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

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 for more information.

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

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