I. Issue and Discussion

Under P.L. 86-272, 15 U.S.C. § 381, the Massachusetts corporate excise tax does not apply to a foreign corporation if the sole activity of the corporation in the state is the solicitation by the corporation's representatives of orders for the sale of tangible personal property, provided that the orders are sent outside Massachusetts for approval or rejection, and provided that the orders are filled by shipment or delivery from a point outside the state.( 1) The Massachusetts Supreme Judicial Court has decided that "delivery from a point outside the state" includes delivery by common or contract carrier, and also delivery in the corporation's own private vehicles. National Private Truck Council, Inc. v. Commissioner of Revenue, 426 Mass. 324, 325 (1997), cert. denied 118 S. Ct. 1840, 66 U.S.L.W. 3757 (U.S. May 26, 1998)(No. 97-1570).

The court in National Private Truck Council, Inc. held that federal Pub. L. 86-272, codified at 15 U.S.C. § 381 (1994), preempts 830 CMR § 63.39.1(5) (the "Regulation"), which granted the federal tax immunity only when the foreign corporation delivered the property by common carrier or contract carrier. The regulation provided that a foreign corporation that delivered the tangible personal property using its own vehicles was subject to Massachusetts corporate excise tax. 830 CMR § 63.39.1(10), example 8.

The court's opinion states that "shipment or delivery," as the term is used in Pub. L. 86-272, means only that transportation of the goods must originate from a point outside the state, the ownership of the transit vehicles notwithstanding. Accordingly, Department of Revenue public written statements are void to the extent that they are inconsistent with the decision in National Private Truck Council, Inc.

In view of the decision of the Massachusetts Supreme Judicial Court, the Regulation will no longer be construed as limiting the tax immunity only when a foreign corporation delivers the subject property by common or contract carrier. Similarly, Department of Revenue Directive 95-7, which defines a threshold of activity by foreign corporations sufficient to establish nexus with Massachusetts, will not be construed to deny tax immunity of foreign corporations that meet the standards of Pub. L. 86-272, and deliver the property in the corporation's own vehicles.

II. Conclusion

Federal law exempts foreign corporations from Massachusetts corporate excise tax when the only business activity of the corporation in Massachusetts is the solicitation of orders for sales of tangible personal property, the orders are sent outside of Massachusetts for approval or rejection, and are filled by shipment or delivery from a point outside the state. In Massachusetts, "delivery" is defined to include both delivery by common or contract carrier, and also delivery by use of the corporation's own vehicles. Provisions of Massachusetts regulations and other public written statements that are inconsistent with Federal statute, Pub. L. 86-272, are void.


Mitchell Adams
Commissioner of Revenue


October 16, 1998






1. For guidance on related issues, see Department of Revenue Directive 95-7, "Foreign Corporations Using Massachusetts Roads to Transport Goods: What Constitutes Substantial Nexus?"