Title: U.S. Auto Parts Network, Inc. v. Commissioner of Revenue

State: massachusetts

Issuer: Massachusetts Supreme Court

Document:

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us 
 
SJC-13283 
 
U.S. AUTO PARTS NETWORK, INC.  vs.  COMMISSIONER OF REVENUE. 
 
 
 
Suffolk.     November 4, 2022. - December 22, 2022. 
 
Present:  Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, 
& Georges, JJ. 
 
 
Commissioner of Revenue.  Internet.  Taxation, Commissioner of 
revenue, Abatement, Sales and use tax.  Administrative Law, 
Agency's interpretation of regulation.  Practice, Civil, 
Retroactivity of judicial holding.  Retroactivity of 
Judicial Holding.  Constitutional Law, Taxation. 
 
 
 
 
Appeal from a decision of the Appellate Tax Board. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
Julie E. Green, Assistant Attorney General, for 
Commissioner of Revenue. 
 
George S. Isaacson (Martin I. Eisenstein & David Swetnam-
Burland, of Maine, & Jamie E. Szal also present) for the 
taxpayer. 
 
The following submitted briefs for amici curiae: 
 
Ben Robbins & Daniel B. Winslow for New England Legal 
Foundation. 
 
Tyler L. Martinez, of the District of Columbia, & Karen A. 
Pickett for National Taxpayers Union Foundation.  
 
Frank J. Bailey, Selena Fitanides, John C. La Liberte, 
Matthew Schaefer, & Richard L. Jones for PioneerLegal, LLC. 
 
2 
 
 
 
WENDLANDT, J.  For more than half a century, the United 
States Supreme Court adhered to a "bright-line rule" as it 
pertained to the constitutional limits of a State's authority to 
impose an obligation on a nondomiciliary seller to collect and 
remit a sales or use tax when a consumer purchases its goods or 
services for use or consumption in the State.  See National 
Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 
753, 758 (1967) (Bellas Hess), overruled by South Dakota v. 
Wayfair, Inc., 138 S. Ct. 2080 (2018) (Wayfair).  See also Quill 
Corp. v. North Dakota, 504 U.S. 298, 317 (1992) (Quill), 
overruled by Wayfair, supra.  This rule, the Court maintained, 
was rooted in the dormant commerce clause of the United States 
Constitution, and it required the nondomiciliary seller to have 
some "physical presence" in the taxing State.  Quill, supra at 
314.  The rigid rule, the Court acknowledged, was somewhat 
arbitrary but had the benefit of encouraging settled 
expectations; a clear rule was necessary, the Court reasoned, so 
as to allow States and nondomiciliary sellers to conduct their 
affairs in reliance on the fixed constitutional test.  Id. at 
315. 
In 2018, urged by States, including Massachusetts, which 
argued that they were losing substantial tax revenues because 
the bright-line rule stifled their ability to tax the growing 
3 
 
number of commercial transactions conducted over the Internet, 
see Brief for Colorado et al., as Amici Curiae Supporting 
Petitioner, at 5-12, Wayfair, 138 S. Ct. 2080 (Wayfair amicus 
brief), the Court altered course.  In advocating for the change, 
the States represented to the Court that sellers' reliance 
interests were not a valid concern in its analysis whether to 
abrogate the decades old, bright-line test.  Id. at 18-21.  They 
assured the Court that any change to the constitutional test 
would not be applied retroactively to upset settled 
expectations.  Id. at 19-20.  States, they said, had either 
regulations that prohibited retroactive application, or 
procedures that would provide notice and a comment period before 
application, of any newly announced rule.  Id.  Accordingly, the 
Court concluded that the physical presence test no longer made 
economic sense and was no longer constitutionally required.  
Wayfair, supra at 2099. 
Now, the Commissioner of Revenue (commissioner) asks us to 
construe a pre-2018 regulation -- namely, 830 Code Mass. Regs. 
§ 64H.1.7 (2017), Vendors Making Internet Sales (regulation) -- 
to incorporate the Court's new rule retroactively so as to 
permit him to impose on a nondomiciliary seller the obligation 
to collect and remit a use tax for periods prior to the Court's 
decision.  We decline to do so.  Instead, we conclude that the 
regulation incorporates the bright-line rule set forth in the 
4 
 
Court's pre-2018 jurisprudence and does not by its plain terms 
permit the commissioner to apply the Court's new rule to the tax 
period at issue in the present case.  Further concluding that 
the existence of what the commissioner described as "electrons" 
in the Commonwealth does not satisfy the applicable physical 
presence test, we affirm the decision of the Appellate Tax Board 
(board) permitting the abatement requested by the nondomiciliary 
seller, U.S. Auto Parts Network, Inc. (U.S. Auto Parts).1 
 
1.  Background.  a.  U.S. Auto Parts.  During the relevant 
tax period, U.S. Auto Parts was an online retailer that sold 
after-market automobile parts and accessories; it was 
headquartered in California.2  U.S. Auto Parts did not own or 
lease any offices, facilities, inventory, or equipment in the 
Commonwealth.  Nor did it have any employees or representatives 
in the Commonwealth.  Instead, the company sold its products 
over the Internet through websites and mobile applications 
("apps")3 and sometimes by catalog, to customers throughout the 
 
1 We acknowledge the amicus briefs submitted by the National 
Taxpayers Union Foundation, the New England Legal Foundation, 
and PioneerLegal, LLC. 
 
2 U.S. Auto Parts's competitors included auto parts 
retailers (like Advance Auto Parts, AutoZone, and NAPA Auto 
Parts), local independent retailers, and online retailers like 
Amazon.com. 
 
3 An app "is a program that facilitates performance of a 
task or retrieval of information"; it is "a data add-on for 
technology devices," commonly "handheld devices."  Bell & 
5 
 
United States, including consumers in the Commonwealth.4 
A customer could download an app onto a portable device 
from various locations with Internet connectivity, including 
from within the Commonwealth, for use anywhere with the 
requisite Internet access.  The app would then be stored on the 
customer's portable device, including customer devices located 
in the Commonwealth.  U.S. Auto Parts had its products delivered 
to customers by common carrier from locations outside of 
Massachusetts. 
 
Like many online retailers,5 U.S. Auto Parts used "cookies" 
on its websites.6  After a customer accessed one of the company's 
 
Hughes, One Bad App Spoils the Bunch:  Brand Protection in the 
App Era, 74 Tex. B.J. 218, 219 (Mar. 2011).  Apps are, according 
to the commissioner's expert, "composed of bits -- electrons 
stored in charge traps on a silicon substrate" and "generally 
persist on a device until affirmatively and intentionally 
manually deleted."  They can store data on the mobile device 
with the expressed or implicit permission granted by a user 
"when downloading and installing the app."  The board found that 
"[t]he U.S. Auto Parts' apps were available for portable devices 
using either the iOS or Android operating systems" and that 
"[c]ustomers, including Massachusetts customers, could download 
U.S. Auto Parts apps from anywhere in the United States for use 
anywhere in the United States." 
 
