Massachusetts PL 86-272 Nexus | Income Tax Nexus for Remote Sellers

The newly amended Massachusetts regulation 830 CMR 63.39.1 provides nexus clarification for out-of-state vendors. The changes emphasize that PL 86-272 protection from corporate income tax applies only when a corporation’s in-state activities are strictly limited to the solicitation of orders for tangible personal property, with all orders approved and fulfilled from outside the state. The amendment includes new examples of activities that are not protected under the regulation — including digital interactions such as placing cookies on Massachusetts customers’ devices to collect data for business purposes, which are deemed not “entirely ancillary” to solicitation. It is important to note that PL 86-272 protections apply only to the income tax measure and not the non-income measure of the Massachusetts corporate excise tax.

Remote sellers should review how they use customer search information collected by Internet cookies to determine whether such use creates a Massachusetts income tax nexus under the amended regulation. This issue has already been litigated in New York and New Jersey, so a legal challenge in Massachusetts is likely as well.

The full regulation may be viewed here:

830 CMR 63.39.1 – Massachusetts Department of Revenue
.