In its response to the US Supreme Court’s decision in Wayfair, New Hampshire, one of five states (NOMAD) that does not impose sales tax, requires states to send notices of intent to collect sales and use tax from businesses. New Hampshire Governor Sununu signed Senate Bill 242 into law on July 19, 2019, requiring other states and localities to provide a written notice to the New Hampshire Department of Justice (DOJ) at least 45 days before taking any action to determine or impose sales and use tax liability on a business in New Hampshire.
“... if they think we are just going to take this without a fight, well then they have another thing coming.”
The Law & Its Apparent Noncompliance
The bill was passed in response to US Supreme Court’s decision in South Dakota v. Wayfair, Inc., which established that sellers do not need to have physical presence in a state to create a requirement to collect and remit sales tax.
Because New Hampshire does not impose their own sales tax, SB 242 was passed in an effort to monitor all collections of sales and use tax from New Hampshire businesses. Specifically, the written notice must give the full legal name and address of the seller, the reasons for the sales and use tax request or examination, a citation to legal authorities that authorize the imposition of tax collection, and an explanation of why the seller is subject to those legal authorities.
The DOJ will first review the notice to determine that the collection efforts are “[b]ona fide and non-fraudulent and comport with the United States and New Hampshire Constitution.” If the Department finds the out-of-state taxing authority to be in violation of any law, civil action may be pursued.
Additionally, the bill encourages businesses in NH to notify the DOJ if another state or locality requests information for use in determining sales tax liability. They are also advised to contact an accountant or attorney.
However, out-of-state taxing authorities do not appear to be complying with NH’s law. As of February 2022, there are still states that have not provided the DOJ with written notices as required.