Massachusetts Adopts Economic Nexus via Directive 17-1

April 4, 2017

On April 3 the Massachusetts DOR issued Directive 17-1 establishing an economic nexus standard for out-of-state vendors. Under this new rule, starting on July 1, the existing “physical presence” standard as defined by the famous Quill v. North Dakota Supreme Court decision would be replaced with a requirement that specifies all vendors that make at least $500,000 in sales (or 100+ sales) into Massachusetts will be required to collect and remit tax when selling to Massachusetts customers. With this step, Massachusetts joins a growing list of states including Alabama, South Dakota, Vermont, Tennessee, and Wyoming issuing open challenges the current sales tax status quo. We expect litigation to follow.

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