4 U.S. Auto Parts sold its products through three primary 
websites -- www.carparts.com, www.jcwhitney.com, and 
www.autopartswarehouse.com -- as well as secondary websites 
(collectively, U.S. Auto Parts's websites), and through the apps 
for the JC Whitney and Auto Parts Warehouse websites. 
 
5 See Annot., Claims Concerning Use of "Cookies" to Acquire 
Internet Users' Web Browsing Data Under Federal Law, 36 A.L.R. 
Fed. 3d, art. 5, § 2 (2018). 
 
6 
 
websites, cookies were delivered to the Internet browser of the 
customer's digital device, and they recorded and maintained data 
about the customer's online activities.7  U.S. Auto Parts used 
the customer information obtained through the cookies as part of 
its business.8 
 
U.S. Auto Parts also used content delivery networks (CDNs) 
 
6 According to the commissioner's expert, "[t]he term 
'cookie' is used in computer science to mean a piece of data (up 
to [four] kilobytes) that a computer receives at the time a 
website visitor downloads a web page from a web server, and 
automatically stores in [the computer's] long-term memory or 
'hard drive.'"  Cookies are comprised "of specific sequences of 
electric or magnetic charges, which humans have by convention 
agreed to interpret as alphanumeric characters based on 
character encoding schemes."  "A cookie is held in a computer's 
hard drive by way of electrons stored in charge traps on a 
silicon substrate (on solid state hard drives), or magnetic 
charges stored in the magnetic alloy coating of a disk (on 
magnetic disk hard drives)."  The "electric or magnetic charges 
persist on a computer's hard drive, even if the computer is not 
connected to any power source." 
 
7 "Cookies are text files containing . . . information about 
the user, such as the user's browsing history."  Comment, 
Sharing More Than You Thought:  Facebook Cannot Assert the Party 
Exception to Avoid Liability Under the Wiretap Act, 62 B.C. L. 
Rev. E. Supp. II-205, II-210 (2021).  "A cookie text file stores 
content such as social media logins and passwords or online 
shopping data and saves information for when users visit the 
websites."  Id. at II-210 n.24.   
 
8 Cookies are placed either by the web page's host server 
("'[f]irst party' cookies") or by "a different server than the 
one requested by the user, typically an unrelated advertiser or 
data processing provider, which gains access to a website 
visitor's computer through arrangements with the requested 
website's owner" ("'[t]hird party' cookies").  U.S. Auto Parts 
used both first party and third party cookies. 
 
7 
 
operated and maintained by Akamai Technologies, Inc. (Akamai), 
and Cloudflare, Inc. (Cloudflare).9  Copies of the computer code 
from U.S. Auto Parts's websites were placed onto Akamai's or 
Cloudflare's servers for delivery to website users, enabling 
these users to access the websites stored on those servers, 
rather than on the websites' host servers.  U.S. Auto Parts did 
not control the location of servers used by Akamai and 
Cloudflare, but transactions on U.S. Auto Parts's websites have 
been traced to Akamai servers in Cambridge.   
 
During the twelve months preceding October 2017, U.S. Auto 
Parts earned more than $500,000 in Massachusetts Internet sales 
from more than one hundred online transactions.  At oral 
argument, the commissioner described U.S. Auto Parts's 
connections to the Commonwealth -- the apps, cookies, and CDNs 
-- as "electrons" existing in the Commonwealth; we consider that 
 
9 "A CDN is an infrastructure placed on top of the Internet 
that pushes content close to users."  Lin, Internet 
Jurisdiction:  Using Content Delivery Networks to Ascertain 
Intention, 24 Va. J.L. & Tech. 1, 24 (2020).  "It is a large 
distributed system of multiple servers deployed all over the 
world, sometimes called edge or cache servers."  Id.  "A CDN 
allows people and businesses . . . to deliver content faster and 
more reliably to target locations."  Id. at 25.  Specifically, a 
CDN "accelerates the delivery of websites and applications by 
caching content, . . . which means it stores replicas of text, 
images, audio, and videos so that when a user requests certain 
data, that request can be served by a nearby server rather than 
a far-off origin server."  Id.  See Narechania, Network Nepotism 
and the Market for Content Delivery, 67 Stan. L. Rev. Online 27 
(2014), for a discussion of the CDN market.  
8 
 
representation as well as the more detailed, technical 
definitions set forth supra in our analysis. 
 
b.  The assessment.  In September 2017, the audit division 
of the Department of Revenue (department) sent a letter to U.S. 
Auto Parts, explaining that the department promulgated the 
regulation, effective on October 1, 2017, which the department 
believed would apply to U.S. Auto Parts.10  Pursuant to the 
regulation, beginning on October 1, 2017, a nondomiciliary 
vendor that employed, inter alia, apps, cookies, or CDNs in 
connection with its sale of goods or services in the 
Commonwealth would be required to "register, collect, and remit 
Massachusetts sales or use tax" for the three months from 
October 1, 2017, to December 31, 2017, "if during the preceding 
12 months, October 1, 2016 to September 30, 2017, the vendor had 
in excess of $500,000 in Massachusetts sales completed over the 
Internet and made sales resulting in a delivery into 
Massachusetts in [one hundred] or more transactions."  830 Code 
Mass. Regs. § 64H.1.7(3).  Other relevant provisions of the 
regulation are discussed infra. 
According to the department's estimates, the letter 
advised, U.S. Auto Parts would likely meet the regulation's 
 
10 The department sent similar letters to 282 other Internet 
retailers. 
 
9 
 
thresholds, triggering its application.  The letter directed 
U.S. Auto Parts to register as a vendor through the department's 
website, MassTaxConnect,11 by October 1, 2017, and indicate that 
it was an Internet vendor with no in-State location. 
 
U.S. Auto Parts neither registered nor filed use taxes for 
the period from October 1, 2017, to October 31, 2017 (the tax 
period at issue).  In March 2018, following notice to U.S. Auto 
Parts of its failure to register and of the commissioner's 
intent to assess use taxes pursuant to the regulation, the 
commissioner issued a notice of assessment in the amount of 
$60,139.81.  The next month, U.S. Auto Parts filed an 
application for abatement, which the commissioner denied in 
September 2019. 
 
c.  Procedural history.  U.S. Auto Parts timely appealed to 
the board.  On the parties' cross motions for summary judgment, 
the board decided in favor of U.S. Auto Parts, granting it an 
abatement as to the full amount of the tax, interest, and 
penalties.  The board rejected the commissioner's argument that 
the Supreme Court's 2018 decision in Wayfair, 138 S. Ct. 2080, 
 
