Massachusetts Sales tax / Use Tax: State high court says New Hampshire retailers don't have to collect Massachusetts use tax

Town Fair Tire Centers, Inc. v. Commissioner, Mass. (8/25/09). Reversing the Massachusetts Appellate Tax Board's controversial ruling from 2008 [See State Tax Matters, Issue 2009-29 for New Hampshire law that was enacted in response to this earlier ruling], which had required a tire retailer/installer in New Hampshire that sold products to Massachusetts residents to collect and remit Massachusetts use tax when such customers purchased and took delivery of the merchandise outside Massachusetts, the Massachusetts Supreme Judicial Court held that state statutes do not permit Massachusetts to presume in-state use and/or assess use taxes against a vendor in these circumstances.

The Court explained that there is currently no statutory presumption of "use" in Massachusetts where personal property is sold to a Massachusetts resident outside Massachusetts, even if such goods are subsequently affixed to property registered in Massachusetts. The absence of such a statutory presumption, the Court explained, is particularly significant because other states (e.g. California and Wisconsin) have enacted similar statutory presumptions. Therefore, in the absence of any such statutory authorization in Massachusetts, the Court reasoned:

- It would be erroneous to presume that tires sold to Massachusetts residents outside the State are actually used in Massachusetts, and

- That principles of tax statute interpretation preclude the Court from "engrafting such language on the statute as written."