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September 18, 2018

Massachusetts Enforces Sales and Use Tax on Remote Vendors Following 'Wayfair' Decision (article)

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In the aftermath of the Wayfair Supreme Court decision, Massachusetts recently released additional information about its sales tax policy for remote vendors. The Technical Information Release 18-8, Tax Jurisdiction Over Internet Vendors Prior to and Subsequent to Wayfair, Inc. v. South Dakota (TIR 18-8) clarifies the state Department of Revenue’s position on the types of activities that would require an out-of-state business to collect and remit sales tax in Massachusetts.

TIR 18-8 affirms the position that the Massachusetts Department of Revenue took in the 830 CMR 64H.1.7, Vendors Making Internet Sales regulation (the sales tax regulation). The sales tax regulation technically went into effect on Oct. 1, 2017, and requires Internet vendors with a principal place of business outside of the state that are not otherwise subject to state tax to collect and remit sales tax if over the internet they conduct more than $500,000 in sales with state residents that result in delivery in at least 100 transactions.

Prior to the Supreme Court’s Wayfair decision, it was questionable whether the state could enforce the sales tax regulation because it did not meet the established physical presence standard. Wayfair overturned the physical presence standard in favor of an “economic nexus” standard, the theory of which the sales tax regulation uses. TIR 18-8 clarifies that Massachusetts will be enforcing the regulation from its Oct. 1, 2017, effective date.

Remote vendors that meet the regulation’s sales tax requirements that have not yet registered can do so here.

For more information about your company’s compliance with Massachusetts sales tax law, please contact us.

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