Massachusetts Revokes Directive 17-1 – Will Adopt Regulation Establishing Economic Nexus for Sales/Use Tax

July 5, 2017

By Jeff Glickman, SALT partner

As discussed in our May 2017 SALT Newsletter, on April 3, 2017, the Massachusetts Department of Revenue issued Directive 17-1, which established an economic nexus rule for sales/use tax effective July 1, 2017, for internet vendors that have more than $500,000 in Massachusetts sales and made sales for delivery into Massachusetts in at least 100 transactions.

However, on June 28, 2017, the Department issued Directive 17-2, revoking Directive 17-1 immediately. Internet vendors subject to Directive 17-1 expressed concern that the economic nexus rule should not have been established by a Directive, which is intended only as a written interpretation by the Department. According to Directive 17-2, the requirements set forth in Directive 17-1 will be forthcoming via regulation, which will be made available for public comment, and any obligations imposed on internet vendors to collect Massachusetts sales/use tax will be on a prospective basis.

As a result, the economic nexus rules for sales/use tax that were supposed to take effect on July 1, 2017, no longer exist, and the timing of any new regulation on this issue is unknown.

Contact Jeff Glickman, partner-in-charge of Aprio’s SALT practice, at [email protected] for more information.

This article was featured in the June 2017 SALT Newsletter. You can view the full newsletter here.

Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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About the Author

Jeff Glickman

Jeff Glickman is the partner-in-charge of Aprio, LLP’s State and Local Tax (SALT) practice. He has over 18 years of SALT consulting experience, advising domestic and international companies in all industries on minimizing their multistate liabilities and risks. He puts cash back into his clients’ businesses by identifying their eligibility for and assisting them in claiming various tax credits, including jobs/investment, retraining, and film/entertainment tax credits. Jeff also maintains a multistate administrative tax dispute and negotiations practice, including obtaining private letter rulings, preparing and negotiating voluntary disclosure agreements, pursuing refund claims, and assisting clients during audits.

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