(a) General Rule. M.G.L. c. 63, § 39 imposes an excise on a general business corporation that includes an income measure and a non-income measure and a minimum excise that applies when those two measures combined are below a certain dollar threshold for a particular taxable year. A general business corporation is typically subject to the tax jurisdiction of Massachusetts pursuant to M.G.L. c. 63, § 39 when it meets the statutory standards, including the circumstance where the corporation owns or uses any part of its plant or property in the state or is engaged in doing business in the state. The state’s assertion of jurisdiction may be limited by the provisions of the U.S. Constitution or federal law; however, the Commissioner will generally construe M.G.L. c. 63, § 39 as asserting the tax jurisdiction of the state to the fullest extent permitted by the U.S. Constitution and federal law.
(b) Examples of Tax Jurisdiction. Examples of contacts or other incidents that will typically subject a general business corporation to tax jurisdiction under M.G.L. c. 63, § 39, taking into account the principles that apply under the U.S. Constitution, include, without limitation, the circumstances where such corporation:
1. is incorporated or organized in the state;
2. is headquartered or commercially domiciled in the state;
3. owns real or tangible personal property in the state, including property that is possessed, held or used by another person pursuant to a lease, license, consignment or other arrangement;
4. uses real or tangible personal property that it does not own in the state, including property that it possesses or holds pursuant to a lease, license, consignment or other arrangement;
5. has a full or part-time employee acting on its behalf in the state, irrespective of the nature of the employment, see 830 CMR 63.39.1(3)(c);
6. has an independent contractor or other non-employee representative acting or operating on its behalf in the state for the purpose of selling, delivering, installing, assembling, maintaining or repairing the corporation’s products, or taking orders for or otherwise establishing or maintaining a market for the corporation’s products and/or services in the state, see 830 CMR 63.39.1(3)(c);
7. owns or uses intangible property in the state where:
a. the intangible property generates or is otherwise a source of gross receipts within the state for the corporation, including through a license, sublicense or franchise; and
b. the activity through which the corporation obtains such gross receipts from the intangible property is purposeful (e.g., a contract, license or sublicense); or
8. does not have the contacts or other incidents with the state as referenced in 830 CMR 63.39.1(3)(b)1. through 7., but has considerable in-state sales derived through either economic or virtual contacts. See 830 CMR 63.39.1(3)(d). See also South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018).
The list above represents examples of contacts or other incidents that will typically subject a general business corporation to tax jurisdiction under M.G.L. c. 63, § 39, taking into account the principles that apply under the U.S. Constitution. Other contacts or incidents may subject a general business corporation to such tax jurisdiction depending upon the specific facts.
(c) Employee or Representative Visits. For purposes of the examples referenced in 830 CMR 63.39.1(3)(b)5. and 6., supra, in any instance in which a general business corporation’s contacts with the state are limited to visits by an employee and/or one or more other representative(s) from a location outside the state, such contacts will generally subject the corporation to the tax jurisdiction of Massachusetts under M.G.L. c. 63, § 39 where the visits are lengthy, continuous, regular or systematic. Also, for purposes of the example referenced in 830 CMR 63.39.1(3)(b)5., supra, jurisdiction will generally be established where the in-state visit or visits of the employee of such corporation provide management or technical oversight or other business assistance with respect to a related person’s in-state business activities when the corporation and the related person are engaged in a unitary business. These circumstances represent examples of when a visit or visits by an employee or other representative(s) of a general business corporation will establish jurisdiction on the part of the corporation and do not necessarily describe all circumstances in which such a visit or visits will establish this jurisdiction. In general, in making a determination as to when the visit or visits of an employee or other representative will establish nexus on the part of a general business corporation, the Commissioner will consider the nature of the employee or representative visit(s), including the benefits that inure from such visit(s) to the corporation’s business. A general business corporation that is subject to the tax jurisdiction of the state because its activities are described in 830 CMR 63.39.1(3)(b)5. or 6., supra, may nonetheless be exempt from the income measure of the corporate excise, though not the non-income measure or minimum excise, by reason of federal law, Public Law 86-272 (15 U.S.C. § 381 et seq). See 830 CMR 63.39.1(4)(e).
(d) Economic and virtual contacts. For purposes of this regulation, including the examples referenced in 830 CMR 63.39.1(3)(b)8., supra, the Commissioner will presume that a general business corporation’s virtual and economic contacts subject the corporation to the tax jurisdiction of Massachusetts under M.G.L. c. 63, § 39, where the volume of the corporation’s Massachusetts sales for the taxable year exceeds five hundred thousand dollars. Massachusetts sales for purposes of this provision are sales that are attributed to Massachusetts pursuant to M.G.L. c. 63, § 38. A general business corporation that is subject to the tax jurisdiction of the state because its activities are described in 830 CMR 63.39.1(3)(b)8., supra, may nonetheless be exempt from the income measure of the corporate excise, though not the non-income measure or minimum excise, by reason of the federal law, Public Law 86-272 (15 U.S.C. § 381 et seq). See 830 CMR 63.39.1(4)(e). In applying the presumption set forth in this section 830 CMR 63.39.1(3)(d), the Commissioner will include, with respect to any corporation that has Massachusetts sales, the Massachusetts sales of a related person engaged in a unitary business with such corporation if absent this inclusion no corporation engaged in the unitary business would be subject to the excise due under M.G.L. c. 63.