MA DOR Resubmits Regulation to Require Online Sales Tax 

The Department of Revenue (DOR) has reissued a proposed regulation to require sales tax collection from online retailers who do not have a physical presence in the state but do make a significant amount of annual sales into the state. The DOR had earlier this year proposed a directive requiring the same, but was forced to rescind that and pursue the issue via a regulation, which allows for a public hearing and comment process.

Under the proposed 830 CMR 64H.1.7: Vendors Making Internet Sales, the state imposes an obligation to collect and remit sales tax on all out-of-state internet vendors with sales into Massachusetts in excess of $500,000 and more than 100 transactions. The regulation has a proposed effective date of October 1, 2017. The DOR has taken a unique approach in that they have interpreted the presence of in-state software and “cookies” that are installed on MA residents’ computers, laptops and mobile devices when they purchase from online sellers, as enough to satisfy the physical presence requirement. RAM has long advocated for the Department to take a more aggressive approach in going after online sellers that fail to collect and remit and we support this action. Groups representing online sellers challenged the earlier directive in MA Superior Court, and we fully expect that they will be back in court challenging the regulation once it is finalized.

A public hearing will be held on the proposed regulation on Thursday, August 24, 2017, at 10:00 a.m. at the DOR offices in Boston.