MANCHESTER, N.H. — A bill pending in Congress would turn New Hampshire businesses that sell over the Internet into tax collectors for other states if they have more than $500,000 in remote sales.
“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,” U.S. Sen. Kelly Ayotte, R-N.H., said at a Senate Commerce Committee hearing Wednesday. Ayotte is a member of the committee.
“For non-sales tax states like New Hampshire, this is simply an unfair burden for our businesses to bear,” she said.
The debate over the so-called Marketplace Fairness Act has pitted large national players in the Internet space against each other. Amazon supports it; eBay opposes it. In Maine, Gov. Paul LePage is urging passage of the bill. First District Rep. Chellie Pingree is the only member of Maine’s delegation to support it.
In June, Lepage said, “A damaging inequity exists in the retail marketplace because some online retailers are not required to collect Maine sales tax, but Maine retailers are,” he said. “Not only does this hurt Maine businesses, it hurts the state.”
Brian Bieron, eBay’s senior director for federal relations, said with municipal and county taxes added on to state taxes across the country, a nationwide Internet seller would have to keep track of more than 9,600 tax jurisdictions under the proposed legislation.
“This is going to fundamentally change the rules,” Bieron said. “So where today it’s New Hampshire law that governs the sales of the New Hampshire business, this is all about making the law of the government of the buyer the law that applies to the New Hampshire business,” he said.
The proposed changes threaten New Hampshire’s tax-free advantage, UNH professor Neil Niman said. “We’ve built our retail economy on the advantages of no sales tax, and this just seems like the first step toward eliminating one of our most important advantages.
“I think we need to be more concerned than just Internet business; it could impact all businesses,” said Niman, who chairs the Economics Department.
“If this Marketplace Fairness Act is extended to sales on the Internet, what’s going to stop them from one day extending it to brick and mortar businesses?” Niman said. “So, are we going to see Macy’s or Sears being compelled in the Rockingham Mall or Fox Run Mall to collect sales taxes for the state of Maine or Massachusetts?”
Amazon’s vice president for global public policy Amazon, Paul Misener, said at Wednesday’s Senate hearing, “Amazon believes that Congress should authorize the states to require out-of-state sellers to collect the sales tax already owed, and we strongly support enactment of S. 1832, a bipartisan bill already before the Senate.”
Although the bill would give businesses an exemption from collecting other states’ sales taxes for up to $500,000 in out-of-state sales, that number is low compared to other measures of small business size, Bieron said.
“The Small Business Administration currently defines a small business who’s an online retailer as being a small business up until $30 million in sales,” he said.
U.S. Sen. Jeanne Shaheen, D-N.H., is cosponsor of the Ayotte-Wyden resolution to ensure that Congress does not place unfair tax collection burdens on small businesses, spokesman Faryl Ury said.
Ayotte joined with Sen. Ron Wyden, D-Ore., last fall to introduce the bipartisan resolution, but it hasn’t passed the Senate.
NobleSpirit, a Pittsfield-based coin and stamp dealer using eBay as its sales platform, said the state collection regime would benefit Amazon.
“Their infrastructure … is structured so they can deal with these issues,” said Joe Cortese, owner of NobleSpirit. “This a is a strategic advantage that they have that puts them ahead of the competition in terms of all of the small business sellers.”
“If policy-makers decide to impose new sales tax collection burdens on small businesses and force them to collect and remit in 9,600 tax jurisdictions nationwide, the legal, compliance and administrative costs alone would undoubtedly make it harder and in many cases impossible, to enjoy the opportunities and benefits that come with access to the Internet marketplace,” Cortese wrote in a letter to Ayotte, which she submitted at the Senate Commerce Committee hearing.
Fred Kocher, president of the New Hampshire High Technology Council, said, “Our position is that it negatively impacts mall online retailers that would be required to collect sales taxes not only in state but out of state.”
“The argument has been that it’s unfair that online retailers are exempt from taxes when retailers that have stores on main street have to pay taxes, but the counter argument to that is the stores on main street have online sales, too, so they benefit from not having taxes on Internet transactions,” Kocher said.
But there is no blanket exemption from collecting sales taxes for Internet retailers. Under the 1992 Quill decision, which predates large-scale Internet commerce, businesses that have a physical presence in a state with sales tax have to collect that sales tax on their sales there.
The issue parallels the fracas created years ago when Massachusetts tried to force Town Fair Tire to collect sales from Massachusetts residents who purchase tires from the firm’s New Hampshire stores. New Hampshire legislators responded by passing a law barring businesses from revealing customer information to other states that seek it for the purpose of collecting taxes.
The Massachusetts Supreme Court struck down the state revenue officers’ six-year effort to force Town Fair to collect the tax.
“It wasn’t right in that case; it isn’t right in this case,” said former U.S. Sen. John E. Sununu, R-N.H. “The more you tax something, the less of it you’re going to get.
“If we really believe, as I do, that the Internet is an engine of innovation and job creation and entrepreneurship, then we should be very, very careful before we start piling on with the kind of taxes and fees and regulations that are going to stifle that economic growth,” he said.
