Case Title: Oracle USA, Inc. v. Commissioner of Revenue

Citation: 

Docket Number: SJC-13013

State: massachusetts

Court: Massachusetts Supreme Court

Date: 2021-05-21T00:00:00Z

Document:
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SJC-13013 
 
ORACLE USA, INC.  vs.  COMMISSIONER OF REVENUE  
(and two consolidated cases1). 
 
 
 
Suffolk.     February 1, 2021. - May 21, 2021. 
 
Present:  Budd, C.J., Gaziano, Lowy, Cypher, Wendlandt, 
& Georges, JJ. 
 
 
Taxation, Sales tax, Abatement, Apportionment of tax burden, 
Commissioner of revenue.  Practice, Civil, Abatement.  
Administrative Law, Regulations.  Constitutional Law, 
Taxation, Separation of powers.  Statute, Construction.  
Commissioner of Revenue. 
 
 
 
 
Appeal from a decision of the Appellate Tax Board.  
 
 
The Supreme Judicial Court on its own initiative 
transferred the case from the Appeals Court. 
 
 
 
Richard S. Weitzel, Assistant Attorney General, for 
Commissioner of Revenue. 
 
Richard L. Jones for the taxpayers. 
 
Ben Robbins & Martin J. Newhouse, for New England Legal 
Foundation, amicus curiae, submitted a brief. 
 
Karl A. Frieden & Michael E. Porter, for Council on State 
Taxation, amicus curiae, submitted a brief. 
 
 
 
 
1 Oracle America, Inc. vs. Commissioner of Revenue; and 
Microsoft Licensing, GP vs. Commissioner of Revenue. 
2 
 
 
WENDLANDT, J.  At issue in these cases is whether G. L. 
c. 64H, § 1, provides taxpayers a statutory right to apportion 
sales tax on software transferred for use in more than one 
State, and, if so, whether the general abatement process, see 
G. L. c. 62C, § 37, is available to taxpayers seeking such an 
apportionment.  The taxpayers -- Oracle USA, Inc. (Oracle USA); 
Oracle America, Inc. (Oracle America); and Microsoft Licensing, 
GP (Microsoft) -- are vendors who sold or licensed software to 
Hologic, Inc. (Hologic), a medical device company headquartered 
in the Commonwealth.  The vendors and Hologic did not follow the 
regulations prescribed by the Commissioner of Revenue 
(commissioner) for collecting and remitting sales tax only on 
the portion of the value of the transferred software that was to 
be used in the Commonwealth; rather, at the time sales taxes 
were due (generally monthly), the vendors remitted tax payments 
to the Commonwealth based on the entire value of the 
transactions.  Thereafter, when Hologic notified the vendors 
that only a portion of the software was to be used in the 
Commonwealth, the vendors applied for refunds through the 
general abatement process for the portion of the sales tax they 
had paid to the Commonwealth but which was attributable to out-
of-State use of the software.   
 
The commissioner denied the applications for abatement on 
the ground that the regulations for apportionment had not been 
3 
 
followed; the vendors appealed from the decision to the 
Appellate Tax Board (board).  The board granted the requested 
abatements.  Concluding that G. L. c. 64H, § 1, creates a 
statutory right to apportionment for software transferred for 
use in more than one State, and that the general abatement 
process is available to the vendors who paid sales tax in excess 
of that properly apportioned to sales in the Commonwealth, we 
affirm the board's decision.2  
 
1.  Background.3  Between 2009 and 2012, Hologic purchased 
or licensed software from the vendors, Oracle USA, Oracle 
America, and Microsoft.4  Hologic installed the software on its 
servers in the Commonwealth, and the vendors collected sales tax 
from Hologic based on the total value of the transactions.  The 
 
 
2 We acknowledge the amicus briefs submitted by the New 
England Legal Foundation and the Council on State Taxation. 
 
3 The factual background is based on the parties' joint 
statement of agreed facts.   
 
 
4 As is common with enterprise software sales, the software 
that is the subject of this appeal was sold or licensed on a 
"quantity" or user basis.  See, e.g., Oracle USA, Inc. v. Rimini 
St., Inc., 6 F. Supp. 3d 1108, 1112 n.2 (D. Nev. 2014) 
("Enterprise Software is a type of computer software program 
that enables core operational tasks -- like payroll, human 
resource tasking, and inventory management -- across an entire 
organization.  Instead of being tied to a specific computer, 
Enterprise Software is hosted on a server and provides 
simultaneous access and service to a large number of users over 
a computer network").  For example, one invoice from Oracle 
America included software described as "Human Resources 
Analytics Fusion Edition -- Enterprise Employee Perpetual," with 
"3,500" listed as the quantity or number of authorized users.  
4 
 
vendors timely remitted the sales tax to the Commonwealth on 
their monthly sales and use tax returns.  
 
