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And the winner is: New Hampshire (for now)

Posted by salestax on August 26, 2009

I know, I know, I’ve reported on this at least twice:  Here and Here

But, I get so excited when courts are reasonable and rule in favor of a taxpayer over an overzealous auditor or Revenue department after more funds! 

So, long story short:  MA audited a NH business who had stores in MA and NH.  This was a tire business.  So MA residents went to either NH or MA stores to get tires – often times put on their cars at the same time as the purchase.  MA decided that not only should they get the taxes from the sales of tires made in the MA stores, but if a MA customer went to a NH store, MA should also be allowed to have the NH store collect the MA tax dollars there.  Shenanigans, I say! 

Anyway, the Tire store was furious (as they should’ve been), ’cause now they’re on the hook for all of the MA sales tax that they didn’t charge on sales to customers from MA.  But, alas, the tire store fought the MA Revenue department and after a long battle (well not that long really, this all happened over the last year), the 2nd level of court appeals, MA Supreme Judicial Court agreed that MA Revenue overstepped the boundaries of the “Use Tax” statute as written in MA.

If you like this exciting stuff, you can read the final decision here.

However, even though this is a sign of relief for most of us in the sales tax world, it’s far from finished.    The language in the decision alludes to a way that the MA legislature can re-word it’s statute to require the collection of MA use tax from an out of state store.  Again… I say shenanigans.  If this actually happens, maybe the next fight will be to ensure that the Appellate courts address not only the state statute, but to see if that statute is in line with the U.S. Constitution – a discussion conveniently left out of this decision.

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