Avalara > Blog > Sales and Use Tax > Massachusetts cookie law likely to crumble

Massachusetts cookie law likely to crumble


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The cookie nexus rule that took effect in Massachusetts on October 1, 2017, served a purpose for a time. Now it’s just empty calories.

Massachusetts created cookie nexus (830 CMR 64H.1.7) at a time when it and other states were prohibited from taxing remote sales. Until June 21, 2018, when the Supreme Court of the United States overruled a longstanding physical presence rule (South Dakota v. Wayfair, Inc.), states could only require a business to collect and remit sales tax if the business had a physical presence in the state.

A creative interpretation of physical presence

Some states, like South Dakota, challenged the physical presence restriction head-on. Massachusetts took a different approach: The Department of Revenue decided that remote internet vendors establish a physical presence in Massachusetts through property interests in the commonwealth, or through the software (e.g., “apps”) or ancillary data (e.g., “cookies”) they place on in-state devices to establish and promote their market in Massachusetts.

Indeed, a day after the Supreme Court issued its historic decision in Wayfair, the Massachusetts Department of Revenue announced its cookie nexus rule was unaffected by the opinion: “[E]xisting regulation 830 CMR 64H.1.7 … continues to apply and is not impacted by the Supreme Court’s decision.” After all, Wayfair pertained only to businesses with no physical presence in a state.

Economic nexus in Massachusetts

Nonetheless, the Massachusetts Legislature did what many other state legislatures did after Wayfair: It enacted an economic nexus law similar to the South Dakota law that led to the repeal of the physical presence rule.

Under economic nexus, a remote retailer establishes a sales tax collection obligation solely through economic activity in a state. South Dakota and most other states with economic nexus allow safe harbor for small sellers, so remote retailers are only required to collect and remit sales or use tax in states where their sales in the state exceed the small seller exception.

Massachusetts enacted economic nexus in July 2019. House Bill 4000 requires an out-of-state business with no other collection obligation in the commonwealth to collect and remit Massachusetts sales tax if its taxable sales in Massachusetts exceed $100,000 in the current or previous calendar year. The measure also requires marketplaces to collect and remit tax on all sales in Massachusetts, including third-party (marketplace) sales. 

The $100,000 economic nexus threshold is considerably lower than the threshold established by the cookie nexus rule, which allowed an exception for small remote online sellers with $500,000 or less in internet sales in Massachusetts and no more than 100 transactions in the commonwealth during the preceding 12 months.

In other words, having both an economic nexus law and a cookie nexus rule is a bit confusing.

Crush the cookie

Little wonder that the Massachusetts Department of Revenue is now looking to repeal its cookie nexus rule (830 CMR 64H.1.7).

According to the department’s Notice of Public Hearing, “This regulation is being repealed because as of October 1, 2019, the provisions of the regulation have ceased to apply, due to recent statutory changes to General Laws Chapter 64H and 64I related to out-of-state ‘remote’ sellers and marketplace facilitators.”

The hearing is scheduled to take place Thursday, November 2, 2019, at 2:30 p.m.

If, as anticipated, the cookie nexus provision is repealed, remote vendors selling into Massachusetts will only need to concern themselves with the Massachusetts economic nexus law. Unless they're marketplace sellers or marketplace facilitators, of course.

Massachusetts isn’t the only state striving to clean up laws affecting remote sellers. Learn more in Avalara’s state-by-state guide to sales tax nexus laws.


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.