Brann & Isaacson Wins Summary Judgment for U.S. Auto Parts in Massachusetts Tax Dispute

On January 28, 2021, the Massachusetts Appellate Tax Board granted summary judgment in favor of Brann & Isaacson client, U.S. Auto Parts, and abated a sales tax assessment dating to October 1, 2017. The Massachusetts Department of Revenue had assessed U.S. Auto Parts, which did not have a physical presence in Massachusetts, under its Internet Vendor Rule, which purported to authorize the Department to require any company with annual internet sales greater than $500,000 to collect Massachusetts sales tax. The Rule and period covered by the assessment pre-dated the U.S. Supreme Court opinion in South Dakota v. Wayfair, in which the Court held that out-of-state sales alone could constitute substantial nexus under the Commerce Clause. Massachusetts argued that the Department could enforce the Wayfair holding retroactively, a position the Board did not find persuasive. The decision in favor of the taxpayer is significant because the Department assessed many other out-of-state internet retailers under the Internet Vendor Rule for periods pre-dating Wayfair.  George Isaacson, Martin Eisenstein, David Swetnam-Burland and Jamie Szal are the B&I team representing U.S. Auto Parts in the case. An appeal is expected.