New Hampshire Enacts Legislation to Protect In-State Sellers Post-Wayfair

New Hampshire has enacted legislation to protect in-state sellers considered remote sellers in other states following the South Dakota v. Wayfair decision. The legislation prohibits “foreign taxing jurisdictions” from requesting private customer information from, conducting examinations of, or imposing sales and use tax collection obligations on New Hampshire remote sellers, unless the outside jurisdiction provides notice to the New Hampshire Department of Justice (DOJ). The law aims to allow remote sellers to comply with foreign taxing jurisdiction directives if they determine it is in their best interest.

A foreign taxing authority must provide written notice to the DOJ at least 45 days before taking any action to determine or impose a sales or use tax liability against a New Hampshire remote seller. The notice must denote that is an “RSA 78-E Notice, provide the full legal name and address of the seller, contain the reason for the request or examination, cite the legal authorities that authorize the imposition of a tax collection obligation on the seller, and explain why the seller is subject to the out-of-state laws.

Foreign taxing authorities are not allowed to request private customer transaction information from New Hampshire remote sellers to determine if one of their customers has a sales or use tax liability without first providing written notice of intent 45 days in advance.

New Hampshire remote sellers shall provide any notices they receive to the DOJ containing requests for customer information to ensure the foreign taxing authority has provided sufficient notice as described above. A New Hampshire remote seller may elect immediate compliance with a foreign taxing authority if its in seller’s best interest. The seller must provide notice to the DOJ if it chooses to comply, either by email, phone call, or letter.

The DOJ will review all written notices from foreign taxing authorities to determine if a foreign taxing authority’s laws meet the requirements of the U.S. and New Hampshire constitutions and other considerations such as a safe harbor for sellers with limited business in a state, retroactive tax collection, and whether the state is an SST member.

If the DOJ determines that an action by foreign taxing jurisdiction or authority creates an undue burden on interstate commerce or violates any other provisions of the U.S. or New Hampshire constitution or any applicable state or federal law, the DOJ may bring civil action against the jurisdiction or authority.

Under the legislation, a New Hampshire remote seller that is obligated to collect and remit sales or use tax on behalf of a foreign taxing authority is entitled to recover or deduct any “reasonable costs” such as initial set up or ongoing maintenance costs from any taxes collected.

These provisions do not apply to New Hampshire sellers that have a physical presence in the foreign taxing jurisdiction. Physical presence does not include activities typically included under a “click-through” nexus provision and it also requires temporary presence of more than 15 days before it constitute physical presence. New Hampshire sellers should review the full list of what constitutes physical presence which would eliminate them from the protection under this provision.

The New Hampshire Department of Justice, in collaboration with the Department of Revenue Administration, will transmit periodic bulletins to New Hampshire businesses about these new developments related to tax collection by foreign jurisdictions. (Ch. 280 (S.B. 242), Laws 2019, effective July 19, 2019)

Posted on August 12, 2019