11 During the relevant tax period, MassTaxConnect was a free 
web-based application through which taxpayers could file tax 
returns and forms and make payments.  After a vendor registered 
and provided its sales information, including exempt sales, 
MassTaxConnect would perform calculations to determine the 
amount of sales and use taxes to be paid.  The vendor could then 
file returns and make payments directly through the application.  
10 
 
which as discussed infra abrogated the "physical presence" rule, 
applied retroactively to the tax period at issue.  Instead, the 
board concluded that the Court's prior jurisprudence, limiting 
States to imposing an obligation to collect and remit a sales or 
use tax only on nondomiciliary sellers with an in-State physical 
presence, see Quill, 504 U.S. at 314, governed its analysis.  
The board also determined that U.S. Auto Parts's use of apps, 
cookies, and CDNs did not constitute the physical presence 
required under Quill.  The commissioner timely appealed, and 
U.S. Auto Parts applied to this court for direct appellate 
review, which we allowed. 
2.  Analysis.  a.  Standard of review.  "We defer to the 
board's expertise with respect to the interpretation of tax laws 
in the Commonwealth."  VAS Holdings & Invs. LLC v. Commissioner 
of Revenue, 489 Mass. 669, 674 (2022) (VAS Holdings).  See 
Oracle USA, Inc. v. Commissioner of Revenue, 487 Mass. 518, 522 
(2021) ("Because 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 and 
alteration omitted]).  "We will not reverse a decision of the 
board 'if it is based on substantial evidence and on a correct 
application of the law.'"  Macy's E., Inc. v. Commissioner of 
Revenue, 441 Mass. 797, 800, cert. denied, 543 U.S. 957 (2004), 
quoting Bill DeLuca Enters., Inc. v. Commissioner of Revenue, 
11 
 
431 Mass. 314, 315 (2000).  If the board's construction of a tax 
law "is reasonable, we will defer to its interpretation."  
Oracle USA, Inc., supra.  "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.'"  Id., quoting Commissioner of Revenue v. Gillette 
Co., 454 Mass. 72, 76 (2009).  "[W]e accord the words of a 
regulation their usual and ordinary meaning."  Warcewicz v. 
Department of Envtl. Protection, 410 Mass. 548, 550 (1991).  
"[T]he authority to tax must be plainly conferred and . . . any 
ambiguity must be resolved in favor of the taxpayer."  
Commissioner of Revenue v. Oliver, 436 Mass. 467, 473 (2002).  
Finally, as it pertains to constitutional issues, "we apply our 
'independent judgment.'"  VAS Holdings, supra, quoting WB&T 
Mtge. Co. v. Assessors of Boston, 451 Mass. 716, 721 (2008). 
b.  Legal framework.  i.  Use tax statute.  The 
Commonwealth imposes an excise tax on tangible personal property 
purchased from a vendor for storage, use, or other consumption 
in the Commonwealth.  See G. L. c. 64I, § 2.  Responsibility for 
payment of the use tax generally falls on the purchaser, see 
G. L. c. 64I, § 3; however, in certain instances, the 
Commonwealth places that burden on the vendor, which must 
collect and remit the use tax.  During the tax period at issue, 
"[e]very vendor engaged in business in the commonwealth and 
12 
 
making sales of tangible personal property or services for 
storage, use or other consumption in the commonwealth . . . 
shall at the time of making the sales . . . collect the 
[use] tax from the purchaser . . . .  The tax required to 
be collected by the vendor shall constitute a debt owed by 
the vendor to the commonwealth."  
 
G. L. c. 64I, § 4, as amended through St. 2009, c. 166, § 26. 
Amended in 1988, St. 1988, c. 202, § 19 (1988 amendment), 
the version of the statute applicable to the tax period at 
issue, and relevant to the issues in this case, defined a vendor 
"[e]ngaged in business in the commonwealth" as one  
"regularly or systematically soliciting orders . . . for 
the sale of tangible personal property for delivery to 
destinations in the commonwealth; [or] otherwise exploiting 
the retail sales market in the commonwealth through any 
means whatsoever, including, but not limited to . . . 
solicitation materials sent through the mails or otherwise 
. . . [and] advertising . . . in . . . computer networks or 
in any other communications medium." 
 
G. L. c. 64H, § 1 (made applicable to use tax pursuant to G. L. 
c. 64I, § 1, as amended through St. 1990, c. 121, § 57). 
In response to the 1988 amendment, the commissioner issued 
Technical Information Release (TIR) 88-13, explaining that the 
1988 amendment purported to expand the Commonwealth's 
jurisdiction to enable collection of sales and use taxes from 
nondomiciliary vendors "that regularly solicit orders for sales 
from Massachusetts customers, . . . but that do not maintain a 
business location in the Commonwealth."  See TIR 88-13 (Dec. 8, 
1988).  However, the commissioner advised the public that the 
department would "refrain from enforcing" the newly expanded 
13 
 
taxing authority "until [F]ederal statutory or case law 
specifically authorizes each [S]tate to require foreign mail 
order vendors to collect sales and use taxes on goods delivered 
to that [S]tate."  Id., citing Department of Revenue, 1988 
Legislative Recommendations of the Commissioner of Revenue, at 
134 (Nov. 1987). 
ii.  Pre-2018 constitutional limitations regarding 
nondomiciliary sellers.  The due process and commerce clauses of 
the United States Constitution limit the States' authority to 
tax.12  This case implicates the limitations grounded in the 
commerce clause, which expressly authorizes Congress to 
"regulate Commerce . . . among the several States."  Art. I, 
§ 8, of the United States Constitution.  "It has been construed 
as having a negative sweep, referred to as the 'dormant' 
commerce clause, which prohibits States from levying 'taxes that 
discriminate against interstate commerce or that burden it by 
 
12 The due process clause prohibits the taking of property 
without due process of law.  Fourteenth Amendment to the United 
States Constitution, § 1.  As it pertains to States' taxing 
authority, due process centrally concerns the fundamental 
fairness of the proposed taxing activity; it focuses on whether 
a taxpayer's connections with the taxing State are substantial 
enough to legitimate the State's exercise of power over it.  See 
VAS Holdings, 489 Mass. at 675, quoting MeadWestvaco Corp. ex 
rel. Mead Corp. v. Illinois Dep't of Revenue, 553 U.S. 16, 24-25 
(2008) (broad inquiry is "whether the [S]tate has given anything 
for which it can ask return").  On appeal, U.S. Auto Parts 
contends that retroactive application of the regulation would 
raise due process concerns.  We need not reach this argument in 
view of our resolution infra.  
14 
 
subjecting activities to multiple or unfairly apportioned 
taxation.'"  VAS Holdings, 489 Mass. at 675 n.8, quoting 
MeadWestvaco Corp. ex rel. Mead Corp. v. Illinois Dep't of 
Revenue, 553 U.S. 16, 24 (2008).  It is founded on structural 
concerns about the effects of a State's tax on the national 
economy; it reflects 
"a central concern of the Framers that was an immediate 
reason for calling the Constitutional Convention:  the 
conviction that in order to succeed, the new Union would 
have to avoid the tendencies toward economic Balkanization 
that had plagued relations among the Colonies and later 
among the States under the Articles of Confederation."   
 
