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Congresswoman Ann McLane Kuster

Representing the 2nd District of New Hampshire

N.H. leaders blast Supreme Court tax ruling

Jun 22, 2018
In The News

CONCORD – New Hampshire Republicans and Democrats presented a rare united front on Thursday in voicing strong opposition to a U.S. Supreme Court ruling, which will likely force small businesses in the Granite State to collect sales taxes for other states.

“It’s clear that none of those judges are from a low-tax state like New Hampshire because if they were, they’d know how outrageous the decision is,” Republican Gov. Chris Sununu said during a Thursday news conference.

The court issued a ruling in the matter of South Dakota v. Wayfair, Inc., on Thursday. The ruling likely means that online businesses can be compelled to collect sales taxes by states, even when those businesses do not have a physical presence in that state. This ruling overturns the 1992 ruling in the Quill Corp. v. North Dakota, which had said that the Constitution bars states from requiring businesses to collect sales taxes unless they have a substantial connection to the state.

This means that a New Hampshire business that sells good online must collect sales taxes for customers in states that have a sales tax, such as Massachusetts and many others. Those New Hampshire businesses will then have to send the money to the taxing state.

Sununu said this ruling goes against the New Hampshire way, as it forces small businesses and small states to bear the burden for big businesses and high tax states.

“I think it’s unconscionable that they would ask our businesses to become basically tax collectors for other states,” he said.

Sununu isn’t alone condemning the ruling, which is picking up bipartisan criticism. U.S. Sen. Maggie Hassan, D-N.H., said the ruling will hurt New Hampshire small businesses.

“I’ve heard from small business owners in the Granite State about how a mandatory internet sales tax collection requirement would negatively impact them, creating a complex web of red tape and hindering their growth,” she said.

U.S. Rep. Annie Kuster, D-N.H., said online retailers are a critical component of New Hampshire’s economy, and this ruling hurts their ability to compete.

“Simply put, this is a devastating ruling for small companies in New Hampshire that sell their products online,” Kuster said.

U.S. Supreme Court Justice Anthony Kennedy, writing for the 5-4 majority in the case, wrote that states have lost as much as $33 billion in sales tax revenue since the 1992 Quill ruling, which he said gave internet companies an unfair advantage.

“Quill puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers,” he wrote. “Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own.”

Chief Justice John Roberts, writing the dissenting opinion, agreed with Kennedy in that Quill was wrongly decided, but he wrote that Congress should make any necessary changes, rather than the court.

“E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical presence rule,” Roberts wrote. “Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.”

Sununu plans to meet with state Attorney General Gordon MacDonald and members of the New Hampshire congressional delegation to form a plan moving forward.

“This is a disastrous decision for New Hampshire’s economy and does not take into account the day to day challenges of running a small business,” U.S. Sen. Jeanne Shaheen, D-N.H., said. “New Hampshire small businesses do not have the time or resources to become tax collectors for other states. This decision creates mountains of red tape for small businesses in New Hampshire and across the country, hurting their ability to grow and create jobs by selling on the internet.”

“Other states shouldn’t be able to force Granite State business owners to navigate a complicated web of tax collection rules in order to collect and remit taxes that we don’t even have in our state,”U.S. Rep. Carol Shea-Porter, D-N.H., added.