Cookie Nexus Can't Apply Pre-Wayfair, Mass. Justices Say

December 22, 2022

Richard Jones was quoted in the article "Cookie Nexus Can't Apply Pre-Wayfair, Mass. Justices Say," published by Law360 [sub. req.]. The article discusses the Massachusetts Supreme Judicial Court's decision issued December 22nd in U.S. Auto Parts Network Inc. v. Commissioner. In ruling for the taxpayer, the SJC rejected the Massachusetts Commissioner of Revenue’s contention that a remote Internet vendor had physical presence in Massachusetts (and thus was subject to the state’s sales/use) by virtue of its Internet cookies or apps that could reside on an in-state user’s device. Moreover, the validity of the assessment could not be saved by a retroactive application of the economic nexus standards first set forth in the U.S. Supreme Court's 2018 decision in South Dakota v. Wayfair. The “cookie nexus” regulation upon which the Commissioner relied in asserting tax jurisdiction adhered to a physical presence standard.

Rich told Law360 that the Supreme Judicial Court's decision, which rejected the notion that electrons constitute physical presence, should mark the end of the "cookie nexus rule."

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