‘Main Street Fairness Act’ is unfair to N.H.
In the first week of July, U.S. Rep. William Delahunt, D-Massachusetts, introduced yet again legislation in Congress known as the “Main Street Fairness Act” (H.R. 5660), related to the “Streamlined Sales Tax Agreement (SSTA)”. This effort has been tried and failed a number of times but this year it could garner more support.This legislation would require some retail businesses that engage in remote sales (taking orders via telephone and Internet and sending to another state) to collect the sales and use tax and remit it to the state to which an item was sent or from which the order was placed. This would address the U.S. Supreme Court’s “Quill” decision that declared that a business must have business activity in the other state in order for that state to require collection of its sales tax. Proponents of Delahunt’s bill believe that the “Quill” decision left the door open for Congress to act in this way.While the “Main Street Fairness Act” is aimed at the super-Web sites like Amazon and eBay, it also catches small businesses in no-sales-tax states like New Hampshire that make products available to purchasers in other states via telephone and Internet.If passed, a business located only in New Hampshire and no nexus in any other state, yet exceeds an amount of sales allowed under a “small business exemption,” will be required to collect and remit sales tax to the states that have signed the SSTA.The Delahunt bill would allow the “Streamlined Sales Tax Commission,” made up of officeholders and bureaucrats from SSTA states, to establish a small business exemption to the tax. This exemption would mean the provisions of the law would only apply to businesses making a certain volume of “remote sales.”It is troublesome that this commission could lower the threshold whenever the states that have signed on to the SSTA need money. The commission may also have the power to make other policy changes that affect New Hampshire businesses, while New Hampshire has no seat at the table.Most importantly, however, this bill would circumvent the sovereign decision made by the state of New Hampshire to not impose a tax on retail sales made here in New Hampshire. A small enterprise that happens to make its products available via phone or Internet could fall victim to this federal incursion, if passed.The states that are encouraging Congress to subvert the sovereignty of our state are doing so because they cannot enforce their own laws. Each state that imposes a sales tax also includes a “use tax” provision in its law. This requires residents to pay the use tax, at the same rate as the state’s sales tax, on products brought into that state from another.That principle applies here — a customer in another state purchases an item from a business in New Hampshire (shipped via third party). The customer should be responsible for any tax owed.In 2009, in an effort spearheaded by Gov. John Lynch, sponsored by Sen. Maggie Hassan, and co-sponsored by the full New Hampshire Senate and a host of members of the House in leadership positions, the New Hampshire Legislature passed into law Senate Bill 5, which prohibits New Hampshire businesses from providing customers’ personal information to out-of-state revenue agents unless certain conditions are met.This was in response to an attempt by the Commonwealth of Massachusetts to accomplish much the same as what is being tried in this federal legislation – requiring a business in New Hampshire to collect its sales tax from residents of another state.The legislation’s authors claim to have addressed privacy concerns by requiring non-personal information to be recorded. Regardless of how “simple” the SSTA states make it sound, the federal government has no business allowing other states to dictate tax policy on New Hampshire businesses.Curtis J. Barry, a lobbyist with the Dupont Group in Concord, can be contacted at email@example.com.