The electronics retailer, which has no physical presence in Massachusetts, says the state’s demand that it collect and remit tax from online sales there is unconstitutional.
Massachusetts officials want Crutchfield Corp. to fork over sales taxes for online transactions made their state, and the Virginia-based consumer electronics retailer is going to court over the request.
Crutchfield, No. 190 in the Internet Retailer 2017 Top 500, on Tuesday filed a complaint in a Virginia court seeking a declaratory judgment to exempt it from Massachusetts’ efforts to collect sales tax for online transactions, despite the fact that Crutchfield has no physical presence there.
The retailer maintains that Massachusetts’ attempt to collect sales tax violates federal law, as determined by a 1992 U.S. Supreme Court decision in a case generally known as Quill Corp. v. North Dakota. The court in that case ruled that Quill, a catalog retailer, did not have to collect sales tax in North Dakota where it had no physical presence. Online retailers have used that decision to argue that they need not collect sales tax in states where they do not have physical locations.
“The physical presence requirement of Quill currently remains the law of the land under the U.S. Constitution. The states, and all state agencies, including the commissioner and the MDOR [Massachusetts Department of Revenue], are bound by Quill,” Crutchfield states in the lawsuit.
Crutchfield filed its action in Virginia because the commonwealth has a law that allows Virginia businesses to sue for declaratory judgement against a state that asserts a sales tax obligation when the business has no physical presence.
The Massachusetts Department of Revenue had informed Crutchfield that, by Oct. 1, it must register with the state as an internet vendor because it had more than $500,000 in online sales and more than 100 transactions resulting in delivery to Massachusetts in the preceding 12 months. An online retailer meeting those criteria is obligated to register for, collect and remit Massachusetts sales and use tax, according the department of revenue. Businesses that don’t comply face statutory penalties and interest charges.
more at: https://www.digitalcommerce360.com/2017/10/25/crutchfield-sues-block-massachusetts-collecting-online-sales-tax/