N.H. may go to Supreme Court over Internet sales tax

If this decades-old precedent is overturned, New Hampshire businesses could be forced to collect sales and use taxes on behalf of other states. (Courtesy photo)

CONCORD - Governor Chris Sununu and Attorney General Gordon MacDonald announced on Wednesday that the State of New Hampshire will argue to the U.S. Supreme Court that it should not overrule existing precedent in a manner that would expose New Hampshire citizens and businesses to out-of-state sales taxes.

For over 50 years, the U.S. Supreme Court has restricted states' authority to impose taxes on entities that operate outside of their borders. However, South Dakota has enacted a law that requires a seller that "does not have a physical presence in the state" to collect and remit sales taxes to it. Earlier this month, the Court agreed to hear South Dakota v. Wayfair, Inc. In that case, South Dakota seeks to uphold its law by challenging the so-called "physical presence" standard set forth in a 1967 U.S. Supreme Court decision, National Bella Hess v. Department of Revenue, and upheld in a 1992 U.S. Supreme Court decision, Quill Corp. v. North Dakota.

If this decades-old precedent is overturned, New Hampshire businesses could be forced to collect sales and use taxes on behalf of other states. A reversal of this precedent may also open the door to further taxation of e-commerce. New Hampshire plans to submit arguments to the Court in the form of an amicus curiae, or "friend-of-the-court," brief. It anticipates coordinating with other states that have no sales taxes.

"As Governor, I am going to do everything in my power to fight this outrageous attempt to force New Hampshire's businesses to collect out of state taxes," Sununu said. "We are a no sales tax state. That applies across the board, to our citizens and those in other states. Period."

"The Wayfair case directly implicates the interests of the State and its citizens, including countless New Hampshire business owners engaged in retail sales," said MacDonald. "It is important that these interests are represented as the Supreme Court considers this case and the implications of removing the physical presence requirement."