Wayfair, 138 S. Ct. at 2089, quoting Hughes v. Oklahoma, 441 
U.S. 322, 325-326 (1979).  Still, the commerce clause does not 
prohibit a State from taxing interstate commerce altogether; to 
the contrary, "interstate commerce may be required to pay its 
fair share of [S]tate taxes."  D.H. Holmes Co. v. McNamara, 486 
U.S. 24, 31 (1988). 
Instead, two principles bind a State's authority to 
regulate interstate commerce.  First, "[S]tate regulations may 
not discriminate against interstate commerce."  Wayfair, 138 S. 
Ct. at 2091.  See, e.g., Philadelphia v. New Jersey, 437 U.S. 
617, 618, 628 (1978) (law prohibiting importation of most "solid 
or liquid waste which originated or was collected outside the 
territorial limits of the State" was unconstitutional because it 
"impose[d] on out-of-[S]tate commercial interests the full 
15 
 
burden of conserving the State's remaining landfill space").  
State regulations that do so discriminate face "a virtually per 
se rule of invalidity."  Wayfair, supra, quoting Granholm v. 
Heald, 544 U.S. 460, 476 (2005). 
Second, "States may not impose undue burdens on interstate 
commerce."  Wayfair, 138 S. Ct. at 2091.  See, e.g., Kassel v. 
Consolidated Freightways Corp. of Del., 450 U.S. 662, 671 (1981) 
(Iowa truck-length limitations unconstitutionally burdened 
interstate commerce because they significantly impaired Federal 
interest in efficient and safe transportation, and State's 
safety interest was illusory).  Even-handed State regulations 
applicable to taxes will be upheld "unless the burden imposed on 
[interstate] commerce is clearly excessive in relation to the 
putative local benefit."  Wayfair, supra, quoting Pike v. Bruce 
Church, Inc., 397 U.S. 137, 142 (1970). 
In view of these two principles, the Supreme Court has set 
forth a four-prong framework that governs the limits of State 
taxation of interstate commerce.  Specifically, "[t]he Court 
will sustain a tax so long as it (1) applies to an activity with 
a substantial nexus with the taxing State, (2) is fairly 
apportioned, (3) does not discriminate against interstate 
commerce, and (4) is fairly related to the services the State 
provides."  Wayfair, 138 S. Ct. at 2091.  See Complete Auto 
Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977). 
16 
 
Until 2018, the Supreme Court concluded that the 
"substantial nexus" requirement (prong one of the commerce 
clause framework) was satisfied only if a nondomiciliary entity 
had a "physical presence" in the taxing State.  Compare Quill, 
504 U.S. at 302-303 (State precluded from imposing obligation to 
collect and remit use tax on nondomiciliary seller engaging "in 
regular or systematic solicitation of a consumer market in th[e] 
[S]tate" but lacking in-State physical presence), and Bellas 
Hess, 386 U.S. at 758 (State regulation obligating 
nondomiciliary vendor to collect and remit use tax 
unconstitutional where vendor, which sent flyers and catalogs 
into State and used common mail carriers to deliver orders to 
in-State customers, otherwise lacked in-State physical 
presence), with Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 
364 (1941) (commerce clause not violated where nondomiciliary 
seller had in-State retail stores), and Felt & Tarrant Mfg. Co. 
v. Gallagher, 306 U.S. 62, 68 (1939) (commerce clause not 
violated where nondomiciliary seller had local agents). 
For more than half a century, the Court drew a sharp 
distinction between "sellers with retail outlets, solicitors, or 
property within a State, and those who do no more than 
communicate with customers in the State by mail or common 
carrier as part of a general interstate business."  Bellas Hess, 
386 U.S. at 758.  See Goldberg v. Sweet, 488 U.S. 252, 263 
17 
 
(1989) (fact that interstate telephone call terminated in State 
failed to provide substantial nexus absent physical presence of 
seller); D.H. Holmes Co., 486 U.S. at 26, 32-33 (use tax 
permissible where nondomiciliary company had "'nexus' aplenty" 
comprised of catalogs printed at company's direction outside 
State and shipped to prospective customers within State, and 
where company had stores and over $100 million in annual sales 
in State); Commonwealth Edison Co. v. Montana, 453 U.S. 609, 617 
(1981) (State levying severance tax on coal mined in State was 
permissible because it had obvious nexus); National Geographic 
Soc'y v. California Bd. of Equalization, 430 U.S. 551, 559-600 
(1977) (use tax on nonprofit soliciting advertising for monthly 
magazine had sufficient nexus because nonprofit had two offices 
in State, even if those offices played no part in taxed 
activity). 
Indeed, in 1992, approximately four years after the 
Commonwealth adopted the 1988 amendment, the Court considered a 
similar statute adopted by North Dakota that also purported to 
impose an obligation on nondomiciliary sellers that 
systematically transacted business in North Dakota to collect 
and remit a use tax despite not having a physical presence in 
the State.  Quill, 504 U.S. at 301.  The Court declined to 
abrogate "the bright-line rule" that physical presence was 
required to satisfy the substantial nexus requirement of the 
18 
 
commerce clause.  Id. at 317. 
The Court acknowledged that the physical presence 
requirement "appears artificial at its edges," and that 
"[w]hether or not a State may compel a vendor to collect a sales 
or use tax may turn on the presence in the taxing State of a 
small sales force, plant, or office."  Id. at 315.  
Nevertheless, the Court concluded that that "artificiality" was 
"more than offset by the benefits of a clear rule."  Id.  The 
rule, the Court reasoned, "firmly establishe[d] the boundaries 
of legitimate [S]tate authority to impose a duty to collect 
sales and use taxes and reduce[d] litigation concerning those 
taxes."  Id. 
Additionally, the bright-line rule "encourage[d] settled 
expectations and, in doing so, foster[ed] investment by 
businesses and individuals."  Id. at 316.  The bright-line 
physical presence rule, the Court acknowledged, already had 
"engendered substantial reliance and ha[d] become part of the 
basic framework of a sizeable industry"; adherence to settled 
precedent, the Court reasoned, advanced the "stability and 
orderly development of the law," in keeping with the 
underpinnings of the doctrine of stare decisis.  Id. at 317, 
quoting Runyon v. McCrary, 427 U.S. 160, 190 (1976) (Stevens, 
J., concurring).  Additionally, overruling the bright-line rule 
"might raise thorny questions concerning the retroactive 
19 
 
application of . . . taxes and might trigger substantial 
unanticipated liability."  Quill, supra at 318 n.10. 
iii.  Commissioner's response to Quill.  In response to the 
Court upholding the physical presence rule in Quill, the 
commissioner revoked TIR 88-13; there was no authority, at that 
time, permitting imposition of an obligation to collect and 
remit use taxes on nondomiciliary sellers without a physical 
presence in the State.  See TIR 96-8 (Oct. 16, 1996).  
Contemporaneous with the revocation, the commissioner affirmed 
that he would enforce the definition of "engaged in business in 
the commonwealth" contained in the 1988 amendment only "to the 
extent allowed under constitutional limitations."  Id. 
Nevertheless, twenty-five years after Quill was decided and 
with no Federal statute or Supreme Court decision abrogating 
Quill or the physical presence bright-line test, the 
commissioner adopted the regulation.13  830 Code Mass. Regs. 
 