Subsequently, Hologic notified the vendors that its 
employees located outside the Commonwealth also were using the 
software.  Only approximately seventeen percent of Hologic's 
employees using Oracle USA and Oracle America software were 
located within the Commonwealth, and only about thirty percent 
of Hologic's employees using Microsoft software in the United 
States were located in the Commonwealth.5  
 
The sales tax statute, G. L. c. 64H, § 1, states that the 
commissioner "may, by regulation, provide rules for apportioning 
tax in those instances in which software is transferred for use 
in more than one [S]tate."  The regulations the commissioner 
issued pursuant to this authority provide, in part, that a 
permissible method of apportionment may be "based on [the] 
number of computer terminals or licensed users in each 
jurisdiction where the software will be used."  830 Code Mass. 
Regs. § 64H.1.3(15)(a)(3) (2006).  Having been furnished the 
information about the percentage of licensed users in the 
Commonwealth, the vendors timely filed applications for 
abatement and refunds for the portions of the taxes they had 
 
 
5 Approximately five percent of Hologic's employees using 
Microsoft software during the relevant period were located 
outside the United States. 
 
5 
 
remitted on software that had been transferred for use outside 
the Commonwealth.6 
 
The commissioner did not dispute that the vendors' 
abatement applications reflected the correct amount of sales tax 
that would have been due if the vendors had been permitted to 
apportion their remittances based on in-State use.  Nonetheless, 
the commissioner denied the applications for abatement because 
the vendors had not complied with the regulations requiring 
that, to be entitled to apportionment, a purchaser must submit 
to the seller a "multiple points of use" certificate at the time 
of purchase or "no later than the time the transaction is 
reported for sales or use tax purposes."  830 Code Mass. Regs. 
§ 64H.1.3(15)(a)(1), (2) (2006).  In the transactions at issue 
here, Hologic had not presented such certificates to the 
vendors.  
 
The vendors appealed from the commissioner's decision to 
the board on the ground that they had a right to apportionment 
under G. L. c. 64H, § 1.  The vendors argued that the 
requirement of an exemption certificate was relevant only to 
determining whether they had a duty to collect the tax in the 
 
 
6 "Vendors are responsible for collecting and remitting the 
sales tax and therefore are the party entitled to seek 
abatement."  WorldWide TechServs., LLC v. Commissioner of 
Revenue, 479 Mass. 20, 29 (2018).  As is required under G. L. 
c. 62C, § 37, the vendors agreed to credit Hologic any refunds 
they received from their applications for abatement. 
6 
 
first instance and to remit it at the time that the taxes were 
due but did not prohibit them from later seeking an abatement 
for the portion of taxes remitted to the Commonwealth that were 
attributable to out-of-State software uses. 
 
In May 2017, the board decided in the commissioner's favor, 
and both sides requested findings of fact and a report from the 
board.  See G. L. c. 58A, § 13.  In March 2019, the board, on 
its own motion, reconsidered its decision and concluded that the 
vendors could seek apportionment by means of the general 
abatement process, despite not having received exemption 
certificates at the time of sale or when the tax initially had 
to be reported to the Commonwealth.  The commissioner sought 
reconsideration.  After a hearing and additional briefing, the 
board denied the commissioner's motion and granted the 
abatements in the amounts requested.  The commissioner appealed, 
and we transferred the appeal to this court on our own motion.  
 
2.  Discussion.  a.  Statutory right to apportionment.  
General Laws c. 64H, § 1, provides that the commissioner "may, 
by regulation, provide rules for apportioning tax in those 
instances in which software is transferred for use in more than 
one [S]tate."  The commissioner maintains that the provision 
does not create a statutory right to apportionment.  Emphasizing 
the word "may" in the statutory language, the commissioner 
instead argues that the provision empowers him to determine 
7 
 
whether to allow apportionment of sales tax in circumstances 
where software is transferred for use in multiple States.  The 
vendors, by contrast, contend that the statute creates a right 
of apportionment in such circumstances and authorizes the 
commissioner to decide only how to apportion the relevant sales 
tax.  Concluding that the statute "grants taxpayers the right to 
apportion sales tax on a sale of taxable software that is 
transferred for use in more than one [S]tate," and that the 
commissioner's role is "to prescribe rules for that 
apportionment by regulation," the board agreed with the vendors 
and, accordingly, denied the commissioner's motion. 
 
