SEABROOK — A civil war's a brewin' over who has the right to impose a sales tax in the Granite State: New Hampshire or Massachusetts?
As far as New Hampshire officials are concerned, their southern neighbor needs to butt out of Granite State business.
"We need to send a clear message that Massachusetts and other states shall not impose their sales taxes on New Hampshire businesses," New Hampshire Gov. John Lynch said about the move by Massachusetts to make a New Hampshire tire store, Town Fair Tire Center, collect sales tax from its Massachusetts customers. "That is why I will be proposing legislation that will prohibit any New Hampshire business from collecting other states' sales taxes on items purchased in New Hampshire stores.
"I think it is outrageous that Massachusetts erroneously believes it can impose its sales tax here in New Hampshire. We have chosen not to have a sales tax here in New Hampshire, and we are not about to let Massachusetts — or any state — impose its sales tax on our businesses for items purchased in New Hampshire stores."
Town Fair Tire Centers, a Connecticut corporation, does business throughout New England, with several stores in Massachusetts and New Hampshire, including one on Route 1 in Seabrook. It is fighting an order by Massachusetts to start collecting a 5 percent sales tax from Bay Staters who buy tires in "tax free" New Hampshire stores.
Seabrook's senator, Maggie Hassan, D-Exeter, is the prime sponsor of the legislation that would stop Massachusetts in its tax tracks. An attorney, Hassan is chairwoman of the Senate Commerce Committee and a member of the Senate Finance Committee.
"If Massachusetts chooses to tax its citizens for use of products they buy in other states, Massachusetts needs to find a way to collect that tax from their citizens and not put the burden on New Hampshire businesses," Hassan said yesterday. "This would place an undo burden on New Hampshire businesses. How is a store clerk supposed to know which of their customers comes from Massachusetts without collecting information about their addresses their customers may not want to give. This also taps into another issue that's very near and dear to our hearts in New Hampshire. That's privacy."
On Thursday, New Hampshire Attorney General Kelly Ayotte announced she'll take action by filing a brief in the Massachusetts Supreme Judicial Court to support the Town Fair Tire Center's appeal of the Massachusetts tax enforcement action.
"I intend to file an amicus brief on behalf of the state to ensure that New Hampshire businesses will not become agents of Massachusetts tax authorities." Ayotte said. "I am concerned that the action taken by the Massachusetts Commissioner of Revenue may be interpreted to expand its authority to collect taxes from New Hampshire businesses. The Massachusetts tax law should not be enforced in such a way as to interfere with interstate commerce."
Seabrook fire Chief and attorney Jeff Brown said the issue of interstate trade is a huge factor.
"To me, there is an interstate commerce argument against this action by Massachusetts," Brown said yesterday. "Massachusetts doesn't have the authority to regulate interstate trade. According to the (U.S.) Constitution, only Congress can do that. But there are other issues against this as well."
Brown noted the Massachusetts sales tax law has a "use tax" provision, stipulating Massachusetts residents buying products out of state they will use in Massachusetts must pay use taxes on the purchases. But, reporting it is on the "honor system," and few people do it, he said.
"Who's responsibility is it to pay the use tax?" Brown said. "According to Mass. state law, it's the Massachusetts resident, not out-of-state businesses."
Brown see precedents being set if Massachusetts were allowed to reach across its borders to create law in another jurisdiction.
"They're declaring war on New Hampshire," Brown said. "They may be going after Town Fair Tire now, but they'll be going after every store in the state of New Hampshire."
Both Brown and Hassan said if Massachusetts only goes after Town Fair Tire Centers or just New Hampshire businesses, and not other businesses in sales tax-free states throughout the nation, it would be selective enforcement.
"And there's a backlash to this," Brown said. "If I were Town Fair Tire, I'd close every store I had in Massachusetts. Then Massachusetts revenue officials couldn't go in and get Town Fair Tire's sales records."
State Rep. Mark Preston, D-Seabrook, believes the New Hampshire Legislature will not be shy about letting Massachusetts know what its limitations are in the Granite State.
"I think what Massachusetts is trying to do is ridiculous, and I'll jump on that bill as a co-sponsor with Maggie Hassan, " Preston said. "Massachusetts is so desperate for money, they're going after any nickel and dime they can get."
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