In a case to watch for interstate trucking companies, Regency Transportation, Inc. is appealing a use tax assessment upheld by the Massachusetts Appellate Tax Board (“ATB”). Regency had challenged the Department of Revenue’s assessment of use tax on trucks which, although stored and serviced in Massachusetts, were purchased outside of Massachusetts and used for transportation and distribution services throughout the Eastern United States. Regency did not pay tax at the time of purchase, as the purchases were either made in states that did not impose sales tax (e.g. New Hampshire) or states that provided an exemption for purchases of vehicles used in interstate commerce (e.g. New Jersey, Indiana, and Pennsylvania). Regency asserted that the assessment was invalid on Commerce Clause grounds. The ATB disagreed and upheld the use tax assessment. However, the ATB did grant Regency a waiver of penalties, based on Regency’s reliance on an old ruling that continued to be published by the Department. For a more detailed discussion of this decision, see our prior coverage here.

On March 19, 2015, Regency appealed the ATB’s decision with the Massachusetts Appeals Court. Subsequently, Regency filed an application for Direct Appellate Review (“DAR”). The DAR application is a procedural step, whereby a party with an appeal pending at the Appeals Court that involves novel questions of law, questions of constitutionality or questions pertaining to the public interest, can request that those questions be decided by the Supreme Judicial Court, Massachusetts’ highest court, without first having been heard at the Appeals Court. Regency’s appeal could have implications for any interstate trucking company that has vehicles stored or serviced in Massachusetts.

If you are interested in following developments in this appeal, or wish to obtain a copy of any of the briefs, please email Michael Jacobs at mjacobs@reedsmith.com.