The Massachusetts Appellate Tax Board determined that three licensors of software properly sought refunds (or “abatements”) to apportion sales tax based upon proof of their purchasers’ intent to use the software in multiple locations, including outside of Massachusetts. In doing so, the Board rejected the Commissioner of Revenue’s argument that the taxpayers could apportion sales tax, but only on their original reports.

The Board concluded that the Commissioner’s regulation did not prohibit taxpayers from seeking apportionment through the abatement process, contrasting the apportionment regulation with several other regulations that required certain actions – such as elections – to be made on original reports. The Board also pointed to the regulation’s retroactive application – it took effect in October 2006, but applied to transactions in April 2006 – as proof that there is no original-report requirement. If there were, retroactive application would be impossible.

Oracle USA, Inc., et al v. Commissioner of Revenue, No. C318441 (Mass. App. Tax Bd. Nov. 27, 2019)