New England Legal Foundation (NELF) SJC “Amicus” Brief Backs Out-of-State Companies In Exemption From a 2017 State Commissioner of Revenue Regulation on Sales Tax Collection

BOSTON – The New England Legal Foundation (NELF –, in an amicus curiae friend-of-the-court brief before the Massachusetts Supreme Judicial Court (SJC), is backing 46 out-of-state online companies that claim an exemption from assessing state sales taxes on in-state Massachusetts customers because they have no “traditional physical presence” in the Bay State.

The principal issue before the Court – in the case of U.S. Auto Parts Network, Inc. v. Commissioner of Revenue – is whether the Massachusetts Commissioner of Revenue had the authority in 2017 to require the would-be taxpayer and 45 other online companies with similar claims, to collect sales taxes on internet sales to Massachusetts customers.

Citing a 1992 US Supreme Court decision, Quill Corp. v. North Dakota, NELF’s brief – written by its Senior Staff Attorney Ben Robbins – argues, in part, that in 2017, when the Commissioner promulgated the Massachusetts regulation, out-of-state mail order houses could not be required to collect and remit sales tax because they lacked a physical presence in the state. “At the time of the regulation’s promulgation,” Robbins said, “the United States Supreme Court had long required that out-of-state sellers must have a physical, brick-and-mortar presence within the taxing state, such as with outlets, offices, or employees, to satisfy the Court’s … requirement between the seller’s activity and the taxing state. … Moreover,” Robbins added, “the federal Internet Tax Freedom Act (ITFA) prohibits a state from imposing ‘discriminatory’ taxes on electronic commerce.” In this connection, Robbins said, “the 2017 DOR regulation applied only to online retailers.  It did not apply to mail order companies.”

Nine months after the DOR’s 2017 regulation took effect, the Supreme Court reversed itself in South Dakota v. Wayfair, Inc., by expressly abandoning the physical presence requirement, and held that an economic and virtual presence were sufficient to establish the necessary substantial nexus between the out-of-state retailer and the taxing state. The Commissioner argues in the case now before the SJC that Wayfair should apply retroactively to the Commissioner’s 2017 application of the regulation against U.S. Auto Parts, but again, NELF’s amicus brief disagrees.

Robbins argues that Wayfair “does not apply retroactively to sanitize the Commissioner’s 2017 regulation after the fact. Perhaps even more importantly,” Robbins said, “the exclusively prospective reach of Wayfair is consistent with the [US] Supreme Court’s own ‘presumption against retroactivity’ that the Court has long applied to the interpretation of federal statutes that burden private rights.” He quoted a SCOTUS ruling, “Since the early days of this Court, we have declined to give retroactive effect to statutes burdening private rights unless Congress had made clear its intent.”

“In sum,” the NELF brief argues, “the Commissioner’s promulgation and enforcement of its 2017 regulation against U.S. Auto Parts violated the ‘dormant’ Commerce Clause [of the US Constitution].  Moreover, the Supreme Court’s subsequent decision in Wayfair does not apply retroactively to sanitize the Commissioner’s prior unconstitutional conduct.  Therefore, the Court should affirm the Appellate Tax Board’s decision invalidating the 2017 regulation and abating the Commissioner’s assessment of a double use tax, penalties, and interest against U.S. Auto Parts.”


About the New England Legal Foundation

The New England Legal Foundation (NELF – is the leading non-profit public interest law firm in the region dedicated to addressing policy and constitutional concerns related to free enterprise. NELF’s ongoing mission is to champion individual economic liberties, property rights, good government based on rule of law, and inclusive economic growth. NELF challenges actions by governments and private litigants which would unreasonably intrude on the economic freedoms of individuals and business enterprises in New England and the nation. We believe that free enterprise is a linchpin of a democratic society and offers the most sustainable path to advance the American ideals of life, liberty, and the pursuit of happiness, including freedom from material want.


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