13 Prior to the regulation, the commissioner attempted to 
impose an obligation to collect and remit a use tax on 
nondomiciliary sellers through an administrative directive with 
substantially the same provisions as the regulation.  See 
Department of Revenue Directive 17-1 (Apr. 3, 2017).  The 
directive distinguished the "business and activities of Internet 
vendors" from those of the mail order vendors analyzed in Quill 
because "Internet vendors do not limit their contacts with the 
state to mail and common carrier."  Id. at § IV(b)(ii)(B).  Two 
national retail trade associations sought to enjoin enforcement 
of the directive on constitutional, statutory, and 
administrative procedural grounds.  American Catalog Mailers 
Ass'n vs. Heffernan, Mass. Super. Ct., No. 2017-CV-1772 BLS1 
(Suffolk County June 28, 2017).  The injunction was granted on 
20 
 
§ 64H.1.7.  Not surprisingly, the commissioner tied the scope of 
the regulation to the then-existing Federal limitations on 
States' taxing authority as set forth in Quill –- namely, the 
requirement of the bright-line physical presence rule.14  
Specifically, the regulation provided: 
"Dormant Commerce Clause.  The provisions of [G. L. c. 64H, 
§ 1,] are enforced to the extent allowed by the 'physical 
presence' dormant Commerce Clause standard as set forth in 
Quill Corp. v. North Dakota, 504 U.S. 298 (1992), where a 
[S]tate sought to impose a use tax collection duty on an 
out-of-[S]tate mail order vendor on sales of tangible 
personal property shipped into the [S]tate.  Unlike the 
mail order vendor at issue in Quill, Internet vendors with 
a large volume of Massachusetts sales invariably have one 
or more of the following contacts with the [S]tate that 
function to facilitate or enhance such in-[S]tate sales and 
constitute the requisite in-[S]tate physical presence 
. . . ." 
 
 
administrative procedural grounds in June 2017.  Id.  The 
commissioner then revoked the directive.  See Department of 
Revenue Directive 17-2 (June 28, 2017). 
 
14 In the department's "Notice of Public Hearing" on the 
proposed regulation in the Massachusetts Register, the 
department also tied the proposed regulation to Quill.  
Specifically, the notice stated:  
 
"A vendor that is engaged in making taxable sales in the 
[C]ommonwealth or that sells taxable tangible personal 
property or services or a combination of both for use in 
the [C]ommonwealth is subject to a sales or use tax 
collection duty when it is 'engaged in business in the 
[C]ommonwealth' within the meaning of [G. L. c. 64H, § 1,] 
and it meets the constitutional requirements as discussed 
in Quill Corp. v. North Dakota, 504 U.S. 298 (1992).  The 
provisions of [G. L. c. 64H, § 1,] are to be 'enforced to 
the extent allowed under the constitutional limits.'"   
 
1344 Mass. Reg. 37-39 (July 28, 2017).  
21 
 
830 Code Mass. Regs. § 64H.1.7(1)(b)(2).  The regulation set 
forth the commissioner's view that nondomiciliary Internet 
vendors with a certain threshold volume of sales to 
Massachusetts customers "invariably have one or more" contacts 
with Massachusetts that, in the commissioner's view, constituted 
in-State physical presence satisfying Quill.  These contacts 
included the use of apps, cookies, and CDNs.  See 830 Code Mass. 
Regs. § 64H.1.7(1)(b)(2)(a)-(b).15  Such contacts satisfied the 
physical presence rule, the commissioner concluded, even though 
sending catalogs and taking and delivering orders via the post 
office or common carrier did not.  See Quill, 504 U.S. at 317; 
Bellas Hess, 386 U.S. at 758.  
Assuming that a nondomiciliary Internet vendor had one or 
more of these contacts with the Commonwealth, the regulation 
purported to impose on the vendor an obligation to collect and 
 
15 The regulation specified one other category of contacts 
constituting physical presence:  "contracts and/or other 
relationships with online marketplace facilitators and/or 
delivery companies resulting in in-[S]tate services including, 
but not limited to, payment processing and order fulfillment, 
order management, return processing or otherwise assisting with 
returns and exchanges, the preparation of sales reports or other 
analytics and consumer access to customer service."  830 Code 
Mass. Regs. § 64H.1.7(1)(b)(2)(c).  The parties agreed that 
"U.S. Auto Parts had no contracts or other relationships with 
Internet marketplace facilitators or delivery companies 
resulting in in-[S]tate services performed in Massachusetts."  
Accordingly, we limit our analysis to whether the use of apps, 
cookies, and CDNs constitutes the requisite physical presence. 
 
22 
 
remit a use tax for the period October 1, 2017, through December 
31, 2017, if, during the preceding twelve months, the vendor 
"had in excess of $500,000 in Massachusetts sales from 
transactions completed over the Internet and made sales 
resulting in a delivery into Massachusetts in [one hundred] or 
more transactions."  830 Code Mass. Regs. § 64H.1.7(3)(a).16 
iv.  Abrogation of physical presence rule.  In 2018, after 
the regulation was adopted, the Supreme Court altered its half-
century course and overruled its decisions in Bellas Hess and 
Quill.  Wayfair, 138 S. Ct. at 2099.  In light of "far-reaching 
systemic and structural changes in the economy," id. at 2097, 
quoting Direct Mktg. Ass'n v. Brohl, 575 U.S. 1, 18 (2015) 
(Kennedy, J., concurring), physical presence, the Court 
concluded, no longer was required to satisfy the "substantial 
nexus" prong of the requisite four-prong commerce clause 
analysis,17 Wayfair, supra at 2099.  Instead, "[s]uch a nexus is 
 
16 Thereafter, Internet vendors would be required to 
"register, collect and remit" the taxes "[f]or each calendar 
year beginning with 2018, if during the preceding calendar year 
[the Internet vendor] had in excess of $500,000 in Massachusetts 
sales from transactions completed over the Internet and made 
sales resulting in a delivery into Massachusetts in [one 
hundred] or more transactions."  830 Code Mass. Regs. 
§ 64H.1.7(3)(b). 
 
17 As discussed in part 2.b.ii, supra, in addition to the 
substantial nexus prong, the commerce clause requires State tax 
laws to be fairly apportioned, nondiscriminatory against 
interstate commerce, and fairly related to the services the 
23 
 
established when the taxpayer or collector avails itself of the 
substantial privilege of carrying on business in that 
jurisdiction" (alteration and quotation omitted).  Id., quoting 
Polar Tankers, Inc. v. Valdez, 557 U.S. 1, 11 (2009). 
After reviewing the dramatic developments in the national 
economy resulting from the widespread use of the Internet for 
commercial transactions, the Court disavowed the physical 
presence test, reasoning that the test itself created market 
distortions exacerbated by the Internet revolution,18 resulted in 
State budget shortfalls because it prevented States from 
reaching commercial sales from many online vendors, and had 
proved unworkable.19  Wayfair, supra at 2097.  "Each year, the 
 
State provides.  See Complete Auto Transit, Inc., 430 U.S. at 
279. 
 
