Wayfair Ruling Opened Door for Sales Tax Requests. So Far, Zero Collected

Dec 2, 2019

Credit Ken Teegarden via Flickr CC

Despite fears that a 2018 Supreme Court decision would open the floodgates on sales tax collection requests from New Hampshire businesses, a report from the N.H. Department of Justice shows that through October 31, not a single tax authority has filed the necessary notification to collect a tax.

Last year’s ruling in South Dakota v.Wayfair cleared the way for the 45 states with a sales tax to require businesses outside of their borders to collect and remit a sales tax on their behalf. The ruling overturned 50 years of precedent that said companies must have a physical presence in a state before it is subject to sales or use tax collection requirements. It was seen as a blow to companies in five states including New Hampshire that sell goods over the internet, which would now be forced to collect sales or use taxes on those interstate purchases. 

After an initial rejection, the state legislature passed a bill in response to the decision that requires any state or local taxing authority--an estimated 10,000 different entities--to first notify the Attorney General’s office before it sends any New Hampshire business a tax remittance notification. 

According to a new report, zero taxing notifications were received through the end of October.

The report also shows that just four businesses have contacted the Department of Justice concerning possible tax collection efforts.

The low rate of tax activity could mean one of two things: it’s proof that the law is having its intended effect of scaring off tax collectors from other states, or it’s a sign that initial fears of a massive wave of tax collection bills may have been overblown. 

Either outcome is welcome news to New Hampshire businesses, which have expressed fear over the cost of attempting to collect and remit tax bills on behalf of thousands of different jurisdictions.

The Attorney General’s office is serving as a resource for those businesses, operating a hotline for companies that have questions about the Wayfair ruling and, should it ever receive a taxing notification, the office will determine if the request meets legal scrutiny.

New Hampshire’s congressional delegation is also attempting to shield local businesses from the costs of complying with the ruling. Bills filed in both the House and Senate seek to delay the collection of any taxes until 2021, and would exempt businesses that generate less than $10 million in sales. The legislation remains stalled, however, as it likely faces opposition from the 45 states that could benefit from an influx of tax receipts.