Massachusetts recently joined a handful of other states (read: States over the Edge and Testing Boundaries with Business Activity Tax Nexus) by issuing a final revised regulation adopting a bright-line, $500,000, nexus threshold for its corporate excise tax. See generally 830 CMR 63.39.1. Echoing the language of the Wayfair decision, the state’s revised nexus regulation provides that “the Commissioner will presume that a general business corporation’s virtual and economic contacts subject the corporation to the tax jurisdiction of Massachusetts under M.G.L. c. 63, § 39, where the volume of the corporation’s Massachusetts sales for the taxable year exceeds five hundred thousand dollars.” 830 CMR 63.39.1(3)(d).
In a decision that may foretell the future of business privilege tax nexus, the Washington Supreme Court in November upheld the imposition of the state’s business & occupation (B&O) tax on an out-of-state distributor with respect to sales that were not generated by the distributor’s in-state office. In Avnet Inc. v. Dep’t of Rev., Dkt. No. 92080-0 (Wash. 2016), the Court effectively killed any notion that transactional nexus is required to impose the B&O tax—a tax on the privilege of doing business in Washington. This case, coupled with the Ohio Supreme Court’s decision in Crutchfield v. Testa, which was decided one week before Avnet and involved Ohio’s similar Commercial Activity Tax (CAT), continue the trend of aggressively pursuing nexus in the business privilege tax context.