i.  Standard of review.  We consider the question whether 
G. L. c. 64H, § 1, creates a statutory right of apportionment de 
novo.  See Citrix Sys., Inc. v. Commissioner of Revenue, 484 
Mass. 87, 91 (2020) (Citrix) ("We review [the board's] 
conclusions of law, including questions of statutory 
construction, de novo" [citation omitted]).  "Tax statutes are 
strictly construed, with ambiguity resolved in favor of the 
taxpayer."  Id. at 92.  "[B]ecause the board is an agency 
charged with administering the tax law and has expertise in tax 
matters, we give weight to its interpretation of tax statutes" 
(citation omitted).  Shaffer v. Commissioner of Revenue, 485 
Mass. 198, 203, cert. denied, 141 S. Ct. 819 (2020).  Where the 
board's construction of a tax statute is reasonable, we will 
8 
 
defer to its interpretation.  See AA Transp. Co. v. Commissioner 
of Revenue, 454 Mass. 114, 119 (2009).  At the same time, 
principles of deference are not principles of abdication; "[t]he 
proper interpretation of a statute is a question of law for us 
to resolve" (citation omitted).  Commissioner of Revenue v. 
Gillette Co., 454 Mass. 72, 76 (2009).  "In doing so, '[t]he 
general and familiar rule is that a statute must be interpreted 
according to the intent of the Legislature ascertained from all 
its words construed by the ordinary and approved usage of the 
language, considered in connection with the cause of its 
enactment, the mischief or imperfection to be remedied and the 
main object to be accomplished, to the end that the purpose of 
its framers may be effectuated.'"  Id., quoting Commissioner of 
Revenue v. Dupee, 423 Mass. 617, 620 (1996).   
ii.  Statutory framework.  General Laws c. 64H, § 2, 
provides that "[a]n excise is hereby imposed upon sales at 
retail in the [C]ommonwealth . . . of tangible personal 
property."  Software, however, is not "tangible" within the 
plain meaning of that term.  See America Online, Inc. v. St. 
Paul Mercury Ins. Co., 347 F.3d 89, 94-95 (4th Cir. 2003), 
quoting Webster's Third New International Dictionary 2337 (1993) 
(tangible means "capable of being touched; able to be perceived 
as materially existent [especially] by the sense of touch; 
palpable, tactile").  Software instead consists of a set of 
9 
 
instructions, directing a computer to perform specified 
functions or operations.  See Microsoft Corp. v. AT&T Corp., 550 
U.S. 437, 447-448 (2007).   
Prior to 2005, whether the sale or license of software was 
subject to sales tax depended on its method of delivery; 
software sold or licensed electronically was not taxed, while 
software delivered in a physical form (e.g., software loaded 
onto a compact disc) was.  See Citrix, 484 Mass. at 92-94.  In 
2005, the Legislature amended G. L. c. 64H, § 1, in order to 
address this disparity by extending the statutory definition of 
"tangible personal property" to capture software that was 
transferred electronically.  See St. 2005, c. 163, § 34.  The 
statute currently provides:   
"A transfer of standardized computer software, including 
but not limited to electronic, telephonic or similar 
transfer, shall also be considered a transfer of tangible 
personal property."   
 
G. L. c. 64H, § 1.   
iii.  Software used in multiple locations.  Having 
permitted sales tax on software, even when transferred 
electronically, in 2005, the Legislature addressed another 
characteristic of software that makes it different from other 
types of personal property.  Sales of personal property 
generally are "in the Commonwealth" if the purchaser takes 
possession of or title to the property in the Commonwealth.  
10 
 
G. L. c. 64H, § 1 (defining "sale"), § 2 (imposing sales tax on 
"sales at retail in the [C]ommonwealth").  If the purchaser does 
not take possession or title in the Commonwealth, the sale will 
not be subject to Massachusetts sales tax.  See Citrix, 484 
Mass. at 92-93.   
This paradigm does not easily apply to software because, 
even though software has been deemed "tangible personal 
property," the place of transfer or possession often is not 
readily identifiable.  Transfers of standardized software may 
not involve the actual transfer of title; rather, purchasers 
often will acquire a license or a right to use the software.  
See Rustad & Kavusturan, A Commercial Law for Software 
Contracting, 76 Wash. & Lee L. Rev. 775, 784, 826, 843 (2019).  
Moreover, standardized software can be (and often is) provided 
for use by multiple users within a business.7  Such software may 
be accessed remotely from a server in one jurisdiction and made 
available concurrently to users in multiple jurisdictions.8  See 
 
 
7 Oracle America's sale or license to Hologic of, for 
example, human resources software for 3,500 users, see note 4, 
supra, apparently was not meant to be used only by Hologic 
employees in the Commonwealth. 
 
