SB5 (2009) Detail

(New Title) prohibiting retailers from disclosing private customer information to foreign states in connection with the collection of certain sales and use taxes.


CHAPTER 169

SB 5 – FINAL VERSION

04/08/09 1200s

04/08/09 1293s

20May2009… 1474h

06/10/09 2092eba

2009 SESSION

09-1047

09/01

SENATE BILL 5

AN ACT prohibiting retailers from disclosing private customer information to foreign states in connection with the collection of certain sales and use taxes.

SPONSORS: Sen. Hassan, Dist 23; Sen. Barnes, Jr., Dist 17; Sen. Bragdon, Dist 11; Sen. Carson, Dist 14; Sen. Cilley, Dist 6; Sen. D'Allesandro, Dist 20; Sen. DeVries, Dist 18; Sen. Downing, Dist 22; Sen. Fuller Clark, Dist 24; Sen. Gallus, Dist 1; Sen. Gatsas, Dist 16; Sen. Gilmour, Dist 12; Sen. Houde, Dist 5; Sen. Janeway, Dist 7; Sen. Kelly, Dist 10; Sen. Larsen, Dist 15; Sen. Lasky, Dist 13; Sen. Letourneau, Dist 19; Sen. Merrill, Dist 21; Sen. Odell, Dist 8; Sen. Reynolds, Dist 2; Sen. Roberge, Dist 9; Sen. Sgambati, Dist 4; Rep. Packard, Rock 3; Rep. Hess, Merr 9; Rep. Wallner, Merr 12; Rep. Eaton, Ches 2; Rep. Reardon, Merr 11

COMMITTEE: Commerce, Labor and Consumer Protection

AMENDED ANALYSIS

This bill prohibits retailers in New Hampshire from providing private customer information to any foreign state for purposes of enforcing collection of a sales or use tax, unless the foreign state has a qualifying sales and use tax statute.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

04/08/09 1200s

04/08/09 1293s

20May2009… 1474h

06/10/09 2092eba

09-1047

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Nine

AN ACT prohibiting retailers from disclosing private customer information to foreign states in connection with the collection of certain sales and use taxes.

Be it Enacted by the Senate and House of Representatives in General Court convened:

169:1 New Chapter; Protection of Private Customer Information in Connection with Retail Purchase Transactions. Amend RSA by inserting after chapter 78-C the following new chapter:

CHAPTER 78-D

PROTECTION OF PRIVATE CUSTOMER INFORMATION

IN CONNECTION WITH RETAIL PURCHASE TRANSACTIONS

78-D:1 Findings and Purpose. The general court finds:

I. Numerous states impose a sales tax on goods and services purchased by customers within their boundaries, and also impose an excise known as a “use tax” on use, storage, or consumption of goods and services purchased by their residents from a business located out of the taxing state. Many of these states require their residents to report and pay the use tax directly to the state.

II. The state of New Hampshire does not impose a sales tax on customers making purchases of goods and services in New Hampshire, nor on goods and services purchased by its residents out of state for use, storage, or consumption in New Hampshire. New Hampshire businesses are not required by law to determine where a person intends to use, store, or consume goods or services purchased within the state.

III. The state of New Hampshire is a year-round destination visited by hundreds of thousands of persons from numerous states that impose sales and use tax on their own residents. A requirement on businesses located in New Hampshire to determine, collect, and remit such taxes could be, in many instances, unreasonably burdensome given the variation in rates and exemptions of these taxes in other states, the magnitude of sales to residents of foreign taxing states, and the absence of uniform administrative systems to determine, collect, and remit such taxes. Unlike other states, New Hampshire has not adopted the Streamlined Sales and Use Tax Agreement because of its sovereign decision not to impose such taxes.

IV. New Hampshire has a strong governmental interest in protecting the privacy of an individual’s personal information that may be used to facilitate the sale of goods and services within this state, while the general court can identify no governmental interest in requiring its businesses to make an affirmative inquiry concerning the location of the intended use of a good or service, or whether such good or service will be used by the purchaser or by another person.

V. The United States Supreme Court has unequivocally determined that only businesses that have an adequate physical presence in a state imposing a sales and use tax may be subject to a requirement to assess, collect, and remit a sales and use tax on goods and services delivered by the seller into the taxing state. New Hampshire businesses that have no physical presence in such a foreign state, such as through retail or wholesale locations, or sales personnel, have no obligation to assess, collect, or remit a sales tax with respect to purchases by foreign state residents.

VI. The imposition by other states of obligations to collect use tax imposed on residents with respect to purchases occurring within this state results in fundamental discrimination between businesses selling items within the foreign state (who are subject only to the sales tax administrative burdens) and businesses selling similar items within this state (who are subject to potentially highly burdensome and arbitrary administrative requirements to determine, in some manner, whether a customer will store, use, or consume such items within such foreign state even before the customer has in fact stored, used, or consumed the item within such foreign state). This discriminatory burden violates federal constitutional protections that create an area of trade that is free from interference by state laws and prohibit state laws that discriminate against interstate commerce by providing a direct commercial advantage to local businesses.

