Post by homebase on Feb 7, 2009 10:08:26 GMT -5
Heads up Massachusetts residents! Mass Dept. of Revenue is getting frisky, testing new waters....
NH officials promise fight over Mass. tax plan
MANCHESTER - A sales tax in tax-free New Hampshire?
If Massachusetts has its way, its residents will be paying the Bay State's 5 percent sales tax on certain goods purchased north of the border.
Manchester Mayor Frank C. Guinta called it harassment and promised a fight. Consumers called it a reason not to shop in New Hampshire.
"That would be horrible," said Manfred Herweg, of Groton, Mass., as he slid two big-screen TVs into his car yesterday at Best Buy in Nashua.
The Massachusetts Department of Revenue has ordered Town Fair Tire Centers, a Connecticut-based company with stores in Massachusetts and New Hampshire, to charge Bay Staters a 5 percent sales tax on purchases in New Hampshire. The Bay State requires residents to pay a little-known "use tax" when they buy certain items in New Hampshire for use in Massachusetts.
This case puts the onus squarely on the company.
"The retailer is not in control of what the customer does with the product," said David J. Nagle, an attorney representing Town Fair Tire Centers.
The case, which is pending before the Massachusetts Supreme Judicial Court, has ramifications for companies and consumers alike, said Nancy C. Kyle, president of the Retail Merchants Association of New Hampshire.
"I think it's horrific," she said. "I don't think it's any coincidence that the state of Massachusetts is going after a medium-sized retailer. They're testing the waters to see how it goes and if they win their case, the big-box retailers are next."
The Massachusetts Department of Revenue reviewed sales five years ago at Town Fair Tire locations in Manchester, Nashua and Salem. It then levied a $108,947 tax assessment. The company appealed, but the Massachusetts Appellate Tax Board found a "definite link" between Massachusetts and Town Fair Tire.
"The purchases at issue in this case were not cash-and-carry transactions, but instead involved tires installed on vehicles operated by Massachusetts residents," the board concluded last June.
Town Fair Tire Centers, which now has seven locations in New Hampshire, is suing Massachusetts for a violation of due process and U.S. commerce rights.
Besides Guinta, who called Massachusetts' actions a violation of New Hampshire sovereign ability, state leaders are watching with a bit more reserve.
"The issue is going through the courts of Massachusetts so it would be premature for us to take any position, but we are monitoring it," said Kevin Clougherty, commissioner of the New Hampshire Department of Revenue Administration.
Colin Manning, a press secretary for Gov. John Lynch, said yesterday, "There is no sales tax in New Hampshire and there should be no tax charged to items sold in New Hampshire."
The issue is not cut and dried, according to Stan Arnold, former commissioner of Department of Revenue Administration and current senior tax policy adviser at the law firm of Rath, Young and Pignatelli.
Contrary to local myth, he said, if Massachusetts residents come to New Hampshire and purchase goods that are taxable in their home state, they are required by law to report taxes they did not pay as a "use tax" when they file their state tax returns.
The use tax is self-reported and hard to track, so there is a very low compliance with the law, he said.
If a company is New Hampshire-based without any presence in Massachusetts, the company is not required to collect sales tax for that state, Arnold said. He said if a company is delivering goods to Massachusetts or performing services in the state, they do have to collect a sales tax.
If the company has stores in Massachusetts and New Hampshire, he said, the company may be required to collect sales tax on goods Massachusetts residents buy in New Hampshire. "That's a narrower call," Arnold said, and probably why the issue is being litigated.
A "big box store" that does business in many states has no obligation to find out where its customers are from or to collect sales tax for another state, Arnold said.
Phil Blatsos, another former DRA commissioner, noted that states are sovereign and don't have to collect revenue for other states. He said states like Massachusetts often put pressure on businesses with stores in both states to collect the tax, but the company has no obligation to do that.
"There has to be a nexus," Blatsos said. "If something is bought in New Hampshire and the company delivers it and installs it in Massachusetts, then it should collect the tax because they are doing business in Massachusetts. But if someone comes to New Hampshire and just buys a computer, the company has no obligation to collect the tax."
Shoppers aren't buying the Bay State's position.
Jim Schiavoni and Helen Hoffman, of Haverhill, Mass., said paying a sales tax on their cross-border purchases would take the incentive out of making the 15-minute drive to the Mall at Rockingham Park in Salem.
"It's not fair, we pay plenty of taxes in Massachusetts and now they are raising those too," Schiavoni said. "That would be like a tax for just being from Massachusetts. I'm against it."
J.T. Melanson, of Tyngsborough, Mass., who was shopping at Best Buy in Nashua, said the use tax was "utterly ridiculous."
"If you buy an item in another state, Massachusetts should not force you to pay taxes on it," he said. "That's not right."
Breanna Lucci, from Andover, Mass., was at the Nashua Town Fair Tire store having work done on her car.
"I think it's kind of ridiculous," she said.