18 The Supreme Court explained that "[i]n effect, Quill has 
come to serve as a judicially created tax shelter for businesses 
that decide to limit their physical presence and still sell 
their goods and services to a State's consumers -- something 
that has become easier and more prevalent as technology has 
advanced."  Wayfair, 138 S. Ct. at 2094.  "If the Commerce 
Clause was intended to put businesses on an even playing field, 
the [physical presence] rule is hardly a way to achieve that 
goal," id., quoting Quill, 504 U.S. at 329 (White, J., 
concurring in part), because "Quill puts both local businesses 
and many interstate businesses with physical presence at a 
competitive disadvantage relative to remote sellers," Wayfair, 
supra.  "[I]t is certainly not the purpose of the Commerce 
Clause to permit the Judiciary to create market distortions."  
Id. 
 
19 See Wayfair, 138 S. Ct. at 2093, quoting Quill, 504 U.S. 
at 308 ("it is an inescapable fact of modern commercial life 
that a substantial amount of business is transacted with no need 
24 
 
physical presence rule [became] further removed from economic 
reality and result[ed] in significant revenue losses to the 
States."  Id. at 2092. 
Having abrogated the bright-light test for the "substantial 
nexus" requirement, the Court declined to determine that the 
State regulation at issue passed constitutional muster under the 
remaining three prongs of the commerce clause framework; because 
the second and third prongs had not been litigated, the Court 
remanded for consideration to the State court for it to 
consider, in the first instance, "[t]he question . . . whether 
some other principle in the Court's Commerce Clause doctrine 
might invalidate" the State tax at issue.  Id. at 2099. 
The Court noted approvingly that the South Dakota law at 
issue "include[d] several features that appear[ed] designed to 
prevent discrimination against or undue burdens upon interstate 
commerce."  Id.20  Among them, the Court stated, the State law at 
 
for physical presence within a State in which business is 
conducted" [alterations omitted]); Wayfair, supra at 2097 ("The 
Quill Court did not have before it the present realities of the 
interstate marketplace. . . .  The Internet's prevalence and 
power have changed the dynamics of the national economy").  
 
20 The features were (1) the act's "safe harbor to those who 
transact only limited business in South Dakota"; (2) the 
provision ensuring that no obligation to remit the tax would be 
applied retroactively; and (3) South Dakota's adoption of the 
Streamlined Sales and Use Tax Agreement.  Wayfair, 138 S. Ct. at 
2099.  The Streamlined Sales and Use Tax Agreement "standardizes 
taxes to reduce administrative and compliance costs" by 
"requir[ing] a single, [S]tate level tax administration, uniform 
25 
 
issue by its expressed terms did not apply retroactively and its 
application had been stayed pending the decision by the Court 
whether to abrogate the physical presence requirement.  Id. at 
2089. 
As discussed supra, a coalition of States, including 
Massachusetts, advocated for the Court to abrogate the physical 
presence test. See Wayfair amicus brief, supra at 3, 18-21.  
They disputed that "the possibility of retroactive tax liability 
constitute[d] a valid reason for maintaining the physical-
presence rule," id. at 3, because States either had "regulations 
or other administrative guidance in place that [would] bar 
imposing collection obligations on remote retailers that [fell] 
within Quill's ambit," id. at 19, or had "normal procedures for 
implementing regulatory changes -– including advance notice -– 
[that would] provide adequate safeguards to abate any surprise 
that might accompany a new Supreme Court rule," id. at 3.  The 
States assured the Court that retroactivity was not a concern 
because "[i]f South Dakota prevails here, there is no reason to 
suspect that the amici States will deviate from their normal 
administrative procedures –- including advance notice –- when 
implementing this Court's new post-Quill precedent."  Id. at 20.   
 
definitions of products and services, simplified tax rate 
structures, and other uniform rules."  Id. at 2100.  
Additionally, it "provides sellers access to sales tax 
administration software paid for by the State."  Id.  
26 
 
The States represented that "other legal and pragmatic 
safeguards" would prevent them from applying any new rule 
retroactively.  Id. at 19.  "For one, many States have 
regulations or other administrative guidance in place that bar 
imposing collection obligations on remote retailers that 
currently fall within Quill's ambit."  Id.  Additionally, States 
have "incentives to ensure that large-scale regulatory changes 
are implemented carefully and fairly," id.; providing ample 
notice of tax changes "benefits the States by giving them time 
to prepare intake procedures, increasing taxpayers' compliance, 
and satisfying potential State and [F]ederal due process 
requirements," id. at 20, citing Harper v. Virginia Dep't of 
Taxation, 509 U.S. 86, 100 (1993).  The States represented that 
they were "well equipped to structure their tax laws to both 
comply with due process and avoid unconstitutional retrospective 
applications of new rules."  Wayfair amicus brief, supra.  Thus 
assured, the Court abrogated Quill.  See Wayfair, 138 S. Ct. at 
2099. 
Notwithstanding the States' representations to the Court, 
the commissioner asks us to construe the regulation to 
incorporate the new Wayfair rule retroactively to permit him to 
impose on nondomiciliary sellers the obligation to collect and 
27 
 
remit a use tax for periods prior to the Wayfair decision.21 
c.  The regulation incorporates the Quill physical presence 
requirement.  There is no dispute that U.S. Auto Parts used 
apps, cookies, and CDNs to facilitate its Massachusetts sales 
during the tax period at issue; it also is undisputed that U.S. 
Auto Parts's volume of Massachusetts sales over the Internet and 
deliveries to Massachusetts customers satisfied the thresholds 
specified in the regulation.  And the board noted that the 
parties agree that, having forgone imposition of a use tax on 
 
21 After the Wayfair decision, the Legislature superseded 
the regulations by statute, see St. 2019, c. 41, §§ 31-35, 106 
(amending G. L. cc. 64H and 64I), and the commissioner issued a 
new regulation, see 830 Code Mass. Regs. § 64H.1.9 
(2019).  Pursuant to both the statute and the new regulation, 
remote retailers who are engaged in business in the Commonwealth 
using means including, inter alia, brick-and-mortar locations, 
catalogs, newspaper advertising, and computer networks, are 
required to collect and remit use taxes.  See Internet Tax 
Freedom Act, 47 U.S.C. § 151 note (requiring same tax treatment 
of Internet and brick-and-mortar stores).  See also G. L. 
c. 64H, § 1, as amended by St. 2019, c. 41, § 31 (defining 
"[e]ngaged in business in the commonwealth" to include, inter 
alia, "exploiting the retail sales market within the 
commonwealth through . . . catalogs or other solicitation 
materials sent through the mails," or "computer networks or in 
any other communications medium, including through the means of 
an Internet website, software or cookies distributed or 
otherwise placed on customers' computers or other communications 
devices, or a downloaded application"); 830 Code Mass. Regs. 
§ 64H.1.9(1)-(3) (2019) ("engaged in business in the 
Commonwealth" will be "construed to impose a collection duty to 
the fullest extent permitted by the U.S. Constitution and 
[F]ederal law," so that use of apps, cookies, CDNs, catalogs, 
billboards, or newspaper advertising, etc., will be considered 
contacts triggering use tax collection and remittance 
obligations). 
28 
 
