Reed Smith Client Alerts

The Massachusetts Appellate Tax Board (“ATB”) has issued an order denying three sales tax refund claims involving multiple points of use (“MPU”) sourcing. In each case, vendors had filed refund claims arguing that their customers were eligible for refunds of sales tax charged on the full sales price of software delivered to Massachusetts to the extent the software was actually used by the customer’s employees outside of Massachusetts.

Authors: Michael A. Jacobs Robert E. Weyman Brent K. Beissel

MPU apportionment, refund claim denials, and ATB decision: Massachusetts has issued regulations that permit vendors to apportion the sales price for certain sales of software delivered to a customer in Massachusetts for sales and use tax purchases using multiple points of use (“MPU”) apportionment.1 Under MPU apportionment, if a customer can provide documentation to the vendor that establishes that software delivered to Massachusetts is actually used in multiple states, then the vendor is relieved of its obligation to collect and remit Massachusetts sales tax on the software, and the customer is only required to remit Massachusetts use tax on the portion of the sales price for the software attributable to use of the software in Massachusetts.