There has been some debate about whether online sellers must pay online sales taxes to states where they have no presence but where they do use Amazon's FBA fulfillment program and potentially store inventory at Amazon fulfillment centers in those states.
Now, Massachusetts is demanding Amazon hand over the names of vendors who store products at Amazon locations in the state, according to news sources, including Law360
In an article on Wednesday, the publication reported that the Massachusetts Department of Revenue has asked Suffolk County Superior Court on Sept. 22 for an order to force Amazon to hand over the requested documents. "According to its petition, the Amazon affiliates have declined to release information that would help determine vendors' liability for sales and use tax in the state."
Bisnow notes the awkward timing of the action with its article
titled, "Massachusetts Simultaneously Takes Amazon To Court And Looks To Land HQ2," a reference to the state's interest in playing host to Amazon's second North American headquarters.
Bisnow said Massachusetts asked the court to demand Amazon hand over the requested business records within 20 days. The court will have to decide if using Amazon FBA equates to having a physical nexus in states, though sellers may not have discretion over where Amazon sends their inventory once it's in their distribution network.
In related news, tax software company Avalara reports that a new Massachusetts law takes effect on October 1 requiring large internet vendors to collect Massachusetts sales and use tax despite the fact that "taxing businesses that lack a physical connection to a state is at odds with precedent upheld by the United States Supreme Court in Quill Corp. v. North Dakota."
Avalara wrote, "Massachusetts acknowledges Quill and the physical presence precedent. Yet the regulation maintains that internet vendors differ from mail-order vendors in key ways."
It said Massachusetts was the first state to posit that online vendors have a physical presence in a state through the software or internet cookies they place on computers and handheld devices.