In Tax-Free States, Businesses Squirm at Collecting Online Sales Taxes for Others

The “Live Free or Die” state of New Hampshire is also the “Live Sales-Tax Free” state, one of only five that do not collect any tax on retail purchases. And despite a U.S. Supreme Court ruling in June allowing states to collect sales taxes when their residents buy online, some of New Hampshire’s online retailers don’t want to help other states collect their money.

New Hampshire lawmakers tried a couple of months ago to write a law that would have set up a series of hurdles for other states that want New Hampshire retailers to collect sales tax on their residents’ purchases. The bill called for outside tax authorities to first register with the New Hampshire attorney general, pay a fee and then prove the constitutionality of the sales tax. The legislation failed — partly because of fears it would expose the state’s small businesses to litigation from other states — but the resistance remains.

“It’s extremely unfortunate that retailers who do not have to collect taxes for the state of New Hampshire are going to be put in the position of having to collect for other states,” said Nancy Kyle, president and CEO of the New Hampshire Retail Association, representing 900 businesses in the state. “This is a very difficult thing for small retailers to implement.”

“I would advise my members to talk to the [state] Department of Justice and consult with their own attorneys,” she said.

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