On July 28, the Massachusetts Department of Revenue (the “Department”) issued Proposed Regulation 830 CMR 64H.1.7 (the “proposed regulation”) that, if adopted, would require “internet vendors” to collect and remit sales tax on sales to customers in Massachusetts.1 The proposed regulation comes in the wake of the Department’s revocation of Directive 17-1.2 Directive 17-1 imposed obligations on internet vendors similar to those imposed by the proposed regulation, but did so outside of the formal regulatory process. A public hearing on the proposed regulation is scheduled for August 24, 2017.
The Massachusetts Department of Revenue (the “Department”) issued a proposed regulation that, if adopted, would require “internet vendors” to collect and remit Massachusetts sales tax on their sales to Massachusetts customers if certain thresholds are met. “Internet vendor” is broadly defined to include vendors making sales over the internet, whether through the vendor’s own website or through the website of a third party. The proposed regulation is yet another example of state efforts to enforce their sales and use tax laws in spite of the “physical presence” rule affirmed by the United States Supreme Court in Quill Corp. v. North Dakota.3 Unlike other state laws and regulations that directly attack Quill’s physical presence rule, the proposed regulation asserts that internet vendors satisfy the physical presence rule by, among other things, owning or using software or cookies located on customer computers in the state.