VII. Any foreign state that attempts to require an out-of-state business to collect a use tax imposed on citizens of such foreign state without first seeking actively to enforce such use tax against its own citizens shall have carefully developed information and documentation that demonstrates conclusively that a business knew, based on information provided by a customer, that such customer has stored, consumed, or used a purchased item within such foreign state. Any attempt by such foreign state to charge the business with use tax liability without satisfying these prior requirements is the effective equivalent of imposing a direct tax on the out-of-state business with respect to out-of-state transactions in a manner that unlawfully discriminates against such out-of-state transactions in violation of the Commerce Clause of the United States Constitution.

78-D:2 Qualifying Foreign Sales and Use Tax Statute.

I. In this section:

(a) “Adequate physical presence” means the presence of stores, offices, or other tangible locations within the foreign state at which the retailer or its affiliates engage in business within the foreign state through the activities of owners, officers, directors, partners, managers, employees, representatives, or agents, whether or not related to the activity of the retailer sought to be taxed.

(b) “Foreign state” means a foreign state or commonwealth which assesses sales or use tax on its residents with respect to the use, storage, and consumption of goods and services.

(c) “Goods” means tangible personal property intended for any use other than resale.

(d) “New Hampshire retail purchase transaction” means any sale of services or goods, or both, for any purpose other than resale in the regular course of business that is completed at a location within New Hampshire and where delivery or other first use of the services or goods occurs in New Hampshire.

(e) “Private customer information” means documents, records, and other information maintained in any form which contains the purchaser’s name, address, telephone number, credit card, debit card or check number, a description of the goods or service purchased, the identity of any person for whom the goods or services were purchased, and the identification of the point of transfer of any goods or services that comprise a New Hampshire retail purchase transaction.

(f) “Retailer” means any individual, trust, estate, fiduciary, partnership, corporation, or other legal entity, located within the state that engages in New Hampshire retail purchase transactions.

II. No retailer shall provide to a foreign state any private customer information for use in the determination of sales or use tax liability of the customer in the foreign state or for use in the determination, collection, and remittance of sales or use tax by the retailer with respect to a New Hampshire retail purchase transaction, unless the foreign state has first provided to the retailer written confirmation that the foreign state provided prior written notice of its intent to collect a use tax on such retail transaction to the commissioner of revenue administration, and no later than 60 days following the commissioner’s receipt of such notice by the foreign state, the department of justice has submitted to the commissioner its determination that the foreign state’s sales and use tax statutes:

(a) Impose upon its residents a requirement to individually pay sales or use tax on the use, storage, or consumption of goods or services purchased in any other state;

(b) Specifically identify the goods and services to which the use tax applies and exemptions to the use tax;

(c) Require that the retailer or its affiliates have adequate physical presence to establish nexus with the foreign state for the imposition of an obligation of the retailer to determine, collect, and remit a sales and use tax with respect to purchases by foreign state residents;

(d) Require every resident to submit annually to the foreign state a statement (i) identifying each and every item subject to such foreign state’s sales and use tax purchased outside such foreign state for storage, use or consumption within such foreign state during an applicable period, (ii) stating the value of such items purchased, and (iii) including a statement under penalties of perjury that such resident complied with the requirement stated in this chapter;

(e) Require its residents or the foreign state to provide the retailer at the time of a New Hampshire retail purchase transaction with information establishing whether or not the goods or services purchased in the state are intended to be used, stored, or consumed within the foreign state, and provide that any information supplied by its residents is irrefutably presumed to be correct and complete, and that the retailer may rely on such information regardless of the accuracy or completeness of such information;

(f) Require that any agency of such foreign state responsible for enforcing such foreign state’s sales or use tax shall annually audit, investigate, or examine not less than 10 percent of the total use tax returns filed by residents of such foreign state with respect to each year;

(g) Require that any agency of such foreign state responsible for enforcing such foreign state’s use tax shall conduct its audit, investigation, or examination practices with respect to residents’ use tax returns in a manner that ensures that such practices are applied equally regardless of the state in which the sales transaction occurs, and that requires any such agency to file a public report annually demonstrating compliance with this nondiscrimination requirement;

(h) Create an irrebutable presumption that, in the absence of voluntary information by the resident, the goods or services purchased are intended to be used in the state in which they are purchased; and

(i) Explicitly impose use tax collection requirements on out-of-state retailers with respect to retail purchase transactions that are completed in those other states

78-D:3 Severability. If any provision of this chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable.

169:2 Effective Date. This act shall take effect upon its passage.

Approved: July 9, 2009

Effective Date: July 9, 2009