Lead Sponsor: Senator Jamie Eldridge

Summary: This bill, which is modeled on recent legislation passed by New York and several other states, would require out-of-state retailers—such as Amazon.com and Overstock.com —to collect a use tax from in-state consumers if the retailers have marketing affiliates in the state which produce at least $10,000 in sales.

Why This Matters: In a 1992 decision, Quill v. North Dakota, the U.S. Supreme Court ruled that retailers are exempt from collecting sales taxes in states where they have no physical presence, such as a store, office, or warehouse.  As a result, companies like Amazon.com and Overstock.com collect no sales tax on items they sell to Massachusetts residents, even when their wares are marketed by affiliates in Massachusetts. 

This puts many of our “Main Street” businesses at a disadvantage. Customers purchasing a book from a local bookstore pay the sales tax, but purchases made through an online intermediary avoid that tax, even if the vendor is located in Massachusetts. Passing this bill would help even the playing field for many local business owners.

As a result, Massachusetts loses millions of dollars in sales tax revenues as a result of local vendors selling their products through online intermediaries.  After passing similar legislation, New York was able to collect $68 million dollars in the last fiscal year.

What this Bill Would Do:  This bill would alter the definition of “vendor” in the General Laws in order to clearly cover transactions made through websites with marketing affiliates in Massachusetts.  The Department of Revenue would be in charge of enforcing the law.