Crutchfield Files Court Challenge To Massachusetts “Economic Nexus” Regulation

On October 24, 2017, Crutchfield Corporation filed suit in the Circuit Court for Albemarle County, Virginia, against officials in the Massachusetts Department of Revenue, challenging the validity of Massachusetts’ new “economic nexus” regulation. Crutchfield, represented by George Isaacson, Martin Eisenstein, and Matthew Schaefer, asserts that the new rule violates the Commerce Clause of the United States Constitution and the physical presence “substantial nexus” standard set out by the Supreme Court in Quill Corp v. North Dakota. Although Crutchfield has no physical presence in Massachusetts, it has received written notices from Massachusetts officials asserting that it is nonetheless required to collect and remit sales and use tax under the “economic nexus” theory recently adopted by Massachusetts. Crutchfield also contends that the rule violates the federal Internet Tax Freedom Act, which prohibits states and state agencies from discriminating against electronic commerce.

The case is Crutchfield Corp. v. Harding, et al.; a copy of the complaint is available here.