New Hampshire is one of the few states that does not have a general sales tax. It is one of the many “New Hampshire Advantages” you will see when you live in this beautiful area of the country. Collecting sales tax on internet sales has been a major issue for years. And the insistence of collecting that sales tax only grew with the abundance of online shopping that has been happening for over a year now.
Sales Tax for Internet Purchases by New Hampshire Residents
No New Hampshire residents are obligated to pay sales tax on anything they purchase on the internet. All internet sales tax is imposed on a state-by-state basis and New Hampshire does not require sales tax to be collected on any item that is being delivered to people in the state.
Therefore, if a Massachusetts business sells a product for delivery to a New Hampshire resident with an address in New Hampshire, no sales tax is charged. This is quite different than the sales tax this business would charge to Massachusetts residents and even residents of states like New York where sales tax always needs to be collected.
New Hampshire Businesses Must Collect Sales Tax for Internet Sales
While New Hampshire businesses do not collect sales tax from residents for items sold in person or online, they sometimes must collect sales tax for items going to other states. However, it is dependent on the laws of each state, as well as the businesses’ activity within those states.
A few years ago, the case, South Dakota v. Wayfair, Inc., reached a conclusion that a business does not need to have a physical presence in the state to be obligated to collect sales tax for anything delivered to the state’s residents. There are approximately 24 states that follow those same laws, which means all New Hampshire businesses must collect sales tax for any items being delivered to addresses in those states.
Many of those states do have a minimum activity level though. If a business does not generate $100,000 in sales or have 200 transactions, it may not be obligated to collect sales tax for those states. A few states take the past year’s activity into consideration when determining if a business must collect sales tax. Other states look at the current year’s activity for making their decision.
I recommend that all New Hampshire businesses that sell goods and services to customers in different states review their obligations to collect sales tax. This will ensure you are collecting sales tax when you need to and are not when you don’t.
If you have any questions about collecting sales tax for your business, contact me today. I can help you understand the laws your business must follow.