Massachusetts State Supreme Judicial Court Negates Cookie Nexus

The Massachusetts Supreme Judicial Court (SJC) ruled in U.S. Auto Parts Network, Inc. vs. Commissioner of Revenue, SJC-13283, that a company with only digital ties to the state—like cookies, applications, and content delivery networks—doesn’t create sufficient physical presence nexus for sales and use tax purposes.

In the December 22, 2022 ruling, the SJC didn’t permit the Massachusetts Department of Revenue (DOR) to apply South Dakota v. Wayfair economic nexus standards retroactively.

Internet Cookies Don’t Constitute Physical Presence

In a 2017 audit, initiated by the Massachusetts DOR, the state asserted U.S. Auto Parts had a sales and use tax filing responsibility in Massachusetts.

U.S. Auto Parts, now known as, is a California-based online retailer of aftermarket automobile parts and accessories. It sells products to customers through its website and mobile applications.

Customers accessing its online storefront get internet cookies, or small packets of data, delivered to their devices. In its audit findings, the DOR contended internet cookies on a customer’s device constituted physical presence in the state of Massachusetts.

U.S. Auto Parts appealed the DOR’s audit findings, and a Massachusetts Appellate Tax Board ruled in favor of U.S. Auto Parts. The DOR appealed this decision, and the case was sent to the SJC.

In its opinion issued December 22, 2022, the Massachusetts SJC interprets statements from the United States Supreme Court’s 2018 Wayfair decision. The Massachusetts SJC found that physical aspects of virtual technologies, such as the download of internet cookies, applications, or content delivery networks to a customer’s device, wouldn’t satisfy the physical presence requirements set forth under Quill Corp v. North Dakota.

The Massachusetts SJC affirmed the Appellate Tax Board’s decision in favor of the taxpayer, finding that applications, internet cookies, and content delivery networks don’t constitute physical presence under Massachusetts Regulations Code 64H.1.7.

Massachusetts DOR Not Permitted to Retroactively Apply Wayfair Nexus

In its appeal to the Massachusetts SJC, the Massachusetts DOR also sought to retroactively apply sales and use tax economic nexus standards established in Wayfair, meaning, a filing requirement exists if a company has $100,000 of inbound receipts within the current or previous calendar year.

The Massachusetts SJC agreed with the Appellate Tax Board again, finding that the United States Supreme Court’s economic nexus standard in Wayfair couldn’t be applied to out-of-state business until the state ratified economic nexus thresholds in 2018.

The Massachusetts SJC took particular interest in a brief submitted to the United States Supreme Court by the state of Massachusetts while the Wayfair decision was being considered. This brief indicated the state wouldn’t apply tax laws retroactively, contradicting the Massachusetts DOR’s position against U.S. Auto Parts.


If you don’t have physical presence or more than $100,000 of sales in the state within a given calendar year, you may be able to cease future sales and tax reporting in the state to lower your monthly or quarterly tax compliance burden.

If you don’t have physical presence but you have $100,000 or more of inbound gross receipts in Massachusetts, you likely still have economic nexus and are required to file period sales and use tax returns.

We’re Here to Help

For more information on the recent Massachusetts Supreme Judicial Court ruling on cookie nexus and how this case may affect you, contact your Moss Adams professional or email

Special thanks to Alex Pettibone, Senior, State and Local Tax Services, for his help with this article.

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