"People travel and shop all the time, so I don't get what the difference is," she said. "It's the same thing with people going to outlet stores out of state."
NH officials promise fight over Mass. tax plan
MANCHESTER - A sales tax in tax-free New Hampshire?
If Massachusetts has its way, its residents will be paying the Bay State's 5 percent sales tax on certain goods purchased north of the border.
Manchester Mayor Frank C. Guinta called it harassment and promised a fight. Consumers called it a reason not to shop in New Hampshire.
"That would be horrible," said Manfred Herweg, of Groton, Mass., as he slid two big-screen TVs into his car yesterday at Best Buy in Nashua.
The Massachusetts Department of Revenue has ordered Town Fair Tire Centers, a Connecticut-based company with stores in Massachusetts and New Hampshire, to charge Bay Staters a 5 percent sales tax on purchases in New Hampshire. The Bay State requires residents to pay a little-known "use tax" when they buy certain items in New Hampshire for use in Massachusetts.
This case puts the onus squarely on the company.
"The retailer is not in control of what the customer does with the product," said David J. Nagle, an attorney representing Town Fair Tire Centers.
The case, which is pending before the Massachusetts Supreme Judicial Court, has ramifications for companies and consumers alike, said Nancy C. Kyle, president of the Retail Merchants Association of New Hampshire.
"I think it's horrific," she said. "I don't think it's any coincidence that the state of Massachusetts is going after a medium-sized retailer. They're testing the waters to see how it goes and if they win their case, the big-box retailers are next."
The Massachusetts Department of Revenue reviewed sales five years ago at Town Fair Tire locations in Manchester, Nashua and Salem. It then levied a $108,947 tax assessment. The company appealed, but the Massachusetts Appellate Tax Board found a "definite link" between Massachusetts and Town Fair Tire.
"The purchases at issue in this case were not cash-and-carry transactions, but instead involved tires installed on vehicles operated by Massachusetts residents," the board concluded last June.
Town Fair Tire Centers, which now has seven locations in New Hampshire, is suing Massachusetts for a violation of due process and U.S. commerce rights.
Besides Guinta, who called Massachusetts' actions a violation of New Hampshire sovereign ability, state leaders are watching with a bit more reserve.
"The issue is going through the courts of Massachusetts so it would be premature for us to take any position, but we are monitoring it," said Kevin Clougherty, commissioner of the New Hampshire Department of Revenue Administration.
Colin Manning, a press secretary for Gov. John Lynch, said yesterday, "There is no sales tax in New Hampshire and there should be no tax charged to items sold in New Hampshire."
The issue is not cut and dried, according to Stan Arnold, former commissioner of Department of Revenue Administration and current senior tax policy adviser at the law firm of Rath, Young and Pignatelli.
Contrary to local myth, he said, if Massachusetts residents come to New Hampshire and purchase goods that are taxable in their home state, they are required by law to report taxes they did not pay as a "use tax" when they file their state tax returns.
The use tax is self-reported and hard to track, so there is a very low compliance with the law, he said.
If a company is New Hampshire-based without any presence in Massachusetts, the company is not required to collect sales tax for that state, Arnold said. He said if a company is delivering goods to Massachusetts or performing services in the state, they do have to collect a sales tax.
If the company has stores in Massachusetts and New Hampshire, he said, the company may be required to collect sales tax on goods Massachusetts residents buy in New Hampshire. "That's a narrower call," Arnold said, and probably why the issue is being litigated.
A "big box store" that does business in many states has no obligation to find out where its customers are from or to collect sales tax for another state, Arnold said.
Phil Blatsos, another former DRA commissioner, noted that states are sovereign and don't have to collect revenue for other states. He said states like Massachusetts often put pressure on businesses with stores in both states to collect the tax, but the company has no obligation to do that.
"There has to be a nexus," Blatsos said. "If something is bought in New Hampshire and the company delivers it and installs it in Massachusetts, then it should collect the tax because they are doing business in Massachusetts. But if someone comes to New Hampshire and just buys a computer, the company has no obligation to collect the tax."
Shoppers aren't buying the Bay State's position.
Jim Schiavoni and Helen Hoffman, of Haverhill, Mass., said paying a sales tax on their cross-border purchases would take the incentive out of making the 15-minute drive to the Mall at Rockingham Park in Salem.
"It's not fair, we pay plenty of taxes in Massachusetts and now they are raising those too," Schiavoni said. "That would be like a tax for just being from Massachusetts. I'm against it."
J.T. Melanson, of Tyngsborough, Mass., who was shopping at Best Buy in Nashua, said the use tax was "utterly ridiculous."
"If you buy an item in another state, Massachusetts should not force you to pay taxes on it," he said. "That's not right."
Breanna Lucci, from Andover, Mass., was at the Nashua Town Fair Tire store having work done on her car.
"I think it's kind of ridiculous," she said.
"People travel and shop all the time, so I don't get what the difference is," she said. "It's the same thing with people going to outlet stores out of state."