxes. The DOR ordered Town Fair Tire Centers to pay $108,947 in
state use taxes, plus interest, in 2003, when the Connecticut company’s
stores included 18 in Massachusetts and three in New Hampshire. A DOR
audit of the New Hampshire stores’ invoices tied 313 tire purchases made
in September 2002 to Massachusetts residents.
Bay Staters are required by law to report out-of-state purchases on
their personal income tax returns.
The DOR assessment prompted New Hampshire to pass legislation in June
that protects Granite State retailers from having to disclose customer
information to other states trying to collect use or sales taxes on New
Hampshire sales.
The case had potential implications for other multi-state retailers
whose customers crossed the Massachusetts border to buy merchandise,
Town Fair attorney David Nagle said.
But the SJC ruling leaves an opening for the state Legislature to change
Massachusetts’ use-tax law to mirror those in states such as California,
Nevada and Wisconsin, which presume that out-of-state purchases made by
their residents are intended for in-state use. Such an effort could set
the stage for a legal battle with New Hampshire.
The New Hampshire Union-Leader
Wednesday, August 26, 2009
Bay State tax collectors dealt a blow
By Denis Paiste
New Hampshire Union Leader Staff
MANCHESTER – New Hampshire officials are delighted with yesterday's
Massachusetts Supreme Court ruling that the state cannot collect taxes
from a retail tire chain that sells tires to Massachusetts residents in
New Hampshire.
"This decision is founded in the principle that unless you can really be
sure that the item is used in the taxing state, then you can't tax,"
Assistant Attorney General Glenn Perlow said.
"We certainly think the court got it right," he said. "It certainly
resolves the issue."
The Supreme Judicial Court avoided any broad constitutional issues about
interstate commerce, focusing on state law.
"The Legislature may, of course, enact such a presumption, but in the
absence of any such statutory authorization, it is error to rely on a
presumption that tires sold to a Massachusetts resident outside the
Commonwealth were actually used in the Commonwealth," the court wrote.
In a statement, the Massachusetts Department of Revenue said, the "SJC
decision is the end of the line for this case, since it does not involve
constitutional issues that might require the attention of a higher
court."
Earlier this year, the New Hampshire Legislature passed a bill making it
harder for Massachusetts revenue officials to go after businesses with
stores in both states after Massachusetts attempted to collect $108,000
in unpaid use taxes from Town Fair Tire.
Gov. John Lynch signed the new law last month.
"I think that the Massachusetts Supreme Court decision further
strengthens our ability to remain a state that doesn't charge a sales
tax," state Sen. Margaret Wood Hassan, D-Exeter, said. Hassan sponsored
Senate Bill 5, which protected New Hampshire businesses from being
forced to collect Massachusetts sales taxes.
"It remains very important that we maintain our ability to set our own
tax policy and to be a state where shoppers know that they can shop
tax-free and won't have their privacy invaded," she said.
Colin Manning, spokesman for Gov. John Lynch, said, "The governor is
very pleased. He thinks this is a good decision for New Hampshire."
The court ruling appears to tell the Massachusetts Legislature it could
attempt to collect the tax by enacting a "presumption" that purchases by
its residents in New Hampshire are intended for use in the Bay State.
Attorney David Nagle, who represented Town Fair Tire from the
Massachusetts Appellate Tax Board up through the state Supreme Court,
said the ruling yesterday may put Massachusetts in a politically tough
position.
"Politically it may be difficult to muster support for a law which in
fact authorizes the Massachusetts Department of Revenue to monitor the
shopping activities of Massachusetts citizens out of state, he said.
"That ought to raise genuine privacy concerns."
Massachusetts residents now pay a 6.25 percent sales tax, up from 5
percent.
Town Fair Tire has New Hampshire stores in Amherst, Concord, Manchester,
Nashua, Portsmouth, Salem, Seabrook and Somersworth. A Massachusetts
auditor searching records at three Town Fair stores in New Hampshire in
2003 found 313 invoices with customer addresses in Massachusetts.
