Bill Text - SB5 (2009)

Prohibiting retailers from disclosing private consumer information to foreign states in connection with the collection of certain sales and use taxes.

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Revision: Feb. 24, 2009, midnight

2009 SESSION

09-1047

09/01

SENATE BILL 5

COMMITTEE: Commerce, Labor and Consumer Protection

ANALYSIS

This bill prohibits retailers in New Hampshire from providing private consumer 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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

09-1047

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Nine

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

1 New Chapter; Protection of Private Consumer 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 CONSUMER 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 their citizens 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 citizens from a business located out of the taxing state. Many of these states require their citizens to report and pay the use tax at the time the citizens’ tax returns are filed.

II. The state of New Hampshire does not impose a sales tax on its citizens on the purchase of goods and services in New Hampshire, nor on goods and services purchased by its citizens 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 citizens 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 use tax may be subject to a requirement to assess, collect, and remit a use tax. 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 use tax with respect to purchases by foreign citizens in New Hampshire.

VI. The imposition by other states of obligations to collect use tax imposed on their citizens 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.

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 presence 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 citizens 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 tangible personal property or both for any purpose other than resale in the regular course of business that occurs at a location within New Hampshire.

(e) “Private consumer information” means documents, records, and other information maintained in any form which identifies the name, address, telephone number, credit card, debit card or check number, the goods or service purchased, the identity of the person or persons for whom the goods or services were purchased, and point of transfer of the 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 is engaged in the business of making sales at retail or of making sales for storage, use, or consumption.

II. No retailer shall provide to a foreign state any private consumer information for use in the determination of sales or use tax liability of the consumer 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 provided formal notice to the commissioner of revenue administration of its intention to collect use tax on such transactions and the foreign state’s sales and use tax statute:

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

(b) Identifies specifically the goods and services to which the use tax applies and exemptions to the use tax;

(c) Requires that the retailer or its affiliates have adequate physical presence to establish nexus with the foreign state for the establishment of any obligation of the retailer to determine, collect, and remit a use tax with respect to a New Hampshire retail purchase transaction;

(d) Requires its citizens or the foreign state to provide the retailer at the time of a New Hampshire retail purchase transaction with information establishing that the goods or services purchased in the state are intended to be used, stored, or consumed within the foreign state; and

(e) Requires that in the absence of voluntary information by the citizen or foreign state, the retailer has conclusive evidence at the time of a New Hampshire retail purchase transaction that the goods or services purchased by the foreign citizen are to be used, stored, or consumed in the foreign state.

2 Effective Date. This act shall take effect 60 days after its passage.