Regulation  830 CMR 63.39.1: Corporate Nexus (Proposed Regulation Amendment)

Date:	03/28/2025
Organization:	Massachusetts Department of Revenue
Regulatory Authority:	Massachusetts General Laws
Official Version:	Published by the Massachusetts Register

PROPOSED REGULATION AMENDMENT 830 CMR 63.39.1

830 CMR:  DEPARTMENT OF REVENUE
830 CMR 63.00:  TAXATION OF CORPORATIONS
830 CMR 63.39.1:  Corporate Nexus
830 CMR 63.39.1(4)(e) is hereby repealed and replaced with the following:

(4) Exceptions to Jurisdiction Applicable under M.G.L. c. 63, § 39

(e)  Public Law 86-272; Certain Out-of-state Vendors of Tangible Personal Property.

1. Massachusetts is generally precluded from subjecting a general business corporation to the income measure of the corporate excise under M.G.L. c. 63, § 39 when such corporation is protected by the statutory standards set forth in federal law, Public Law 86-272 (15 U.S.C. § 381 et seq.). The Commissioner will generally construe M.G.L. c. 63, § 39 as asserting the tax jurisdiction of Massachusetts to the fullest extent permitted by such federal law.
2. In general, the Public Law 86-272 statutory standards are met with respect to the income measure of the corporate excise for a particular year when the exclusive business activity by or on behalf of such corporation in Massachusetts is the solicitation of orders of tangible personal property, provided that all such orders are sent outside the state for approval or rejection, and provided that the orders are filled by shipment or delivery from a location outside the state. Public Law 86-272 does not preclude subjecting a corporation to the income measure of the corporate excise when the corporation sells services or licenses intangible property in the state. Also, the statutory standard is not met if the in-state business activity by or on behalf of a corporation, however conducted, includes activity that is not entirely ancillary to the solicitation of orders of tangible personal property. See Wisconsin Dept. of Revenue v. William Wrigley, Jr., Co., 505 US 214 (1992).  As an example, in-state activities that are conducted by a vendor through an Internet website accessible by persons in the state may include activity that is not entirely ancillary to the solicitation of orders of tangible personal property, such as the placement of Internet cookies onto the computers or other electronic devices of in-state customers that gather customer search information used to adjust production schedules and inventory amounts, develop new products, or identify new items to offer for sale.  Cf. South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018). Activities that take place after a sale will ordinarily not be considered entirely ancillary to the solicitation of such sale. Id.   
3. The statutory exception set forth in Public Law 86-272 applies only to the income measure of the corporate excise and not to the non-income measure or the minimum excise.

Proposed Regulation – Public Hearing 4/29/25

Written comments may be emailed to [e-mail].