Sununu, who is chairman of the board of the Waterville Valley Ski Resort, helped enact a seven-year ban on Internet access taxes in 2008. The legislation did not directly address the issue of state sales taxes on Internet purchases. He also consults for PricewaterhouseCoopers LLP.
“This is the government forcing businesses to collect taxes for other states,” Sununu said Friday. “Why should a business in Manchester, New Hampshire, have to collect taxes on behalf of the state of South Carolina or the state of Arizona?” It might not even be constitutional,” Sununu said.
(c)2012 The New Hampshire Union Leader (Manchester, N.H.)
Distributed by MCT Information Services
This would place a huge burden on out of state businesses. You’re already supposed to claim purchases by law on income tax filing. Come on governor just because you lie and cheat doesn’t mean we all do.
You made a persuasive point with me until you took a cheap shot the governor. Please try to keep your comments more civil in the future.
Governor LaPudge loves to raise taxes, tolls, and fees, after all he’s got to make up the revenue shortfall he created by reducing taxes paid by upper earners . Remember middle class Mainers, the beatings will continue until moral improves.
This bill would not raise taxes. It moves the burden of collection to the business instead of relying on the integrity of online purchasers to correctly report sales/use tax due on their income tax return.
The burden to the business to charge the consumer, instead of consumers self-reporting.
Businesses will be required to collect from consumers and remit to the various taxing entities. Not sure what your point is here.
Lepage’s campaigns are funded by the upper earners or, rather, his uppoer owners. Those are his constituents. The rest of Mainers, however, hold the more votes by a half million and we need to use them to fire him. What is the procedure for a recall in this state?
I don’t see that at all.
I see people who are fed up…that is why they voted for Lepage.
Granted there is always the “good ole boy” system in Maine (Baldaci was no different), and this will be any Governors downfall.
The democratic progressives are below 50% in the state (which is unusual considering most of the state voted for Obama).
Liberal First District Rep. Chellie Pingree sides with the governor on this issue of Internet sales tax. Would you favor a recall of Pingree if a recall procedure was in place?
Yes. Unfortunately, there exists a basis, other than her support for Lepage on this issue, on several other levels for my “yes” answer to your question.
He has done a lot better than the past two scabs
Another bullying attempt by the gov. to force other people to his views on how the world should be when he should be looking at getting his own house in order first.Mainers havent heard anything on lawmakers or their companies dealing with the state or reducing the perks for themselves.
I happen to disagree with the governor on the Internet sales tax issue. But I fail to understand how the governor is “bullying” by supporting a measure you are obviously opposed to. After all, if a governor doesn’t support any issues, why have a governor in the first place?
He seems to be always pushing his ideas on other people.Now he seems to be pushing his plans on states with no sales tax.Why doesnt he look at home first and cut into his perks and the lawmakers,and then start on the feds.
I don’t know what perks the governor and lawmakers have that needs cutting, so I can’t comment on that issue. You did not however satisfactorily answer my question on how the governor is “bullying”. If by “bullying” you meant, “Pushing his plans”, then I can’t understand what is wrong with that. “Pushing his plans” is what a governor is supposed to do whether you agree or don’t with his agenda.
lets try healthcare ins. and pensions for a start
This country argues petty politics while global warming has gone beyond agreement among scientists (including the Koch brothers’ scientist who used to doubt) into statistical fact. The odds of the extremeness of the U.S. drought, along with heat and droughts and extreme rainfall in other countries, are so low that only global warming can be the cause.
And we are arguing about collecting sales taxes??? Our focus needs to be on how to reduce our CO2 and methane emissions so our planet does not fry. Come on, politicians, BRAVE UP, and deal with this issue and if it means taking on well funded lobbies, then summon the courage.
Point well taken ……………. BUT ………………… Until the AMERICAN PUBLIC gets fed up with OUR spineless, gutless, bought and paid for Politicians, things like this and cutting the $Billions and $Billions that OUR Government gives away to Foreign Countries, instead of keeping the $$$$$ to help those in THIS Country, ………….. sadly, will not happen.
His point is not well taken because he is just another mouth piece for a radical element within the Progressive Socialist movement.
Evergreen Solar is a much better example of how green energy stimulus $ was outsourced to China from MA (as one example close by …many more).
Obviously rexican has forgotten about CONOOC, and our presidents involvment in allowing them purchase vast resources, or Brazil (who also owns huge amounts of our debt) and the back door peddling of the Government and stimulus $ for their offshore developement.
How about Van Jones using or peddling American Indians on his so called Green iniatives (no politics there)?
The US government is responsible for putting Jacobs wind energy out of business during rural electrification.
We were green before rexican was in diapers…they did not call it green then, they called it yankee thrift / responsible.
We have already reduced them.
Its the other countries that we don’t RULE.
How can we honestly tell China to reduce their CO2 when they own vast amounts of our debt?
You see what they have done to us?
President Obama has used green energy and people etc. as a political tool.
For instance….I would love for everyone to downsize and build small log cabins.
Old School style.
They are very green….very little machining….no grinding small chips and using glues to press stuff into sheets…to be nailed to neat little sticks that use a lot of energy to dry….no more oil used on flappy siding that looks like plastic.