nondomiciliary vendors for more than thirty years following the 
Legislature's passage of the 1988 amendment, the commissioner 
could not rely on the amendment's broad "engaged in business" 
definition in the absence of the regulation.  U.S. Auto Parts 
Network, Inc. vs. Commissioner of Revenue, App. Tax Bd. No. 
C339523, ATB 2021-385, 399 (Dec. 7, 2021).  Accordingly, the 
principal issue before the board was whether the commissioner 
could by regulation impose a collection and remittance 
obligation on U.S. Auto Parts where its only in-State contacts 
were its use of apps, cookies, and CDNs. 
The commissioner contends that the Court's decision in 
Wayfair permits him to impose the obligations set forth in the 
regulation to Internet vendors, like U.S. Auto Parts, so long as 
their sales meet the thresholds set forth therein; he argues 
that whether or not the use of apps, cookies, and CDNs 
constitutes a physical presence in the Commonwealth is not 
relevant to the application of the regulation because the 
Court's decision in Wayfair applies retroactively to permit him 
to saddle nondomiciliary vendors with the regulation's 
obligations for tax periods preceding the Supreme Court's 
decision in Wayfair.  Relying on the Court's statement in 
Harper, 509 U.S. at 97, that its decisions on issues of Federal 
law "must be given full retroactive effect in all cases still 
open on direct review and as to all events, regardless of 
29 
 
whether such events predate or postdate [the Court's] 
announcement of the rule," the commissioner contends that the 
Wayfair standard applies to U.S. Auto Parts because its case was 
pending when Wayfair issued.  We disagree with the commissioner. 
As set forth supra, the regulation, by its own terms, 
limited its reach to nondomiciliary Internet vendors that 
satisfied the physical presence test set forth in Quill.  The 
regulation specifically stated:  
"The provisions of [G. L. c. 64H, § 1,] are enforced to the 
extent allowed by the 'physical presence' dormant Commerce 
Clause standard as set forth in Quill Corp. v. North 
Dakota, 504 U.S. 298 (1992), where a [S]tate sought to 
impose a use tax collection duty on an out-of-[S]tate mail 
order vendor on sales of tangible personal property shipped 
into the [S]tate." 
 
840 Code Mass. Regs. § 64H.1.7(1)(b)(2).  The regulation then 
posited that, "[u]nlike the mail order vendor at issue in Quill, 
Internet vendors with a large volume of Massachusetts sales 
invariably have one or more of the following contacts [(e.g., 
the use of apps, cookies, and CDNs)] with the [S]tate that 
function to facilitate or enhance such in-[S]tate sales and 
constitute the requisite in-[S]tate physical presence."  Id.  
Thus, the regulation, by its own terms, cabined its enforcement 
to the parameters of Quill, which in turn limited States' 
ability to tax out-of-State sellers to only those with physical 
presence within the State.  See Warcewicz, 410 Mass. at 550 ("we 
accord the words of a regulation their usual and ordinary 
30 
 
meaning").   
 
d.  The use of apps, cookies, and CDNs does not constitute 
physical presence.  Consequently, we find ourselves embroiled in 
precisely the kind of "technical and arbitrary dispute[] about 
what counts as physical presence" that the Supreme Court sought 
to avoid in abrogating the now-defunct bright-line test.  
Wayfair, 138 S. Ct. at 2098.  We thus turn to consider whether 
the use of apps, cookies, and CDNs constitutes physical presence 
in Massachusetts under Quill. 
 
We begin our analysis with the board's conclusion that the 
use of apps, cookies, and CDNs does not constitute in-State 
physical presence as required by the regulation.  U.S. Auto 
Parts Network, Inc., App. Tax Bd. No. C339523, ATB 2021 at 406-
408.  As set forth in part 2.a, supra, "[w]e defer to the 
board's expertise with respect to the interpretation of tax laws 
in the Commonwealth," VAS Holdings, 489 Mass. at 674, so long as 
its construction is "reasonable," Oracle USA, Inc., 487 Mass. at 
522.  See id. (in view of its expertise in administering tax 
matters, "we give weight to [the board's] interpretation of tax 
statutes [and regulations]" [citation omitted]). 
In determining whether the board's conclusion is 
reasonable, the Supreme Court's decisions in Quill and Wayfair 
are instructive.  In Quill, the Supreme Court considered 
contacts similar to those at issue here.  Specifically, the 
31 
 
nondomiciliary seller in Quill had licensed its computer 
software program to in-State consumers; the software, like the 
apps at issue here, enabled consumers to check the seller's 
inventories and prices and to place orders with the seller.  
Quill, 504 U.S. at 302 n.1.  In addition, the seller retained 
title to "a few floppy diskettes" that were present in the 
taxing State.  Id. at 315 n.8.  The Court held that, while 
licensed software and diskettes might constitute "some minimal 
nexus," id., such a slight presence did "not comprise the 
'substantial nexus' required by the Commerce Clause," id. at 302 
n.1. 
In Wayfair, 138 S. Ct. at 2095, the Supreme Court 
specifically referenced the use of modern technologies (such as, 
the use of apps, cookies, and CDNs) by remote sellers; far from 
concluding that such technologies constituted the required 
physical presence under Quill's bright-line test, the Court 
identified the ambiguity as to whether such technologies would 
satisfy the physical presence rule as a reason for abrogating 
the rule.   
Indeed, the Court strongly suggested that such contacts 
would not constitute the requisite physical presence in the 
taxing State.  The Court stated that it is an "inescapable fact 
of modern commercial life that a substantial amount of business 
is transacted with no need for physical presence within a State 
32 
 
in which business is conducted" (alterations omitted).  Wayfair, 
supra at 2093, quoting Quill, 504 U.S. at 308.  This is because 
remote sellers can employ apps, cookies, and CDNs that permit 
them to conduct such business.  The Court recognized that, in 
the context of "the modern economy with its Internet technology" 
in which remote sellers can employ apps, cookies, and CDNs, the 
physical presence rule resulted in the anomaly of "a business 
with one salesperson in each State [needing to] collect sales 
taxes in every jurisdiction in which goods are delivered . . . 
but a business with 500 salespersons in one central location and 
a website accessible in every State [not needing to] collect 
sales taxes on otherwise identical nationwide sales."  Wayfair, 
supra. 
The Court also lamented that the physical presence rule 
"treats economically identical actors differently, and for 
arbitrary reasons."  Id. at 2094.  In support of this 
conclusion, the Court relied on the example of two businesses 
that sell furniture online.  Id.  The first vendor "stocks a few 
items of inventory in a small warehouse" in the taxing State; 
under the physical presence rule, it would have to collect and 
remit a use tax on all of its sales, even those having nothing 
to do with the goods in the warehouse.  Id.  The second vendor 
"maintains a sophisticated website with a virtual showroom 
accessible in every State"; yet, under the physical presence 
33 
 
rule, it escapes the use tax on the sale of the same goods 
despite its "pervasive Internet presence."  Id. 
In explaining the unsuitability of the physical presence 
rule for modern commerce, the Court noted: 
"[I]t is not clear why a single employee or a single 
warehouse should create a substantial nexus while 
'physical' aspects of pervasive modern technology should 
not.  For example, a company with a website accessible in 
South Dakota may be said to have a physical presence in the 
State via the customers' computers.  A website may leave 
cookies saved to the customers' hard drives, or customers 
may download the company's app onto their phones. . . .  
Between targeted advertising and instant access to most 
customers via any internet-enabled device, 'a business may 
be present in a State in a meaningful way without' that 
presence 'being physical in the traditional sense of the 
term.'" 
 
