TIR 88-13: Sales Nexus; Amendment of G.L. c. 64H, § 1(5)
This Technical Information Release (TIR) is being issued in response to St. 1988, Chapter 202, §§ 19, 33, (Chapter 202), which amended the definition of "engaged in business in the commonwealth" in G.L. c. 64H, § 1(5), by replacing the first sentence of that paragraph with the following sentence:
"Engaged in business in the commonwealth," having a business location in the commonwealth; regularly or systematically soliciting orders for the sale of tangible personal property for delivery to destinations in the commonwealth or otherwise exploiting the retail sales market in the commonwealth through any means whatsoever, including, but not limited to, salesmen, solicitors or representatives in the commonwealth, catalogs or other solicitation materials sent through the mails or otherwise, billboards, advertising or solicitations in newspapers, magazines, radio, or television broadcasts, computer networks or in any other communications medium; or regularly engaged in the delivery of property in the commonwealth.
The general effect of this amendment is to expand the jurisdiction of Massachusetts to enable the State to collect sales and use taxes from foreign vendors that regularly solicit orders for sales from Massachusetts customers, through the mails or otherwise, but that do not maintain a business location in the Commonwealth.
Section 33 of Chapter 202 states that the effective date for the above amendment to G.L. c. 64H, § 1(5), is January 1, 1989. The clear legislative intent behind the adoption of sections 19 and 33, however, was that the expanded Massachusetts jurisdiction would not be exercised until federal statutory or cse law specifically authorizes each state to require foreign mail order vendors to collect sales and use taxes on goods delivered to that state. See Commonwealth of Massachusetts, Department of Revenue, 1988 Legislative Recommendations of the Commissioner of Revenue p. 134 (Nov. 1987).
In accordance with this legislative intent, the Department hereby announces that it will refrain from enforcing the provisions of Section 19 of Chapter 202, to the extent that they expand the previous taxing jurisdiction of Massachusetts, until further notice. The Department will use the definition of "engaged in busines in the commonwealth" as it appeared in G.L. c. 64H, § 1(5), before the enactment of Chapter 202, namely:
"Engaged in business in the commonwealth", having a business location in the commonwealth; regularly soliciting orders for the sale of tangible personal property by salesmen, solicitors, or representatives in the commonwealth, unless such activity consists solely of solicition by direct mail or advertising via newspapers, radio or television; or regularly engaging in the delivery of property in the commonwealth other than by common carrier or United States mail.
Stephen W. Kidder
Commissioner of Revenue
December 8, 1988