Information from The Associated Press was used in this report.
Associated Press
Wednesday, August 26, 2009
Mass. can't collect taxes on tires sold in N.H.
By Jay Lindsay
The state's highest court ruled Tuesday that Massachusetts can't collect
taxes from a retail chain that sells tires to Massachusetts residents in
New Hampshire, a longtime sales tax free-haven for Bay State shoppers.
Massachusetts officials said their case against Town Fair Tire Centers
was narrowly focused, but others worried if the state won the case
customers all over the region would pay more for cross-border shopping.
The case prompted New Hampshire lawmakers to pass a law to make it tough
for its businesses to collect Massachusetts taxes from Massachusetts
customers.
The Supreme Judicial Court ended up avoiding any broad constitutional
issues about interstate commerce, instead focusing on state law, which
it said didn't allow the state to assume Massachusetts customers at Town
Fair Tire's New Hampshire stores were going to use the tires in
Massachusetts.
"The Legislature may, of course, enact such a presumption, but in the
absence of any such statutory authorization, it is error to rely on a
presumption that tires sold to a Massachusetts resident outside the
Commonwealth were actually used in the Commonwealth," the court wrote.
In a statement, the Massachusetts Department of Revenue said, the "SJC
decision is the end of the line for this case, since it does not involve
constitutional issues that might require the attention of a higher
court."
Prior to the ruling, experts such as University of Georgia tax law
professor Walter Hellerstein warned it was possible that state residents
would not just pay taxes on everything they buy in New Hampshire, but
that neighboring higher sales tax states like Connecticut and Rhode
Island would try to recover revenues lost when their residents shopped
in Massachusetts.
Hellerstein said Tuesday that the case ended with "a whimper, rather
than a bang" because the high court was able to avoid any constitutional
questions.
"They didn't want to step into kind of a hornet's nest," Hellerstein
said. "They don't want a war with New Hampshire, I assume."
Town Fair Tire's attorney David Nagle said the decision is important
because of what the court refused to do.
"Here the court drew the line where everybody thought it had been drawn,
except the Department of Revenue," Nagle said. "And maybe the department
overreached in this instance."
Massachusetts residents pay a 6.25 percent sales tax after an increase
this year — they paid 5 percent during the period covered in the suit.
The case centered on Massachusetts' "use" tax, which residents must pay
for goods they buy out of state but use in Massachusetts. The idea is to
level the playing field between Massachusetts retailers and out of state
retailers in tax-free areas. But residents almost never voluntarily pay
the tax, and retailers in tax free New Hampshire have little motivation
to give up the competitive advantage by collecting it.
In 2003, a Massachusetts auditor searching a sample of records at three
Town Fair stores in New Hampshire found 313 invoices which listed a
Massachusetts address for the customer.
The Department of Revenue then assessed about $109,000 in uncollected
use taxes to Town Fair. The decision was upheld by the state's Appellate
Tax Board, and Town Fair appealed to the high court.
The state argued if tires were sold to Massachusetts residents for use
on cars that were registered in Massachusetts, that was "compelling
circumstantial evidence" that justified a presumption that the tires
were actually used in Massachusetts, and the retailer must assess the
use tax.
But the SJC said state law does not permit that presumption.
"The (appellate tax) board's conclusion is untenable," the court wrote.
"It is not supported by the language of the statute."
Though lawmakers could try to change the law, Nagle said it won't be
easy because retailers would have a tough time avoiding privacy issues
when they tried to find out where customers were going to use an item.
"It's one thing to have a tax assessed that doesn't depend on anything
other than the merchandise you're buying," Nagle said. "It's another to
have a retailer asking background questions about where you're from and
where you're planning to use property."
The Boston Herald
Wednesday, August 26, 2009
A Boston Herald editorial
Taxpayers win one
Let the border wars begin!