 
8 Increasingly, software also is being sold "as a service," 
otherwise known as "software-as-a-service" (SaaS).  Rustad & 
Kavusturan, 76 Wash. & Lee L. Rev. at 778-779.  Through SaaS, a 
seller can deliver specific software applications to specific 
users on an on-demand basis.  See id. at 779.  Indeed, the "SaaS 
access contract is rapidly displacing licensing . . . because it 
enables user access through a provider hosted website, where the 
11 
 
id. at 837-839.  Where software is used by multiple people in 
multiple States, it can be difficult to classify the location of 
the "sale" within the statutory scheme of G. L. c. 64H, § 2, 
which requires payment of sales tax for sales "in the 
[C]ommonwealth."   
Recognizing that software may be used concurrently by 
individuals in different States, and that sales of software are 
often unaccompanied by a transfer of title, in 2005 the 
Legislature amended G. L. c. 64H, § 1, to provide: 
"The commissioner may, by regulation, provide rules for 
apportioning tax in those instances in which software is 
transferred for use in more than one [S]tate." 
 
See St. 2005, c. 163, § 34.  Given the focus of G. L. c. 64H, 
§ 2, on sales "in the [C]ommonwealth," G. L. c. 64H, § 1, 
reasonably can be read, as the board concluded, to mean that the 
Legislature intended to allow taxpayers to apportion sales tax 
on software in situations in which software is transferred for 
use in more than one State, and that the method of apportionment 
would be based on the location of the software's use.  Indeed, 
following the enactment of St. 2005, c. 163, § 34, the 
commissioner promulgated regulations setting forth such rules.  
 
customer does not need to install or maintain expensive 
[information technology] infrastructure to use and maintain the 
software."  1 M.L. Rustad, Computer Contracts § 2.07[1], at 2-
631 (2020).  The same sales tax classification issues posed by 
software licensing similarly are posed by SaaS.  Compare Citrix, 
484 Mass. at 88-89. 
12 
 
See, e.g., 830 Code Mass. Regs. § 64H.1.3(15)(a)(8) (2006) 
("purchase of software loaded onto a server located in a single 
[S]tate that will be available for access by a purchaser's 
employees in multiple jurisdictions" is transaction eligible for 
apportionment); 830 Code Mass. Regs. § 64H.1.3(15)(a)(9) (2006) 
("Delivery of a copy of the software is not necessary for the 
software to be 'concurrently available for use in more than one 
jurisdiction'").  "[B]ecause the board is an agency charged with 
administering the tax law and has 'expertise in tax 
matters,' . . . we give weight to its interpretation of tax 
statutes, and will affirm . . . [the board's] interpretation [if 
it] is reasonable."  WorldWide TechServs., LLC v. Commissioner 
of Revenue, 479 Mass. 20, 26 (2018). 
 
iv.  Constitutional concerns.  The commissioner focuses on 
the word "may" in the language added by St. 2005, c. 163, § 34, 
and argues that G. L. c. 64H, § 1, does not create a right to 
apportionment; rather, according to the commissioner, the 
statute affords him the discretion to decide not only how, but 
also whether, to apportion taxes on software transferred for use 
in more than one State.  This interpretation, as set forth 
infra, raises separation of powers concerns and, thus, runs 
counter to the canon of constitutional avoidance.  See 
Commonwealth v. Fremont Inv. & Loan, 459 Mass. 209, 213-214 
(2011).  When statutory language is susceptible of multiple 
13 
 
interpretations, a court should avoid a construction that raises 
constitutional doubts and instead should adopt a construction 
that avoids potential constitutional infirmity.  See Jennings v. 
Rodriguez, 138 S. Ct. 830, 836 (2018); Chapman, petitioner, 482 
Mass. 293, 305-306 (2019); Baird v. Attorney General, 371 Mass. 
741, 745 (1977).   
 