But the reality is….people like the “communist type housing” they get from manufacturers and builders now.
We have done no such thing. There are presently two major contributors to atmospheric change and they are the US and China. China is using the US as cover so it doesn’t have to act.
It is sad you have signed on to spread misinformation, deceit and lies. China holds some US debt but the vast majority is held by Americans, not the Chinese. This is irrelevant to the point.
Green energy has not been as you say used as a political tool. It is a fast growing, lucrative and innovative industrial sector. By politicizing it as you do, you are providing cover the the Chinese who have used unfair trade practices to sideline American investment. Solar cells are selling. Worldwide demand is skyrocketing. By “blaming” Obama about Solyndra, you give your approval for China to manipulate the next great industry.
America refuses to adopt any of the greenhouse gas reduction treaties and the GOP has signed on with the purveyors of lies to make sure we do nothing. The same people lying about the atmosphere are also inclined to dismantle FEMA, underfund your local fire department and promote shield laws so insurance companies do not have to pay claims related to climate change and increased storm intensity.
You are acting as an agent of deceit with the price to the inhabitants of the world being food security and sustainability. My only question to you is what could you possibly have to gain by playing along with these sociopathically greedy monsters?
What?
I guess your not a very civil person.
China is the third largest holder of US debt?
US citizens only own about 950 billion or so…China is much large. Yes….. not quite as much as Corps etc….but I am hardly lying about the problem.
This does not include US mortgage held by the US government and correspondinly to China…who has also privately bought other mines and commodities (not just in the US but worldwide).
You barkest up the wrong tree, with your ranting.
Ten trillion of 14 trillion in debt is held by Americans. Don’t forget, when these bonds are repaid, they are repaid with interest to Americans as well. This is a big portion of the American economy.
As far as not being civil, that is not for you to say. You know nothing about me except that I disagree with you and consider those who propagate misinformation about atmospheric science liars.
We are not pursuing sensible climate policy because interested parties are contaminating the dialog and propagandizing the American people. Period. It has nothing to do with China. Profits for a few have been placed above the safety and welfare of all of the earths inhabitants.
Only a self-centered imperialist would consider monetary profits as more important than the sustainability of our planets natural systems. Supporting these people is ethically indefensible.
Maine business have got to get more competitive if they want to do business.
Some of the markups on products force people to look other places, even though they like to shop local.
Even between counties. I remember a person telling me he saved over a $150 on brake parts just driving to Bangor from Machias…..granted you have fuel prices, but still that is a considerable savings.
Money is tight for people.
I agree and disagree with our Governor’s policies at times.HE’S RIGHT THIS TIME. Rural states are particulary at a disadvantage in collecting taxes. If you live in Rockwood, why would you buy gas, pay state sales tax, and use your time to buy a TV at Best Buy in Bangor when you could order it online. It’s killing our tax base in Maine.
Agreed, but … the NH representative also has a point in that this requires in state businesses to follow the law of their buyer. While collectiving sales tax is relatively straightforward I wonder if this wouldn’t be used as precedent to having to follow other laws of the buyer’s state (think innovative tort lawyer). If that happens I can envision two scenarios, a huge burden on interstate businesses OR one federal law for all.
So … level the playing field for Maine businesses (and make sure everyone pays the proper sales tax) or open the door to truly burdensome state &/or federal regulations?
if the retailers cannot innovate to compete, whether local or national, then they should go out of business.
Customers visit these uncompetitive stores and then order elsewhere online at times. Is that fair to the people that have to pay for all of the overhead? Does Amazon.com contribute peoperty taxes and employe people in your town? Best Buy does in mine.
If Penguin understood the implications of this tax, he wouldn’t support it. Amazon is the primary sponsor of the move to tax internet sales. Why? Because they have a new business model that will get any product that you purchase from them online into your hands within 24 hours. In order to make that happen, they need to have distribution centers in every State. In order to make that possible, they need to collect sales tax. If this tax is allowed, you can kiss all kinds of local businesses goodbye – Amazon will bury them.
Republicans that love to preach “No More Taxes” They lower the taxes for the rich and then they make up for lost revenue by getting it from the poor.. For instance lets say i don’t have the financial income for a new car so i have to purchase a used one, being poor and not being able to afford a new car, i have to pay a higher interest rate.. Rich people don’t buy used they buy new.. CEO’s pay less taxes on their income than their secretaries, according to Buffett.. Do you think rich people shop on eBay and buy used stuff? If they do it is for something unusual like a grill for a 1907 car they are restoring for their collection.. They can afford once again to buy new.. I would love to blame this internet tax bill on a Republican but it was a Democrat Dick Durbon.. And for all the things Republicans do not want to back because it was a Democratic idea, i wish this was one of them.. Seems all Republicans want this too.. The middle guy is screwed now, First he buys a cd pays taxes then he gets sick of it so he sells it, to someone who will pay taxes again for a second time.. Same item taxed twice.. That’s whats gonna happen if this goes through.. Maybe now they just want the companies like eBay and Amazon but the little guy will get it too.. Not surprising mostly all Republicans are pushing it through..