Today, the Massachusetts Supreme Judicial Court (“SJC”) heard oral argument in Regency Transportation v. Commonwealth, a case in which the taxpayer is challenging the Department of Revenue’s assessment of use tax on the full purchase price of vehicles that it purchased outside of Massachusetts and used more than half the time outside of Massachusetts as part of its transportation services.  Prior coverage of this case can be found here and here.

A hot bench peppered the taxpayer’s representative with questions throughout his argument regarding the taxpayer’s contention that the Department’s assessment was barred on internal and external consistency grounds.  The Department faced fewer questions, though in one interesting exchange, Justice Cordy asked a series of hypotheticals regarding the application of Massachusetts’ credit provisions.  For example, Justice Cordy asked whether Massachusetts would assess use tax in a situation where a taxpayer first used property in Massachusetts for a period of time, but then later brought the property into New Jersey for use and then later accrued and remitted New Jersey use tax.  The Commissioner’s representative indicated that in such a circumstance, the Department would honor the credit provisions in the use tax statute and not assess use tax even though the first use of property was in Massachusetts and tax would otherwise have been due.

After today’s oral argument, and the recent United States Supreme Court decision to vacate and remand the SJC’s decision in First Marblehead for further internal consistency analysis in light of the recent decision in Comptroller of Treasury of Md. v. Wynne, 576 U. S. ____ (2015), the SJC should be issuing some important decisions involving internal and external consistency in the near future.