Id. at 2095, quoting Direct Mktg. Ass'n, 575 U.S. at 18 
(Kennedy, J., concurring).  "[T]he continuous and pervasive 
virtual presence of retailers today is, under Quill, simply 
irrelevant.  This Court should not maintain a rule that ignores 
these substantial virtual connections to the State."  Wayfair, 
supra.  The Court's analysis, leading it to abrogate the 
physical presence rule, suggests its view that any "physical 
aspects" of technologies such as the use of apps, cookies, and 
CDNs would not satisfy the Quill standard.22 
 
22 In D & H Distrib. Co. v. Commissioner of Revenue, 477 
Mass. 538, 540 (2017), we also suggested that nondomiciliary 
sellers, presumably using technologies such as apps, cookies, 
and CDNs to reach Massachusetts customers, would not satisfy 
Quill's physical presence requirement.  We stated that, "[i]n 
light of the Supreme Court's physical presence requirement," in 
34 
 
In fact, the Court presaged that States' efforts to 
"defin[e] physical presence in the Cyber Age," highlighting 
Massachusetts's regulation, id. at 2097, citing 830 Code Mass. 
Regs. § 64H.1.7, would lead to "arbitrary disputes about what 
counts as physical presence," Wayfair, supra at 2098.  To the 
extent that the Court wavered on the issue whether the 
"'physical' aspects of pervasive modern technology," like the 
use of apps, cookies, and CDNs, were sufficient physical contact 
under Quill, the board correctly resolved the ambiguity in favor 
of the taxpayer.  See Oracle USA, Inc., 487 Mass. at 522, 
quoting Citrix Sys., Inc. v. Commissioner of Revenue, 484 Mass. 
87, 92 (2020) ("Tax statutes are strictly construed, with 
ambiguity resolved in favor of the taxpayer"); Dental Serv. of 
Mass., Inc. v. Commissioner of Revenue, 479 Mass. 304, 310 
(2018) ("we construe the use of 'covered persons' in [G. L. 
c. 176I, § 11,] 'strictly against the taxing authority' if the 
statute is ambiguous" [citation omitted]).  See also Gould v. 
Gould, 245 U.S. 151, 153 (1917) ("In the interpretation of 
statutes levying taxes it is the established rule not to extend 
their provisions, by implication, beyond the clear import of the 
language used, or to enlarge their operations so as to embrace 
 
Quill, "if [an] out-of-State retailer of [an item] purchased 
online by [a] Massachusetts consumer had no physical business 
presence [in the State], it could not be compelled to collect 
Massachusetts sales tax."  Id. 
35 
 
matters not specifically pointed out.  In case of doubt[s,] they 
are construed most strongly against the Government, and in favor 
of the citizen"); Lowell Sun Publ. Co. v. Commissioner of 
Revenue, 397 Mass. 650, 654 (1986) ("the 1982 [tax] regulations 
are hardly entitled to the deference we may grant an agency's 
interpretations of its own enabling statutes").  Cf. D & H 
Distrib. Co. v. Commissioner of Revenue, 477 Mass. 538, 545 
(2017) ("In the absence of supporting evidence for a tax 
assessment, a taxpayer will be entitled to an abatement").23,24 
 
23 Because the contacts identified in the regulation do not 
constitute physical presence under Quill, discovery into the 
extent of U.S. Auto Parts's placement of apps and cookies on 
Massachusetts customers' devices or the number of CDNs located 
in Massachusetts is unnecessary.  The cases that the 
commissioner cites for the proposition that "physical presence" 
is a "term of art" requiring "a highly fact-driven inquiry" do 
not involve the virtual contacts at issue here.  See Scholastic 
Book Clubs, Inc. v. Commissioner of Revenue Servs., 304 Conn. 
204, 232-234, cert. denied, 568 U.S. 940 (2012); Scholastic Book 
Clubs, Inc. v. Farr, 373 S.W.3d 558, 564 (Tenn. Ct. App.), cert. 
denied, 528 U.S. 1028 (2012).   
 
24 The parties do not cite, nor are we aware of, any cases 
in our sister jurisdictions analyzing whether the use of apps, 
cookies, or CDNs constitutes physical presence under Quill.  
See, e.g., Overstock.com, Inc. v. New York State Dep't of 
Taxation & Fin., 20 N.Y.3d 586, 597, cert. denied, 571 U.S. 1071 
(2013) (relying on presence of in-State agent to conclude 
commerce clause does not bar New York's click-through nexus 
law); America Online, Inc. vs. Johnson, No. M2001-00927-COA-R3-
CV (Tenn. Ct. App. July 30, 2002) (same). 
 
Where sellers have not had agents in the taxing State, tax 
authorities in other jurisdictions have concluded that a 
nondomiciliary seller's use of another company's in-State 
servers to store and manipulate data, without more, is not 
enough to satisfy the physical presence requirement.  See, e.g., 
36 
 
Accordingly, we defer to the board's reasonable conclusion 
that the use of apps, cookies, and CDNs does not constitute in-
State physical presence as required by the regulation. 
Decision of the Appellate Tax 
  Board affirmed. 
 
Missouri Department of Revenue, Private Letter Ruling No. LR3819 
(Apr. 11, 2007) (declining to find nexus when out-of-State 
company's only connection with Missouri was "data storage, data 
manipulation, or data processing at facilities within 
Missouri"); Texas Comptroller of Public Accounts, Policy Letter 
Ruling No. 201107220L (July 1, 2011) ("if the out-of-[S]tate 
company purchases Internet hosting services from an unrelated 
seller located in Texas who provides the service by use of 
servers that the seller owns or leases in Texas, and that is the 
only contact the out-of-[S]tate company has with Texas, no nexus 
is created"); Virginia Department of Taxation, Ruling of the Tax 
Commissioner No. 12-36 (Mar. 28, 2012) (suggesting that presence 
of company's "several [in-State] Internet servers" "would appear 
to create nexus" for State corporate income tax purposes); 
Virginia Department of Taxation, Ruling of the Tax Commissioner 
No. 00-53 (Apr. 14, 2000) (concluding that no nexus exists to 
tax nondomiciliary online auto parts retailer that contracts 
with in-State web hosting company, which "provide[s] power and 
bandwidth connections [and] other web hosting services, and 
Internet servers").