The Online Merchants Guild (OMG) today posted a message on their Facebook page asking if any New Hampshire based sellers have been approached by other states regarding sales tax.
“If you live in New Hampshire and have been contacted by another state about sales tax you purportedly owe there please let us know. The NH Attorney Generals office is interested in speaking with businesses that are being approached by out of state tax departments as there is apparently a law on the books in NH that precludes this and we would like to make some introductions.”
If this applies to you and you wish to learn more about this situation, the bottom of this post has links to connect with OMG.
A Little Background on This Sales Tax Issue
This week we reported that OMG is helping an Illinois seller that is getting harassed by the State of California for back taxes on previous sales the seller made through Amazon while the state effectively “exempted” Amazon from collecting sales tax during that period.
The Online Merchants Guild is a seller advocacy group founded by Paul Rafelson who has been litigating state tax cases for over a decade. He filed an Amicus brief in South Dakota v. Wayfair Inc ‘Wayfair’ arguing on behalf of small business sellers. ‘Wayfair’ is the 2018 landmark US Supreme Court Case that overturned ‘Quill’ and opened up the floodgates of states demanding sellers and marketplaces like eBay, Etsy, and Amazon to collect sales tax on interstate consumer sales.
Since the US Supreme Court does not make law, the decision in ‘Wayfair’ created a compliance mess with states passing sales tax laws that appear similar, but often have important little differences making compliance complicated. In addition, some states are aggressively trying to collect back taxes on previous sales, using dubious tactics that may not even be legal. A concern that was raised during the arguments in front of the US Surpreme Court.
The Online Merchants Group is trying to level the playing field by legally tackling select situations where sellers have been financially injured in an effort to set legal precedence which would keep states from continuing in their shameful collection efforts.
One of the big issues is that some states made peace with Amazon on previous tax claims because they want the jobs and infrastructure spending from the company’s logistics investments. But some of these states are now going after small and micro sellers to add “peanuts” to their state coffers because the out-of-state solo entrepreneurs and small business owners do not have the lobbyists and connections to fight this egregious conduct of Taxation without Representation. What is peanuts for a state is a sizeable sum for small business owners, especially if the legal argument is unclear.
Who should be responsible for the collection of sales taxes before marketplace facilitator laws were enacted? That is much of the big fight in these situations as Amazon (and possibly other marketplaces) are getting a pass, but small business owners are being chased like tax cheats.
The bottom line is that Congress needs to step in and create a level playing field to make all states follow the same rules and policies. The Court even suggested as much. But Washington seems to be pre-occupied with “bigger issues” and progress on this problem seems stalled.
Meanwhile, states are trying to get away with as much as they can, and this is where the Online Merchants Guild is trying to stop the madness. Much of the organization’s activities can be followed on their Facebook Page and in their Facebook Group. New Hampshire based sellers on the receiving end by abusive states chasing them for dubious claims on back sales taxes can contact OMG through these channels.
This appears to be the first time a state is raising legal concerns about what other states are doing within their state trying to enforce their laws on NH businesses. New Hampshire has no sales tax!
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