The Massachusetts Constitution vests the authority to tax 
exclusively in the Legislature.  See art. 23 of the 
Massachusetts Declaration of Rights ("No subsidy, charge, tax, 
impost, or duties, ought to be established, fixed, laid, or 
levied, under any pretext whatsoever, without the consent of the 
people or their representatives in the [L]egislature"); Part II, 
c. 1, § 1, art. 4, of the Constitution of the Commonwealth 
("full power and authority are hereby given and granted to the 
said general court . . . to impose and levy proportional and 
reasonable assessments, rates, and taxes, upon all the 
inhabitants of, and persons resident, and estates lying, within 
the . . . [C]ommonwealth").  Article 30 of the Massachusetts 
Declaration of Rights prohibits the legislative, executive, and 
judicial branches from exercising the powers of the other 
branches.  See Commonwealth v. Cole, 468 Mass. 294, 301 (2014).  
Thus, the Legislature may not delegate its constitutionally 
vested authority to tax to the commissioner.  See art. 30; 
Commissioner of Revenue v. Molesworth, 408 Mass. 580, 581 (1990) 
14 
 
(determination of amount of tax is legislative function); 
Opinion of the Justices, 302 Mass. 605, 614 (1939) (legislative 
power to appropriate money cannot be delegated by Legislature).   
 
At the same time, not all delegations of authority are 
improper.  See Cole, 468 Mass. at 301 (rigid separation of 
powers is neither possible nor desirable).  Delegation is 
constitutional so long as the legislative body provides an 
"intelligible principle" to direct the exercise of delegated 
authority.  See Gundy v. United States, 139 S. Ct. 2116, 2123 
(2019).  "[T]he Legislature may delegate to an officer of the 
executive branch the working out of the details of a policy 
established by the General Court."  Opinion of the Justices, 393 
Mass. 1209, 1219 (1984).  In so doing, the Legislature must 
provide clear standards to guide the exercise of delegated 
authority.  See id. at 1220.  "[N]o formula exists for 
determining whether a delegation of legislative authority is 
proper"; yet, it is clear that, while the Legislature may 
delegate "the implementation of legislatively determined 
policy," the Legislature may not delegate "the making of 
fundamental policy decisions" (citation and quotation omitted).  
Murphy v. Massachusetts Turnpike Auth., 462 Mass. 701, 710 
(2012). 
 
Under the commissioner's reading of G. L. c. 64H, § 1, the 
Legislature has delegated to the commissioner the ultimate 
15 
 
authority to decide whether to allow apportionment of sales tax 
on software sold in the Commonwealth and transferred for use 
outside the Commonwealth.  Such a determination, however, 
represents a fundamental policy decision that cannot be 
delegated.  See, e.g., Corning Glass Works v. Ann & Hope, Inc. 
of Danvers, 363 Mass. 409, 423-424 (1973) (improper delegation 
of price-setting power to private party where delegation did not 
provide governing policy or standard, participation of any 
public board or officer, notice, hearing, or judicial review); 
Opinion of the Justices, 334 Mass. 716, 720 (1956) (proposed 
bill that would have allowed fish and game board to appropriate 
funds among eleven categories within board's discretion would 
have been improper delegation); Attleboro Trust Co. v. 
Commissioner of Corps. & Taxation, 257 Mass. 43, 53 (1926) (tax 
statute providing that commissioner "may" grant abatement to 
taxpayer who paid illegal or excessive taxes was interpreted as 
requiring commissioner to grant abatement so as to avoid 
improper delegation).  Compare Commonwealth v. Clemmey, 447 
Mass. 121, 136-137 (2006) (no improper delegation of fundamental 
policy decision where legislative policy of balancing 
environmental protection and agriculture was clear, and 
delegation simply directed Department of Environmental 
Protection to work out details for implementation by defining 
"land in agricultural use" and "normal maintenance or 
16 
 
improvement"); First Fed. Sav. & Loan Ass'n of Boston v. State 
Tax Comm'n, 372 Mass. 478, 491 (1977) (no improper delegation 
where agency decision indirectly influenced amount of tax owed 
by savings and loan organization). 
 
The commissioner relies on two other provisions of the tax 
code, G. L. c. 63, § 38, and G. L. c. 64H, § 8, both of which 
provide that the commissioner "may" exercise certain authority, 
to argue that the delegation he discerns in G. L. c. 64H, § 1, 
is permissible.  Neither statute, however, supports the 
commissioner's position.  Under G. L. c. 63, § 38 (j), the 
commissioner "may, by regulation, adopt alternative 
apportionment provisions" for the corporate income tax if the 
commissioner determines that the statutory apportionment 
provisions "are not reasonably adapted to approximate the net 
income derived from business carried on within this 
[C]ommonwealth by any type of industry group."  In this statute, 
the Legislature has answered the policy question whether to 
apportion corporate income tax; the commissioner merely is 
authorized to construct, if he or she so chooses, alternative 
methods of apportionment consistent with the Legislature's 
policy.  Thus, the statute does nothing to advance the 
commissioner's argument.  The same is true regarding the second 
statute, G. L. c. 64H, § 8, on which the commissioner relies.  
Pursuant to that statute, the commissioner "may promulgate 
17 
 
