Massachusetts Establishes New Economic Nexus Thresholds

Last Updated on September 5, 2024

Massachusetts has enacted legislation that creates new requirements for remote retailers and marketplace facilitators, effective October 1, 2019. A remote retailer or marketplace facilitator is required to collect and remit tax if its sales within Massachusetts in the prior or current taxable year exceed $100,000. The state had a previous economic nexus and “cookie nexus” standard of $500,000 and 100 transactions.  The legislation defines “marketplace facilitator” as a person that contracts with one or more marketplace sellers to facilitate for consideration the sale of the seller’s tangible personal property or services through a marketplace operated by the person. A marketplace facilitator engages directly or indirectly in activities such as communicating offers/acceptance between buyers and sellers, owning electronic or physical infrastructure to bring buyers and sellers together, providing a virtual currency to buyers for use on the platform, and R&D activities for software related to the previous activities.

In addition, a marketplace facilitator engages in activities like payment processing, fulfillment and storage, listing, branding, and customer service in respect to a marketplace seller’s products or services. Marketplace facilitators do not include persons that solely provide payment processing services. Marketplace facilitators must include both their own direct sales and sales facilitated on behalf of marketplace sellers towards the threshold. Marketplace sellers are not required to count marketplace sales towards their threshold if a marketplace facilitator reports, collects, and remits tax on those sales.