By David Tirrell-Wysocki / Associated Press
CONCORD, N.H. - Neighboring states would have a tougher time collecting sales taxes from residents who spend their money in New Hampshire under a bill passed unanimously Wednesday by the state Senate.
The Senate vote responds to efforts by Massachusetts to force Town Fair Tire, a New England tire store chain, to collect a 5 percent "use" tax on items Massachusetts residents buy in New Hampshire, but use in their home state.
New Hampshire does not have a general sales tax, a selling point it uses to attract out-of-state retail dollars.
"Not having a sales tax is an important facet of our state's overall economy and our pro-business environment," said Sen. Peter Bragdon, R-Milford. "Now other states are trying to force New Hampshire businesses to collect what amounts to a sales tax, thus eroding the New Hampshire advantage."
The bill moves to the House and has the strong support of Gov. John Lynch.
"We should not allow other states to turn New Hampshire businesses into their own tax agents," Lynch said.
The bill would establish certain conditions other states would have to meet — to New Hampshire's satisfaction — before New Hampshire retailers would have to give them information about shoppers or collect a "use" tax for them.
For instance, other states would have to stipulate that a retailer can presume that items it sells are intended for use in New Hampshire unless the shopper volunteers otherwise. Other states also would have to adopt tough regulations to ensure residents accurately report every taxable item bought in New Hampshire, or any other state.
In a 2003 audit, the Massachusetts Department of Revenue found 313 sales at Town Fair locations in New Hampshire to customers who provided Massachusetts addresses — in some cases, driver's licenses — when they bought tires and had them installed. East Haven, Conn.-based Town Fair collects the information for recall and warranty-tracking purposes.
Massachusetts argued Town Fair should have collected $109,000 in taxes on its behalf. The case is pending before the Massachusetts Supreme Judicial Court.
Massachusetts requires residents to pay a "use" tax for goods they buy out of state but use in Massachusetts, provided the item is taxed by Massachusetts. Residents must report and pay the tax with their state income tax returns; the state concedes most do not.
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