Yes, the state’s highest court yesterday gave Massachusetts taxpayers a
reprieve from state efforts to collect taxes on items bought in New
Hampshire. But it may not last long.
This could just be one small taxpayer victory in a much larger war.
The Supreme Judicial Court in a unanimous ruling found the state
Department of Revenue could not collect some $109,000 in “use” taxes -
the equivalent of a sales tax - from the Town Fair Tire Co. for
purchases made by Massachusetts residents in its New Hampshire stores
(the Connecticut-based firm has stores in all three states).
It was surely no secret that had the decision gone the other way that
all those big box stores just over the border in New Hampshire - Sears,
Costco, Best Buy - would have been next on Revenue’s list.
Yes, first they came for our tires, then our toasters.
But the court decision was also rather narrowly decided - on the state
statute, not the broader issue of whether the effort to impose
cross-border taxes was a violation of the U.S. Constitution’s commerce
clause.
In fact, the SJC told the Legislature exactly how to fix the state law -
as the decision noted, other states have already done. And the potential
loss of sales tax revenue could run to well over $100 million.
Meanwhile, of course, New Hampshire has already approved a law that
shields its retailers from having to collect or share information about
purchases made by out-of-staters.
So the Massachusetts Legislature, which seems intent on squeezing every
last penny out of Bay State taxpayers, can indeed “fix” the law. But
lawmakers would do so at their own political peril (not that that’s ever
stopped them before) - and set the stage for the inevitable return of
the issue to the courts.
Even they couldn’t be that stupid - or greedy.
The Boston Herald
Wednesday, August 26, 2009
New tax-free tires: We’ll drink to that
By Rachelle Cohen
OK, you revenuers, just keep your hands off my Bombay Sapphire gin.
Sure, I bought it in Hooksett - just like the thousands of other
Massachusetts folks rolling into the parking lot of the best known of
New Hampshire’s state liquor stores.
The place was all decked out for the arrival of refugees from across the
southern border with a huge “tax free” banner to greet us outside and
signs everywhere telling us what bargains we were getting - as if anyone
there didn’t already know.
It was a mere two weeks after Massachusetts’ new sales tax on liquor
went into effect. On alcohol, you’ll recall, it wasn’t merely a bump in
the tax, it was for the first time a 6.25 percent hit - all at once! So
not surprisingly the place was jammed with folks loading up their trunks
as if we were on the eve of Prohibition II.
But gin - even really good gin - is small stuff compared to, say, those
laptop computers the parents of the incoming class of 2013 will be
buying this month for their departing college students.
So thanks to yesterday’s ruling by the Supreme Judicial Court,
Massachusetts taxpayers are still safe from the long arm of state tax
auditors attempting to enlist cross-border retailers in their collection
efforts.
Yes, the case was all about tires - and tires generally have to be
attached to cars. And because Town Fair Tire has stores in both states
(it’s headquartered in Connecticut) it made a convenient target for the
Revenue Department, which merely went through sales records looking for
Massachusetts phone numbers or addresses.
But the court found, “There is no evidence that the tires sold by Town
Fair were actually stored, used or consumed in Massachusetts.”
Short of following a car across the border, where’s the proof? Now
imagine trying to make the case for that laptop, which despite the fact
that it was bought by a Massachusetts parent could be used by a student
going off to school in Chicago.
The SJC told the Legislature how it could fix the statute so that such
purchases made by Massachusetts residents would be “presumed” to be used
here. But that would indeed touch off a down and dirty border war with
New Hampshire, which has passed a statute of its own shielding retailers
from collecting or sharing such information.
Meanwhile our Revenue Department in a statement issued yesterday has
fallen on its sword, saying this is “the end of the line for this case.”
But it also issued a reminder that “Massachusetts residents who purchase
items in a no-tax state for use in Massachusetts are as a matter of law
supposed to report the use tax, equivalent to the Massachusetts sales
tax, on their state income tax.”
Is that enough to make you want to mix up a good martini or what!
