New Hampshire enacts law to protect in-state businesses from Wayfair

Aug 06, 2019
Aug 06, 2019
0 min. read

On July 19, 2019, New Hampshire Gov. Chris Sununu signed Senate Bill 242, providing protection for New Hampshire businesses in response to recently enacted sales and use tax collection and remittance requirements enacted across the country in the wake of the South Dakota v. Wayfair decision. As of mid-July, at least 43 of the 46 states imposing a general sales and use tax have addressed sales tax economic nexus standards based on sales or transactions into the state. Recall that New Hampshire is one of five states that has not enacted a general sales and use tax.

Anti-Wayfair provisions

Senate Bill 242 prohibits taxing jurisdictions outside of New Hampshire from imposing sales and use tax collection requirements on New Hampshire businesses on the basis of economic nexus without first complying with certain notice provisions. The bill requires a foreign taxing authority (any state imposing a sales or use tax) to provide written notice to the New Hampshire Department of Justice (NHDOJ) at least 45 days prior to taking any action to determine or impose sales or use tax liability against a New Hampshire business.

The law further prohibits foreign taxing authorities from the following activities without the required notice:

  • Requesting any private customer transaction information from a New Hampshire business in order to determine a sales or use tax liability of the customer or a compliance obligation of the seller, or
  • Conducting an examination or imposing sales and use tax collection obligations on the seller

The required written notice must include 1) the full legal name and address of the seller, 2) the reasons for the request or examination, 3) citations of the legal authorities that authorize imposition of a tax collection obligation on the seller, and 4) an explanation why the seller is subject to those laws.

The law tasks NHDOJ with determining whether the laws of the foreign taxing jurisdiction meet the requirements of the U.S. and New Hampshire Constitutions, namely whether an undue burden exists as discussed in the Wayfair decision. The NHDOJ may bring a civil action or declaratory judgment against the foreign taxing jurisdiction to enjoin any action violative of constitutional requirements.

Impact on New Hampshire businesses

A New Hampshire business must notify the NHDOJ if it receives information requests from a foreign taxing authority. However, the business may elect to immediately comply with the request before the 45-day notice period lapses if it is in the business’s “best interests.”

If the NHDOJ determines that a New Hampshire business is obligated to collect and remit a sales or use tax on behalf of the foreign taxing jurisdiction, the business may deduct “reasonable costs” from the tax collected on behalf of the foreign jurisdiction. Reasonable costs include any initial set up and ongoing maintenance costs incurred in the collection and remittance of sales and use taxes to that jurisdiction. New Hampshire businesses should speak to their tax advisers before making any deductions from the sales and use tax collected from purchasers in other states as this may also violate the other state’s sale and use tax laws.


New Hampshire is one of five states that does not impose a general sales and use tax and the first to pass a bill requiring other states to notify New Hampshire prior to imposing sales tax on New Hampshire-based remote sellers. At this time, it is uncertain how New Hampshire will enforce the notification requirement on other states or whether and when other states may challenge the law in state or federal court.

Senate Bill 242 is highly nuanced and New Hampshire-based businesses subject to other state’s remote seller provisions because of economic sales tax nexus should consider reviewing the law carefully. Any business conducting retail sales or providing services to other states should contact their state and local tax adviser to discuss the possible implications of exceeding economic sales tax nexus thresholds.

RSM contributors

  • Lu Awdeh
  • Jerry Brisbois