Tuesday, February 03, 2009

The Commonwealth and Taxation - Massachusetts Supreme Court to hear Case brought by Retailer against the State - basis: U.S. Constitution Clause

Live Free Or Die, New Hampshire, may no longer be a safe haven for those Massachusetts residents attempting to purchase large ticket items and avoidthe Massachusetts State Sales Tax. A case is now before the Massachusetts Supreme Court involving Connecticut based, Town Fair Tire – the chain who has retail outlets in Massachusetts and New Hampshire, has brought suit against the State of Massachusetts under the U.S. Constitution, Article 1 Commerce clause. The clause (Section 9) “No tax or duty shall be laid on articles exported from any state”, has been viewed by the Courts as applying to those retail outlets that do not have a presence in a particular state (see Quill Corp. v. North Dakota, 504 U.S. 298, 112 S. Ct. 1904, 119 L. Ed. 2d 91 (1992).) here). Further, depending upon the State, there may be an ability to get around the Commerce Clause, as in New York State’s Law requiring Internet retailers to charge sales tax. Amazon.com brought suit under the Commerce Clause and lost to the State of New York.

Suffice it to say, that where Massachusetts and Taxes are concerned, the States ever increasing deficit will play a factor, and given the ability of the Massachusetts Supreme court to “re-interpret” the Constitution, one cannot see Town Fair Tire prevailing in this instance. Under the current Patrick administration; taxes are being proposed on everything from candy bars (sin tax) to alcolhol, to fuel, in order to shore up the budget.

Given the fact that Massachusetts’ low and middle income residents bear the brunt of the states taxes (Institute on Taxation and Economic Policy) one can imagine that no “stone will be left unturned”, to collect any taxes perceived due to the Commonwealth. However, if one were to strictly interpret the clause under the U.S. Constitutions’ Article 1, then the onus of collecting any perceived “taxes due” from Massachusetts residents, who purchase tires over the border in neighboring New Hampshire, would fall to the State of Massachusetts, not the retail outlet.

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