Massachusetts has ordered a tire chain to charge Bay State residents a 5 percent sales tax on their purchases in New Hampshire in an unprecedented move that could have huge implications for consumers and other merchants.
Town Fair Tire Centers, which is based in Connecticut but has six shops in New Hampshire and 25 in Massachusetts, is fighting back with a lawsuit now before the Massachusetts Supreme Judicial Court that accuses the state of violating the US commerce clause. If Massachusetts prevails in the case, which is likely to be heard next month, it could drive up costs for consumers and retailers such as Best Buy and Sears that sell expensive home appliances and other goods in New Hampshire, which doesn't have a state sales tax. It also could mean millions of dollars in new tax revenue for the Commonwealth as it faces a $1.1 billion budget deficit, according to tax analysts.
"This is a first-of-its-kind case," said Fred Nicely, general counsel of the Council on State Taxation, a nonprofit trade association of multistate corporations engaged in interstate and international business. "There's huge ramifications to the entire retail community." |