Court: MA Cannot Force NH Vendor to Collect Use Tax From MA Purchaser

Following up on last November's post on Town Fair Tire and the Silliness of the Physical Presence Rule for Use Tax Collection Nexus, 50 State Tax Notes 447 (Nov. 17, 2008):  the Massachusetts Supreme Judicial Court yesterday issued its opinion in Town Fair Tire Centers v. Commissioner of Revenue, No. 10360 (Aug. 25, 2009):

We consider in this appeal whether a vendor who sells "tangible personal property" to a Massachusetts resident is obligated to collect and remit Massachusetts use tax where the customer purchases and takes delivery of the merchandise outside the Commonwealth. Following a sales and use tax audit of Town Fair Tire Centers, Inc. (Town Fair), concluding, among other things, that certain automobile tires had been sold at Town Fair's New Hampshire stores to Massachusetts residents and inferentially were installed on vehicles registered in Massachusetts, the Commissioner of Revenue (commissioner) assessed use tax and related penalties against Town Fair for failing to collect use taxes on those tire sales.  See G.L. c. 64I, § 1.  Town Fair appealed to the Appellate Tax Board (board), which ruled in favor of the commissioner, finding that the automobile tires at issue were intended for use in the Commonwealth. Town Fair appealed from the board's decision, see G.L. c. 58A, § 13, and we transferred the case here on our own motion. Because we conclude that the applicable Massachusetts statutes do not permit the Commonwealth to assess use taxes against a vendor in circumstances such as these, we reverse.

• Associated Press
• Boston Business Journal
• Boston Herald
• Boston Globe
• Don't Mess With Taxes
• Manchester Union Leader
• Massachuestts Lawyers Weekly
• Wall Street Journal

(Hat Tip: David Nagle.)