Boston (June 9, 2017) – The American Catalog Mailers Association along with its True Simplification of Taxation coalition partner organization NetChoice today sued the state of Massachusetts challenging its regulation requiring out-of-state catalog and online retailers to collect sales taxes.
“This is just the latest in a series of ill-considered and illegal and aggressive state moves to shift the burden of use tax collection on small- and medium-sized businesses outside of their own state borders,” says ACMA President & Executive Director Hamilton Davison. “As has been demonstrated in South Dakota and will be shown again and again, states do not have the right to countermand established Supreme Court precedence.”
The rule also violates the Internet Tax Freedom Act, a law Congress enacted specifically to stop states from imposing taxes that discriminate against the internet. “The well-established practice of placing cookies on computers to improve the user experience has nothing to do with the establishment of physical nexus, as we will show during these proceedings,” Davison added.
Web Access = Physical Presence?
The Massachusetts regulation contends that an out-of-state business effectively has a “physical presence” in the Bay State by giving its residents access to do commerce with it in their computers and mobile phones.
This recklessly-written regulation was developed and adopted without public comment or public hearing. The ACMA and NetChoice will argue this to be a clear violation of state law regarding administrative procedures, as the organizations seek an immediate injunction of the regulation.
Click here for the preliminary injunction.