A fresh New Hampshire law aims to streamline auto sales to out-of-state buyers, and will likely prevent levying fees for car enhancements during the time between contract execution and delivery to the purchaser, according to auto dealer representatives.
“You can get banks to agree to that, but obviously New Hampshire doesn't want to see that,” Massachusetts Independent Auto Dealers Association (MIADA) Executive Director Lou Tedeschi told Autobody News. “They're interpreting it as they're raising the price of the vehicle, which you can't do. That breaks federal law.”
MIADA usually tells members to apply their customers’ deposit money for add-ons like lift kits, custom wheels and tires, for example, Tedeschi said.
“We don't want to raise the price of the vehicle,” he said. “So, we put the vehicle on as the price of the vehicle that was advertised, and then we add that stuff onto different lines of contract, and it really doesn't even go to the bank. The bank never even sees that.”
About 20% of MIADA’s 180 members do collision repair and/or general automotive repair in addition to selling cars.
The provision preventing car sellers from adding fees to principal loan balances after contract execution took effect Aug. 2, the day New Hampshire Gov. Chris Sununu signed the legislation into law.
The same law also removes the requirement that New Hampshire vehicle dealers notify the state’s department of motor vehicles (DMV) of vehicle sales to Massachusetts residents. That language took effect Sept. 1.
Prior to the legislation, New Hampshire had issued temporary plates for buyers from all states except Massachusetts, New Hampshire Automobile Dealers Association (NHADA) President Dan Bennett told Autobody News. For buyers from that border state, New Hampshire dealers had instead issued a small form that was submitted to the DMV to track sales to Massachusetts residents in lieu of temporary plates, he said.
“Because we weren't issuing temp plates, the New Hampshire DMV wanted to be able to keep record of how many vehicles were sold into Massachusetts,” Bennett added. “What the law did was it wipes out that form, and now a New Hampshire dealer selling to a Massachusetts customer is treated the exact same as way all other sales to residents of the other 49 states.”
NHADA comprises about 500 members in the automotive industry, about 8% of which are body shops or parts stores, Bennett said.
The New Hampshire law roughly coincided with a Massachusetts law similarly designed to simplify car sales across state lines.
In April 2023, a Massachusetts law took effect launching temporary tags issued by the state.
Even before that temporary tag law took effect, Massachusetts still had to ultimately collect sales taxes on each car purchase by a state resident, even if the actual purchase occurred in another state. If sales taxes in other states were higher than Massachusetts’ 6.25% car sales tax, residents would be credited the difference, Tedeschi said.
Because New Hampshire has no car sales tax, Massachusetts residents who purchase there are responsible for the Massachusetts tax without any overpayment credit. These taxes are generally paid at the point of sale, even to dealers in New Hampshire or other states.
Still, e-commerce sellers tried to mask sales to Massachusetts residents as true New Hampshire sales before the Massachusetts temporary tag law took effect, Tedeschi said.
“What happens when you don't have temporary registrations is there's a lot of internet commerce going on that is sending paperwork to other states so they can register that car, pay the sales tax in their state, then come pick that vehicle up in Massachusetts, and Massachusetts is losing out on that sales tax,” he said. “Massachusetts isn't losing that money any longer.”
The New Hampshire Banking Department is doing “outreach and education” on the new law, known as House Bill 1243, until Jan. 1, the department announced.
Businesses with any questions, including compliance challenges, are advised to email nhbd@banking.nh.gov.
Brian Bradley