Online sales tax is one of the biggest controversies in the field of sales tax. Strong cases are made for and against. New approaches toward solving the problems on both sides of the debate are proposed. New strategies are dreamed up by people with a wide range of goals broadly or narrowly associated with the question.
Now New Hampshire has weighed in. Senator Jeanne Shaheen has spoken up against the Marketplace Fairness Act specifically because of its possible effects on New Hampshire small businesses.
New Hampshire has no sales tax. That means that businesses in New Hampshire that don’t have nexus in other states don’t have to collect sales tax. Major retail chains have experience in collecting retail sales tax, Shaheen figures, so they’re happy to get rid of the competitive advantage major online retailers gain by skipping sales tax.
But small businesses — including retail, manufacturing, mining, energy, and more — would have the added costs of sales tax compliance without any benefits, competitive or otherwise. New Hampshire businesses would have to collect sales tax, and their state won’t see any of the taxes they collect, so they won’t benefit from having additional funds invested into the infrastructure, or any other benefits sales tax might confer.
From Shaheen’s perspective, it looks like her constituents will be doing a lot of extra work investing in other states, while her state gets nothing out of the deal.
It’s a good point.
Shaheen also seems to feel that New Hampshire businesses will be at a disadvantage because collecting, filing, and remitting sales tax will be a new skill they’ll need to develop. We see her thinking there. But we also know that many businesses in states that do collect sales tax — especially those that aren’t in retail — have plenty of trouble figuring out those complex sales tax regulations.
One client thought they were responsible to collect and remit sales tax for just one jurisdiction. We had to tell them that they were actually responsible for sales tax in 35 different jurisdictions.
Manufacturers often assume that they aren’t responsible for sales tax at all… not realizing that business practices like drop shipping, trade show sales, and the like can create nexus for sales tax purposes. In fact, it’s quite possible that there are businesses in Shaheen’s home state right now that should be filing sales tax in some other state, and don’t know it.
Companies in New Hampshire — or any other state — can count on SalesTaxDataLINK to keep up with all sales tax regulations, no matter how often they change. Take a test drive with your own data today, and see what you’re missing.
