Mass. faces court challenge on online sales tax
When the Baker administration rushed through its controversial rule to require major out-of-state online retailers to collect sales taxes here, state officials must have expected litigation would soon follow.
That day has arrived: Electronics retailer Crutchfield has sued the Mass. Department of Revenue in Virginia in an effort to overturn the new online sales tax.
Crutchfield argues that an often-cited 1992 Supreme Court ruling known as “Quill” precludes a state from imposing a sales tax requirement on retailers that don’t have a physical presence in that particular state.
The Baker administration, meanwhile, is claiming that apps and tracking files known as “cookies” that consumers download to their phones and computers count toward this requirement. Amazon, which has several facilities in this state, has collected sales taxes here since 2013.
Crutchfield’s argument is similar to one that trade group NetChoice made in June, in a suit against the state agency. At the time, the agency was trying to collect these taxes by issuing a directive, something that’s far more streamlined than full-fledged regulations.
A Superior Court judge ruled, though, that this was a big enough policy change that the state needed to go through the trouble of crafting a regulation. After soliciting public comment, DOR wrote one up, to take effect Oct. 1.
A spokesman for NetChoice said his group is considering its own lawsuit, this time against the new regulation, but the Crutchfield suit is the first in line now.
The Baker administration had once hoped to raise $30 million this fiscal year with the change. State officials may want to wait before they count all those dollars.