Foster's Daily Democrat
Dover, NH
Friday, July 10, 2009
Gov. Lynch tells Mass. to collect its own sales tax
By Geoff Cunningham Jr.
NEWINGTON — Gov. John Lynch doesn't have a problem with Massachusetts
having a sales tax, but vowed New Hampshire businesses won't be
collecting it on behalf of their southern neighbor.
Lynch traveled to Rockingham Electrical Supply on Thursday to sign into
law Senate Bill 5, which prevents New Hampshire businesses from having
to collect sales taxes from customers who hail from Massachusetts or any
other state.
"We've chosen not to have a sales tax," Lynch said, adding, "If
Massachusetts wants to have one, that's their prerogative."
Lynch said New Hampshire has worked hard to uphold a business-friendly
environment with a low tax structure and didn't hold back in condemning
recent efforts by the Massachusetts revenue commissioner to collect
taxes for sales made to Bay State residents doing business in the
Granite State.
"I believe it's outrageous," Lynch said.
Legislation to fight such action began being developed by New Hampshire
legislators shortly after Massachusetts embarked on efforts to force
businesses like Town Fair Tire — a company with a Seabrook location
close to the Bay State border — to provide customer information in case
the state chose to tax their residents on purchases made in New
Hampshire.
The tire retailer is taking Massachusetts to court over the state's
attempt to levy a 5 percent sales tax on tires purchased in New
Hampshire.
As that issue headed toward a Massachusetts Supreme Court battle, Lynch
worked with lawmakers to expedite passage of legislation that ensures
New Hampshire retailers do not have to provide private consumer
information to another state for a determination of use or sales tax
liability.
The newly signed bill notes numerous states impose a sales tax on goods
and services purchased by customers within their borders, as well as an
excise, or "use tax," on usage, storage or consumption of goods and
services purchased by their residents from a business located out of the
taxing state.
Many of these states require their residents to report and pay the use
tax directly to the state.
The bill notes New Hampshire has no such sales tax and should not be
required to determine, collect and remit such taxes for other states as
such a mandate would be "unreasonably burdensome" given the variation in
rates and exemptions of these taxes in other states.
Senate Bill 5 essentially prevents businesses in New Hampshire from
having to question their customers about whether they live in another
state or plan to use an item purchased here in a state with a sales tax.
The bill does not exempt states with sales taxes from collecting them on
qualifying products purchased in New Hampshire, but it does protect
Granite State businesses from having to disclose customer information
and collect the taxes themselves.
New Hampshire lawmakers have expressed concern that efforts to try and
make Granite State businesses collect other state's taxes requires them
to determine if their customers are telling the truth about where they
live and were they intend to use or store a purchased item.
Lawmakers say the newly passed Senate Bill 5 will ensure Massachusetts
or any state will carry their own burden of demonstrating whether a good
or purchase in New Hampshire is to be used, stored or consumed in
another state.
The governor appeared with numerous local legislators on Thursday at the
Newington-based business to sign the bill and emphasize its importance.
Lynch said a broad spectrum of business owners from around New Hampshire
have expressed support for the legislation, which was passed with strong
bipartisan support.
Sen. Margaret Hassan, D-Exeter, one of the prime sponsors of the bill,
said the bill was supported by all 24 state senators and represents an
effort to protect New Hampshire businesses, consumers and the state's
right to set its own tax structure.
Sen. Martha Fuller Clark, D-Portsmouth, said the legislation was a
response to an issue that "came out of nowhere" and threatened New
Hampshire with having to "do the work of another state."
More than one legislator attending Thursday's signing of the bill,
including House Speaker Terie Norelli, D-Portsmouth, said they were
proud of how expeditiously the bill was pushed through with the support
of lawmakers on both side of the aisle.
Doug Bates of the Greater Portsmouth Area Chamber of Commerce said the
new law will prevent Massachusetts and other states from "picking the
pocket" of New Hampshire businesses.
Lynch's signing of the bill will see the law go into effect immediately.
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