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Massachusetts Delays Plan to Tax Online Sales

The Massachusetts Department of Revenue today announced it has revoked its directive to collect sales taxes from out-of-state online retailers starting July 1.

State and Local Tax / Multistate taxationEarlier this spring, the Massachusetts Department of Revenue issued a directive aimed at requiring certain out of state vendors to collect sales tax on online sales to Massachusetts customers. The Department’s position is that placing cookies and apps on a user’s computer or device constitutes Nexus (in-state presence), and gives the state the ability to require tax collection. Two retail groups sued to block enforcement of the directive based on similar prohibitions on the collection of tax by catalog mailers.

The DOR announced its plans to impose the same tax collection requirement through a regulation, rather than a directive, anticipated as soon as this fall.

It is important to note that existing rules requiring collection of sales tax on online sales have not changed. Companies that otherwise maintain a physical presence in Massachusetts (retail stores, offices, manufacturing facilities, warehouses, etc.) that presently collect tax are not affected by the proposed directive or its delay.

AAFCPAs reminds clients that State and Local Tax (or multistate taxation) is more complex and demanding than ever before. Over the last few years, certain states have passed legislation similar to this directive that shifts some of the tax and administrative burden from in-state businesses to out-of-state businesses.  AAFCPAs advises that clients and friends of the firm closely re-examine states’ taxing jurisdiction at least annually to ensure compliance with all relevant tax regulations, and to optimize tax savings.

If you have any questions please contact your AAFCPA partner, or Rich Weiner at 774.512.4078, rweiner@nullaafcpa.com.

About the Author

Rich has over 30 years of broad tax experience with a specialty in tax planning and consulting for private and publicly-held businesses. Rich has specific expertise in the Software, Bio-Technology, Medical Device, Life Science, Manufacturing, Retail, Professional Service and Publishing industries, as well as U.S. aspects of international taxation. He works extensively with European companies expanding into the U.S. market. Additional areas of focus include companies and stockholders in transition, including structuring of and planning for Mergers & Acquisitions, planning for changes in ownership and management, and adoption of tax methodologies with a view toward the long term. He is well known in his field and is a frequent speaker on a variety of tax related topics.