Massachusetts – Massachusetts Internet Cookie Directive Has Crumbled

Bloomberg BNA
Salt Talk Blog
by Stephanie E. Cangialosi
July 6, 2017

On April 3, 2017, the Massachusetts Department of Revenue issued Directive 17-1, detailing circumstances in which an online-retailer located outside of Massachusetts and making sales within the Commonwealth may be required to collect and remit sales tax. In a nutshell, the directive adopted an economic nexus standard and added the placement of internet cookies by online retailers on computers and electronic devices of Massachusetts residents to the list of nexus-creating activities that would satisfy physical presence requirements established under Quill v. North Dakota. In either circumstance – whether the retailer has economic nexus with the state or physical presence in the state – the online retailer would be required to collect and remit sales tax.

As it turns out, the Commonwealth’s crafty effort to require online retailers to collect and remit sales tax may have been in vain. The directive was ruled[1]invalid by the Superior Court of the Commonwealth of Massachusetts because “it established a new policy that substantially altered the rights and interest of the regulated parties and therefore had to be promulgated pursuant to sections 2 or 3 of Chapter 30A[2] [of Massachusetts General Law]” as reported by Bloomberg BNA’s, Aaron Nicodemus. In short, although framed as a directive, the court seemed to be of the opinion that the directive was substantively a regulation. Now the Commonwealth must notify the public of the proposed changes, allow for comment, and hold a hearing before it can adopt the policy changes set forth in Directive 17-1.


For More Information:
Bloomberg BNA
The SALT Report July 6, 2017