Tax insight

Massachusetts DOR adopts final rule changes on P.L. 86-272 protections

Insight
5 minute read
October 22, 2025

What happened?

The Massachusetts Department of Revenue (Department) on October 10 amended its Corporate Nexus regulation (830 CMR 63.39.1) to revise the Department’s interpretation of the scope of P.L. 86-272. Specifically, the language added to the regulation provides that the protections of P.L. 86-272 are exceeded when an out-of-state vendor places “Internet cookies onto the computers or other electronic devices of in-state customers” to gather customer search information for non-protected business activities. This amendment will be applied prospectively, beginning with tax years that include the October 10, 2025 date of promulgation.

Why is it relevant?

P.L. 86-272 has not been updated since its enactment, and states increasingly have sought to limit its application as the economy and business practices have changed. Since P.L. 86-272 applies only to sales of tangible personal property, these protections are especially relevant for the consumer and industrial products sectors.

Actions to consider

Taxpayers that currently file “non-income measure” returns should review their use of the customer search information collected by Internet cookies to determine whether that use creates Massachusetts income tax nexus. Further, note that this issue has been litigated in New York and New Jersey, so there also could be a challenge brought in Massachusetts.