The owners spoke out at a Greater Nashua Chamber of Commerce breakfast yesterday, where the keynote speakers were state Attorney General Kelly Ayotte and David Nagle, attorney for Town Fair Tire.

Town Fair Tire is entangled with Massachusetts over its attempts to get the company to collect “use” taxes on purchases made by Bay State residents in the company’s New Hampshire stores. Several states have use taxes, which are taxes on goods that residents buy in other states but use in their home state.

Massachusetts would have a harder time collecting sales taxes under a bill passed unanimously by the New Hampshire Senate yesterday.

In 2005, Massachusetts told Town Fair Tire it owed back taxes for a 2 1/2-year period beginning October 2005 for purchases made in its New Hampshire stores. The Massachusetts Appellate Tax Board has already ruled in the state’s favor, but the matter was appealed and arguments in Massachusetts Supreme Judicial Court are expected to begin next month.

Town Fair Tire also has stores in Massachusetts, which some have said has made it easier for Massachusetts to pursue the matter.

However, several Nashua retailers came forward yesterday and said Massachusetts has sent auditors to look through their books, even though they have no stores across the state line.

The owners of Splash Bath Showrooms, Geri and Bob Boisvert, said they were contacted several years ago by Massachusetts tax authorities who said they wanted to audit the couple’s business to see if it owed them any money. The Boisverts had just run some ads in the Boston media market.

Splash does not make any deliveries or do any installations south of the border. Both its showroom and warehouse are in Nashua, but the Boisverts said they were still afraid to say no.

“If you refuse, they make your life miserable,” Geri Boisvert said.

If a store refuses to comply, Massachusetts can hold business owners personally liable, she said.

On the advice of their lawyer, they agreed to let the auditors in.

“We knew we had nothing to hide,” Bob Boisvert said.

This has been going on for years, said Nancy Kyle, president of the Retail Merchants Association of New Hampshire. But retailers have been afraid to speak up because of the possible repercussions.

“They’re petrified,” she said. “They’re aghast.”

The Massachusetts Department of Revenue goes after smaller retailers because they don’t have the resources to fight, she said.

David Fletcher, owner of Fletcher’s Appliance, said he was audited by Massachusetts in the early 1990s and was told he owed them seven years of back taxes based on deliveries he made to Massachusetts residents.

He said he was told if he didn’t comply, authorities could seize anything with the name of his business on it if it crossed the border, including his delivery truck. Since then, he has been sending Massachusetts use taxes for deliveries he makes across the border.

Fletcher said if Massachusetts wins the Town Faire Tire case, he is concerned he may now have to start collecting information on all of his customers, including those who pick their purchases up, and to ask them where they are using their purchases.

“Isn’t that a privacy issue?” he asked.

Ayotte said yesterday that she found the business owners’ experiences “troubling.”

“That is why the governor and the legislature are focusing on this issue,” she said.

Town Fair Tire’s attorney Nagle said he believes Massachusetts is using this case as a test case. The issue isn’t whether Massachusetts residents have to pay use taxes on tires they buy in New Hampshire and use in Massachusetts – they are legally required to – the issue is whether businesses in New Hampshire should have to collect those taxes, he said.

There is also a troubling retroactive aspect to the Town Fire Tire case, said Nagle.

“The same could be true for other retailers,” he said.

New Hampshire has filed a friend of the court brief in the lawsuit because of the implications for state retailers, said Ayotte.

Ayotte said the state is also concerned about customer privacy issues.

The case has broader implications for New Hampshire because it borders other states with use taxes and because of its tourism industry.

“You could imagine how complicated it could become,” said Ayotte.

First retailers would have to figure out where a person lived and second they would have to figure out where the person intended to use what they were purchasing, she said.

“We shouldn’t have to be the taxing agent for another state,” she said.

Business owners angrily echoed that sentiment.

“When did we get to the point that one state has the right to come in and bully another state?” asked Sy Mahfuz, owner of Persian Rug Galleries. (Tire Review/Akron)