regulations determining which services shall be deemed purchased 
for resale," and therefore not subject to the sales tax for 
"retail" sales.  G. L. c. 64H, § 8 (i).  Again, the Legislature 
has answered the policy question whether to exempt purchases for 
resale from the sales tax; the commissioner is authorized only 
to define, if he or she so chooses, the type of transaction that 
is considered a purchase for resale.   
The board's construction of G. L. c. 64H, § 1, avoids the 
constitutional problems presented by the commissioner's 
proposal.  In the board's view, the Legislature has determined 
the policy question whether to allow apportionment of the sales 
tax on software transferred for use in more than one State and 
delegated only the manner of implementation of the legislatively 
determined policy.9  Because the commissioner's construction 
presents constitutional concerns, and because the board's does 
not, the board's construction is preferred.  See Commonwealth v. 
McGhee, 472 Mass. 405, 413 (2015).  
 
 
9 The commissioner incorrectly relies on 15 W. 17th St. LLC 
v. Commissioner of Internal Revenue, 147 T.C. 557, 578 (2016), 
where the United States Tax Court mentioned the "hundreds, if 
not thousands" of permissive grants of authority in the Federal 
tax code that provide the Commissioner of Internal Revenue with 
the discretion to implement tax policy.  Under the 
commissioner's interpretation of G. L. c. 64H, § 1, however, the 
commissioner would have the authority to decide tax policy, not 
merely to implement it. 
18 
 
 
Finally, to the extent that there is doubt as to whether 
G. L. c. 64H, § 1, created a statutory right to apportionment, 
we resolve that doubt in favor of the taxpayer.  See Dupee, 423 
Mass. at 622; DiStefano v. Commissioner of Revenue, 394 Mass. 
315, 326 (1985).  Where a statute does not plainly confer an 
authority to tax, we do not read in one that the Legislature 
chose not to include.  See Commissioner of Revenue v. Oliver, 
436 Mass. 467, 470-471 (2002).  Accordingly, we conclude that 
G. L. c. 64H, § 1, creates a statutory right to apportionment 
for software transferred for use in multiple States. 
 
b.  Availability of abatement.  The board determined that 
the vendors could exercise their statutory rights of 
apportionment under G. L. c. 64H, § 1, by seeking a refund for 
sales tax paid to the Commonwealth for software transferred for 
use outside the Commonwealth through the general abatement 
process, see G. L. c. 62C, § 37, despite the vendors' failure to 
follow the apportionment regulations.  The commissioner contends 
that the vendors' noncompliance with the regulations precludes 
apportionment altogether.   
i.  Regulatory framework.  Pursuant to G. L. c. 64H, § 1, 
the commissioner has established regulations for apportioning 
tax in those instances in which software is transferred for use 
in more than one State.  "[A] properly promulgated regulation 
has the force of law and must be given the same deference 
19 
 
accorded to a statute."  Global NAPs, Inc. v. Awiszus, 457 Mass. 
489, 496 (2010).  The commissioner's regulations allow 
purchasers and sellers to use "any reasonable, but consistent 
and uniform, method of apportionment that is supported by the 
purchaser's books and records as they exist at the time the 
transaction is reported for sales or use tax purposes."  830 
Code Mass. Regs. § 64H.1.3(15)(a)(2).  See 830 Code Mass. Regs. 
§ 64H.1.3(15)(b) (2006).  "A reasonable, but consistent and 
uniform, method of apportionment includes, but is not limited 
to, methods based on [the] number of computer terminals or 
licensed users in each jurisdiction where the software will be 
used."  830 Code Mass. Regs. § 64H.1.3(15)(a)(3). 
 
