Massachusetts Appellate Tax Board grants sales tax refund for pre-Wayfair periods

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February 2021


The Massachusetts Appellate Tax Board recently granted summary judgment to a taxpayer challenging the Department of Revenue’s sales tax economic nexus policy for the nine months preceding the US Supreme Court’s Wayfair decision. As a result of the decision, taxpayers may wish to review their compliance history in Massachusetts and where appropriate seek abatement of tax for pre-Wayfair periods. [U.S. Auto Parts Network, Inc. v. Commissioner of Revenue, Mass. App. Tax Bd., Docket No. C339523, 1/28/21]

The takeaway

The Board’s decision is the first to grant taxpayer relief from the Department’s continuing application of its ‘cookie nexus’ theory for sales taxes prior to the US Supreme Court’s Wayfair decision. The Department is expected to appeal, and taxpayers should consider their options for preserving their refund rights for this nine-month period in light of Massachusetts’ statute of limitations and abatement procedures.

The Board’s decision could have broader implications, as Massachusetts has been a driving force behind the Multistate Tax Commission’s efforts to revise its Public Law 86-272 policy statement to incorporate a ‘cookie nexus’ approach to determining in-state activity. This revised policy statement currently is undergoing a survey of the states, which is the penultimate step toward adoption by the MTC.

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Peter Michalowski

State and Local Tax Leader, PwC US

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