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Final NH Wayfair Tax Report Waylaid By Pandemic

By James Nani · October 20, 2020, 6:44 PM EDT

A final report due early next month from a New Hampshire commission established to study remote sales tax will likely miss its deadline because of pandemic-related delays, a commission member said Tuesday.

The final report is due Nov. 1. But state Rep. Susan Almy, D-Lebanon, a commission member and chairwoman of the House Ways and Means Committee, told Law360 that because of the novel coronavirus outbreak, the commission hadn't met as planned since early February.

"We would not have been able to meet during the first hectic months of the 2020 session and then — actually in mid-February — the House closed down in quarantine, which turned into a statewide home-stay requirement," Almy said. "We have few staff in the N.H. Legislature and have had secure internet meeting resources for only the most important bills already in process since that time."

While Almy said the remote seller issue was important to the state, which has no sales and use tax, she doubted that the seven-member commission would be able to tackle the issue even next year.

"Because Wayfair may grow as an issue for us, I would like to restore the commission at some point," Almy said. "But next year, due to continuing COVID conditions, would not be a good time to try." Almy referred to COVID-19, the respiratory disease caused by the virus.

In July 2019, New Hampshire enacted a law meant to push back against the U.S. Supreme Court's landmark 2018 decision in South Dakota v. Wayfair , which eliminated the physical presence requirement for businesses to be subject to tax on their sales. The law empowers the state Department of Justice to scrutinize requests to tax New Hampshire's remote sellers and permits the agency to sue the taxing jurisdiction if it determines a request is illegal.

Under the law, out-of-state taxing jurisdictions seeking to audit or impose sales tax on a New Hampshire remote seller must notify the state DOJ at least 45 days in advance. New Hampshire businesses required to collect and remit tax to an outside taxing jurisdiction are allowed to deduct reasonable compliance costs. However, a caveat in the law allows businesses to elect to comply with a taxing request if the company decides that doing so would be "in its best interests."

The law also created a commission to study sales tax collection nationwide. An interim report, issued last November, found that despite the requirement for out-of-state taxing jurisdictions to notify the state of attempts to tax remote sellers in New Hampshire, other jurisdictions had not done so.

The report found that four in-state sellers in New Hampshire had been contacted directly by other states about collecting remote sales tax, but no taxing authorities had gone through the state DOJ, as required under state law.

That report was one of two the commission was required to submit to make any suggestions for further legislation to build upon the law. The commission is required to report its findings and any recommendations for proposed legislation to the president of the Senate, the speaker of the House of Representatives, legislative clerks, the chairs of the Senate and House Ways and Means committees, the governor and the state library.

The commission comprises members of the Senate, the House, the state's Department of Revenue Administration and the state Department of Justice.

Almy said she hadn't heard complaints from businesses she'd tried to keep in touch with for purposes of estimating revenue. She also noted that meetings she'd attended with the National Conference of State Legislatures suggested that states applying Wayfair-inspired rules to collect and remit taxes had done so mostly to the internet platforms that support sales.

Carollynn J. Lear, assistant commissioner with the Department of Revenue Administration, said Tuesday the agency did not have any information about when the report would be released or what it would say.

Samuel Garland, an assistant state attorney general and a member of the commission, told Law360 last week the DOJ hadn't received notice from any out-of-state taxing jurisdictions of an intent to impose sales or use tax on in-state remote sellers. He didn't immediately respond to requests for comment about the status of the commission's final report on Tuesday.

The office of Gov. Chris Sununu, a Republican, didn't immediately respond to requests for comment Tuesday.

--Additional reporting by Asha Glover and Paul Williams. Editing by Robert Rudinger.

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