The regulations set forth three procedures for payment of 
apportioned taxes.  It is undisputed that none of them was 
followed by Hologic and the vendors.  Under the first method, a 
purchaser who, at the time of purchase, knows the software will 
be available for use in more than one jurisdiction, may deliver 
to the seller an exemption certificate claiming multiple points 
of use.  See 830 Code Mass. Regs. § 64H.1.3(15)(a) (2006).  The 
certificate may be delivered at the time of purchase and "must 
be received by the seller no later than the time the transaction 
is reported for sales or use tax purposes."  830 Code Mass. 
Regs. § 64H.1.3(15)(a)(1).  This shifts the burden of 
collecting, paying, or remitting the applicable sales tax from 
20 
 
the seller to the purchaser.  See id.  The purchaser then must 
remit the apportioned tax to the appropriate jurisdictions.  See 
830 Code Mass. Regs. § 64H.1.3(15)(a)(4).  Hologic did not 
provide the vendors with an exemption certificate at the time of 
purchase. 
Under the second method, where the seller knows that the 
software will be available for use in more than one jurisdiction 
but the purchaser has not provided the exemption certification 
required under the first method, the seller can work with the 
buyer to produce the correct apportionment.  See 830 Code Mass. 
Regs. § 64H.1.3(15)(b).  If the buyer certifies the accuracy of 
the apportionment and the seller accepts the certification, then 
the seller must remit the apportioned tax to the appropriate 
jurisdictions.  See id.  Hologic did not certify the accuracy of 
the apportionment, as would have been required under this 
method.10 
Under the third method, a purchaser that holds a "direct 
pay permit" need not deliver an exemption certificate to the 
seller.  Instead, the purchaser must remit the apportioned tax 
directly to the appropriate jurisdictions.  See 830 Code Mass. 
 
10 The commissioner, however, does not dispute the accuracy 
of the apportionment. 
 
21 
 
Regs. § 64H.1.3(15)(d) (2006).11  Hologic is not a direct pay 
permit holder.   
Because Hologic and the vendors followed none of the three 
enumerated methods, the vendors collected from Hologic and 
timely remitted the sales tax owed on the full amount of the 
transactions; the vendors maintain, however, that they are not 
precluded from seeking apportionment through the abatement 
process now that Hologic has informed them that the software it 
purchased is available concurrently for use in multiple States.  
The board agreed with the vendors, and it concluded that "while 
the provisions of the Regulation set out methodologies for 
apportionment and relief of vendor liabilities, they do not 
prohibit apportionment through the abatement process." 
 
ii.  General abatement process.  General Laws c. 62C, § 37, 
creates a general abatement remedy for taxpayers who have paid 
excessive taxes.  See id. ("Any person aggrieved by the 
assessment of a tax . . . may apply in writing to the 
commissioner . . . for an abatement thereof . . . .  [I]f the 
commissioner finds that the tax is excessive in amount or 
 
 
11 "The direct payment program is intended to allow certain 
large volume purchasers to purchase items without paying sales 
or use tax to the vendor at the point of sale and instead 
allowing the purchaser to pay the sales/use tax directly to the 
Department of Revenue on a monthly basis for all purchases made 
within that month."  830 Code Mass. Regs. § 64H.3.1(1)(a) 
(2019).  
22 
 
illegal, he shall abate the tax, in whole or in part, 
accordingly"); Electronics Corp. of Am. v. Commissioner of 
Revenue, 402 Mass. 672, 677 (1988).  The burden to prove that 
the tax paid was excessive or illegal is on the taxpayer.  See 
Boston Professional Hockey Ass'n v. Commissioner of Revenue, 443 
Mass. 276, 285 (2005).  Where a taxpayer is not able to prove 
overpayment, the taxpayer is not entitled to an abatement.  See 
AA Transp. Co., 454 Mass. at 120-121. 
In analyzing whether the regulations preclude the vendors 
from using the abatement process to seek refunds for the 
excessive taxes they paid, we draw a comparison to the 
certification procedures outlined in G. L. c. 64H, § 8.  As 
mentioned, G. L. c. 64H, § 2, imposes an excise tax on "sales at 
retail in the [C]ommonwealth."  General Laws c. 64H, § 8, in 
turn, establishes a presumption "that all gross receipts of a 
vendor from the sale of . . . tangible personal property are 
from sales subject to tax until the contrary is established."  
The burden is on the vendor to overcome the presumption of 
taxability "unless [the vendor] takes from the purchaser a 
certificate to the effect that the . . . property is purchased 
for resale" and timely makes the certificate available to the 
commissioner.  See G. L. c. 64H, § 8 (a), (e); 830 Code Mass. 
Regs. § 64H.8.1(3), (4) (1993).  Where a seller receives a 
certificate from the purchaser, the commissioner is not bound by 
23 
 
