Citing New Hampshire's sales tax-free status, U.S. Senator Kelly Ayotte (R-NH) told the Commerce Committee today that legislation to force online retailers to collect sales taxes would harm the state's online-based businesses - which for the first time would have to remit sales taxes to jurisdictions nationwide. The "Marketplace Fairness Act" aims to change current law, under which a state cannot compel out-of-state Internet vendors to collect and remit to it the sales tax its residents are required to pay on purchases from traditional brick and mortar vendors.
Citing a letter she received this week from Joe Cortese, a small business owner based in Pittsfield, Senator Ayotte said the legislation would turn New Hampshire's online retailers into tax collectors for states across the nation.
"This legislation tramples on New Hampshire's right to not have a sales tax," said Senator Ayotte, a Commerce Committee member. "The bill under consideration would require New Hampshire Internet businesses to file taxes in the 45 states that collect sales tax. And it would expose local online retailers to audits from those jurisdictions. I will fight any and all federal efforts aimed at forcing New Hampshire Internet businesses to collect sales taxes for other states."
Ayotte noted that the Supreme Court's 1992 ruling in Quill v. North Dakota held that requiring remote vendors to collect such taxes would place an unconstitutional burden on interstate commerce. She continued: "By imposing collection requirements on businesses that have no physical presence outside of their home state, the legislation under consideration stands to erode existing protections on state sovereignty. For non-sales tax states like New Hampshire, this is simply an unfair burden for our businesses to bear."
The Senate Commerce Committee's hearing today focused on the existing tax collection treatment of online purchases. Under existing law, for example, when a customer in Illinois (which has a sales tax) buys a product from an online vendor in New Hampshire (which does not), Illinois cannot currently force the New Hampshire vendor to collect and remit the Illinois tax on that sale.
Last fall, Senator Ayotte joined with Senator Ron Wyden (D-OR) to introduce a bipartisan resolution expressing the sense of the Senate that no federal legislation should give states the authority to impose any new burdensome or unfair tax collecting requirements on Internet businesses and entrepreneurs.