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Another View, with Jeanne Shaheen: Supreme Court got the internet sales tax ruling horribly wrong

June 30. 2018 10:11PM

Earlier this summer, the United States Supreme Court handed down a decision that could unleash a tsunami of red tape on New Hampshire businesses.

In a 5-4 decision in the case of South Dakota v. Wayfair, the court ruled that businesses across the country that sell online will have to collect sales taxes on behalf of the more than 12,000 state, county and city tax jurisdictions across the United States.

It is particularly troubling that this ruling will apply to New Hampshire small businesses, even though they have no experience whatsoever collecting sales taxes. Being forced to collect taxes for states and localities across the country will be a nightmare for our businesses that rely heavily on internet sales.

New Hampshire businesses could soon face out-of-state audits, litigation and will be forced to adopt tremendously cumbersome and complex tax collection procedures.

As a state without a sales tax, we will see no benefit from this ruling - only the substantial burden on our small businesses. New Hampshire is a small-business state, and most firms operate on very thin margins. Just about every owner knows what it's like to lie awake at night worrying about paying the bills or meeting the next payroll. Needless to say, our entrepreneurs do not have the time or resources to act as tax collectors for other states and localities.

David Lahme, who is the president and co-founder of Tradeport USA, has been one of New Hampshire's most outspoken business owners on this issue. He put the impact of an internet sales tax on small businesses versus large corporations in context last year to the New Hampshire Business Review, explaining, "The large retailers in this country that are for this, they think this might be leveling the playing field, but they already have major infrastructure, they're already in multiple states and multiple locations in those states."

In his dissenting opinion, Chief Justice Roberts correctly stated that "the burden will fall disproportionately on small businesses" and described the absurdity of putting this new tax collection burden on them, pointing out the complexity of many tax jurisdictions.

He points to the example of Texas, which applies a sales tax to deodorant but not to antiperspirant, and Illinois, which taxes candy bars, like Snickers and Twix, differently based on their ingredients. Because of this ruling, New Hampshire small businesses are now accountable for the minutia of the Illinois and Texas tax codes, as all online purchases from our businesses will require complete compliance.

For years, I've led bipartisan efforts in the Senate to block the misnamed "Marketplace Fairness Act," which would have mandated online sales tax collection. I was very proud to work across the aisle to prevent this bill from ever arriving on the President's desk. Unfortunately, proponents of the so-called "Marketplace Fairness Act" took their case to the Supreme Court, where they found a more friendly audience.

This ruling is a major setback, but the fight must go on to protect our businesses and our state's economy. Congress should act to overturn this ruling, and at the very least, exempt small businesses and protect states that do not have a sales tax.

That's why I am planning to sponsor legislation that would immediately overturn the South Dakota v. Wayfair decision. I'm also asking the U.S. Small Business Administration (SBA) to develop a plan to help small businesses comply with these new requirements.

Unfortunately, our efforts to protect small businesses will have staunch opposition from the most powerful quarters of Washington - including the White House. It was very disappointing to see President Trump on Twitter applauding the Supreme Court's decision, calling it a "big victory for fairness."

For New Hampshire and our small businesses, this decision is anything but fair. New Hampshire gets zero benefit from this decision - only burdens on our small businesses, which will be forced to navigate red tape across the country.

It can't be overstated how much this decision could stifle online commerce, which has driven so much economic growth in recent decades. I will be strongly urging President Trump and his administration to work with Congress to put protections in place for New Hampshire businesses as this court ruling goes into effect.

I encourage all Granite Staters to join with me in urging the President and Congress to protect our small businesses impacted by this ruling.

Jeanne Shaheen, D-Madbury, represents New Hampshire in the United States Senate.

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