the presentation of the certificate and may verify by audit the 
accuracy of the tax return.  See G. L. c. 62C, § 26 (b).  By 
contrast, where a seller does not obtain a certificate from the 
purchaser, the seller may pursue a refund of excessive taxes 
paid through the general abatement process, if the seller shows 
that the items were purchased for resale, because such purchases 
are not subject to the sales tax.  See D & H Distrib. Co. v. 
Commissioner of Revenue, 477 Mass. 538, 545-546 & n.8 (2017).  
We see no reason why the same would not be the case where a 
purchaser does not provide a vendor with a certification of 
multistate use of software as described in 830 Code Mass. Regs. 
§ 64H.1.3(15) (2006).  As with a vendor who may seek a refund 
for excessive taxes paid for sales that were destined for 
resale, but where the purchaser did not provide the requisite 
certification, a software vendor is not precluded by the 
purchaser's failure to provide a certification that software is 
to be used in multiple States from seeking an abatement.12  
 
In support of his argument to the contrary, the 
commissioner purports to rely on 830 Code Mass. Regs. 
§ 64H.1.3(15)(c), which provides that, if the requirements of 
none of the three methods for delivery of a multiple points of 
 
12 By the same token, where a seller receives a certificate 
from the purchaser, the commissioner may verify by audit the 
accuracy of the tax return.  See G. L. c. 62C, § 26 (b).  
24 
 
use certificate have been met, the vendor must collect and remit 
the tax as provided under 830 Code Mass. Regs. § 64H.6.7 (2017).  
Title 830 Code Mass. Regs. § 64H.6.7(3)(a)(1), in turn, provides 
that, "[i]f the purchaser or the purchaser's agent takes 
possession of the property within Massachusetts, whether or not 
for redelivery or use outside Massachusetts, the sale is 
taxable."  Nowhere in the language of 830 Code Mass. Regs. 
§ 64H.1.3(15)(c), however, is there a statement that the tax 
cannot be apportioned through abatement.  Rather, the provision 
requires the seller to pay the tax, when due, as if there were 
no apportionment.  This requirement does not preclude the seller 
from later seeking a timely abatement, see G. L. c. 62C, § 37, 
once the apportionment between software users in various States 
has been determined.  
 
The commissioner also argues that the time limits set forth 
in the regulations imply that apportionment through the 
abatement process "years later" is not available.13  Two of the 
three methods the commissioner points to, however, have no 
express temporal component.  Title 830 Code Mass. Regs. 
 
13 A taxpayer may file an application for abatement "at any 
time:  (1) within [three] years from the date of filing of the 
return . . . ; (2) within [two] years from the date the tax was 
assessed or deemed to be assessed; or (3) within [one] year from 
the date that the tax was paid, whichever is later."  G. L. 
c. 62C, § 37.  Here, the vendors' applications for abatement 
were filed within the statutory limits.  
25 
 
§ 64H.1.3(15)(b) provides only that the seller may work with the 
buyer to produce the correct apportionment and to make a 
certification to that effect.  The section does not demarcate 
expressly a point at which a purchaser and a seller no longer 
may work together to produce an apportionment.  Indeed, a direct 
pay permit holder need not deliver an exemption certificate at 
all, and, in such cases, the purchaser must pay the apportioned 
tax itself.  See 830 Code Mass. Regs. § 64H.1.3(15)(d).  The 
provision does not state that a direct pay permit holder is 
precluded from seeking an abatement if an error related to 
apportionment happened to arise in one of the purchaser's 
monthly returns.  Compare Raytheon Co. v. Commissioner or 
Revenue, 455 Mass. 334, 335 (2009) (allowing direct pay permit 
holder to seek abatement two years after purchase on ground that 
purchases were exempt from sales tax because they were purchased 
for resale).   
 
Contrary to the commissioner's suggestion, interpreting the 
regulations as providing nonexclusive ways in which a taxpayer 
may obtain apportionment does not render the regulations 
meaningless.  The regulations provide simple, efficient 
processes for taxpayers to use in seeking apportionment at the 
time the sales tax is due.  If a taxpayer wants to avail itself 
of the benefits of paying only the apportioned tax when the tax 
is due, then the procedures set forth in the regulations must be 
26 
 
followed.  Otherwise, the presumption that the full amount is 
taxable applies, and the seller must pay tax on the entirety of 
the sale when the tax becomes due.  See G. L. c. 62C, § 16 (h) 
(vendors must report sales for tax purposes each month).  
Allowing a vendor later to seek an abatement for the apportioned 
amount does not render the regulations meaningless.  We 
conclude, as did the board, that the regulations do not preclude 
taxpayers from achieving apportionment through the abatement 
process.  
 
 
 
 
 
 
 
Decision of the Appellate Tax 
 
 
 
 
 
 
 
  Board affirmed.