The Massachusetts Appellate Tax Board (“ATB”) granted summary judgement for taxpayer U.S. Auto Parts Network, Inc. (“U.S. Auto Parts”), abating the Department of Revenue’s sales and use tax assessment based on a finding that the online auto parts seller had acquired “cookie nexus” with the state. The Department’s economic nexus regulation, the “Internet Vendor Rule,” was adopted nine months before the South Dakota v. Wayfair decision. The Department determined that with this regulation,  the pre-Wayfair physical presence nexus requirement is satisfied if sellers place “cookies” on the browsers of in-state customers or if they make apps available for in-state customers to download.  The Department continued to enforce this “cookie nexus” rule post-Wayfair.

The ATB’s one-page ruling did not provide its legal analysis or findings of fact – and indicated a more detailed decision is forthcoming.  U.S. Auto Parts had argued that “cookies” do not qualify as physical presence. It also argued that the assessment violated the Internet Tax Freedom Act and the Due Process clause. The ATB’s decision in this case is significant because previous litigation had failed to overturn the Department’s “cookie nexus” rule and its attempt to enforce an economic nexus rule pre-Wayfair.