D & H Distributing Company v. Commissioner, the Supreme Judicial Court ("SJC") considered whether the taxpayer, a distributor located outside of Massachusetts, bore the burden of proving that a drop shipment to a Massachusetts customer was a “sale at retail” upon which the distributor had an obligation to collect Massachusetts sales or use tax. The transactions at issue were drop shipments where a Massachusetts customer purchased products from an out-of-state retailer, which then directed D&H Distributing (“D&H”) to package, label, and ship products to the Massachusetts customer. D&H had nexus with Massachusetts, but did not have warehouses in the Commonwealth. D&H collected sales tax on transactions where the retailer making a purchase on behalf of a customer had a Massachusetts billing address and the vendor did not provide D&H with a resale certificate. The Massachusetts statute governing drop shipments treats an out-of-state distributor with Massachusetts nexus delivering products to a Massachusetts customer, where the order is made by an out-of-state retailer not engaged in business in Massachusetts as a “sale at retail” subject to Massachusetts sales tax. G.L. c. 64H, § 1. The Department’s auditor identified drop-shipment transactions with a ship-to address in Massachusetts, but a bill-to address outside of Massachusetts, on which D&H had not collected Massachusetts sales tax. The auditor then eliminated those transactions where the order was placed with D&H by a retailer that D&H knew to have a presence in Massachusetts. The Department assessed Massachusetts sales and use tax on the remaining transactions. D&H argued that the burden was on the Department to prove the transactions included in the assessment were limited to transactions with retailers not doing business in Massachusetts. If the transactions were with retailers doing business in Massachusetts, then D&H would not be required to collect Massachusetts sales tax under the drop shipment statute. The ATB rejected D&H’s argument, finding the drop shipment statute treated D&H as the vendor, and the Massachusetts statute places the burden on the vendor to prove that a sale of property is not a “sale at retail”. In July, the SJC affirmed the decision of the ATB, based on reasoning similar to that adopted by the ATB in its decision. D & H Distributing Company v. Commissioner, 477 Mass. 538 (2017) (“we conclude that the commissioner and the board correctly determined that D & H was responsible as the vendor for collecting and remitting the sales tax due on products it sold to the out-of-State retailers and then delivered to consumers where it failed to meet its burden of proving that the retailers were engaged in business in Massachusetts.”).