N.H.'s Tax-Free Shopping May Hamper Some iPhone Buyers

Sep 24, 2015

Credit Photo by Garrett via Flickr Creative Commons

Fans of Apple products will soon line up to buy the latest versions of the iPhone 6, which are available starting Friday. But if you haven’t already reserved one of the devices, you may want to hold off on getting in line at a New Hampshire store. 

NHPR’s Brady Carlson joined All Things Considered to share what he learned about this story. 

Update 9/25: while the reservations-only policy applied to Apple-owned retail locations, some wireless carriers, including Verizon, report they are able to sell the devices to customers at their retail locations who did not make reservations. 

So people will be able to get the new iPhone 6s here, correct? 

Yes, but there are a few extra rules in place for New Hampshire. When Apple announced the release date for the iPhone 6S and the iPhone 6S Plus, the fine print of its statement included this sentence: “iPhone is available by reservation only in China, Hong Kong, Japan and U.S. stores in tax-free states.” That means if your state has no sales tax, such as New Hampshire, you have to have reserved a new phone through Apple’s website or a retail store. And the reservation period is now closed.

So in most states, a customer without a reservation could just walk into an Apple Store Friday and buy an iPhone. But that will be off-limits at Apple's retail locations in New Hampshire. Why?

Well, I asked Apple and, like virtually everyone else who has asked Apple, I didn’t get a response. But Apple-watchers believe this is related to what are called “sharks” – people who buy iPhones in the United States and resell them in countries like China, where the same devices can cost sometimes several hundred dollars more.  

Reselling goods over the border, albeit perhaps on the black market, is an old tradition, right?

Right. The term is arbitrage. Years ago it was European designer handbags being resold in Asian markets; during the Cold War, people brought American blue jeans into the Soviet Union. Now it’s iPhones in China – and the net effect is that the sharks undercut official Apple iPhone sales.

To fight this, Apple limits individuals to buying two unlocked iPhones a day. But the sharks get around this by recruiting people to stand in line on launch day and buy phones. This new policy appears to be Apple’s latest anti-shark measure, and since tax-free states would offer sharks the highest profit margins for reselling, that means no walk-up iPhones for New Hampshire.

But since this policy is only in place for tax-free states, New Hampshire residents could walk into an Apple store in Massachusetts, Vermont or Maine and pick up an iPhone.

Right. I think of all those ads where New Hampshire businesses encourage Massachusetts residents to come north for tax-free shopping. This could be the one time where stores in neighboring states advertise taxed shopping to New Hampshire residents!

Someone who really must have one of these phones right away can try their luck across state lines - if that doesn't work, worst case scenario is that they’d have to wait until iPhone reservations reopen, and that happens September 26th - Saturday. 

So people could really just have to wait one more day.

Hey, when there's a brand new version of a thing in this fast-paced world, waiting one more day is how we lose out on the future. Or something.