On January 6, the Massachusetts Supreme Judicial Court (“SJC”) issued its decision in Regency Transportation v. Commonwealth, finding against the taxpayer. The taxpayer in Regency was a trucking company that purchased vehicles in states that did not charge sales tax on the purchases. Regency used the vehicles more than half the time outside of Massachusetts as part of its trucking business. Regency challenged the Department of Revenue’s assessment of use tax on the full purchase price of the vehicles. Prior coverage of this case can be found here, here, and here.
Regency had argued that the Department’s use tax assessment was excessive because the vehicles were being used in interstate commerce and the use tax as applied to the vehicles by the Department violated the four-pronged Complete Auto Transit test. In particular, Regency argued that the Department’s application of the use tax violated the Commerce Clause, because the tax was not fairly apportioned and, thus, discriminated against purchasers of vehicles engaged in interstate commerce.
The SJC, disagreed, and ruled that Massachusetts’s imposition of use tax was fairly apportioned, being both internally and externally consistent. In addition, the SJC leaned on the catch-all exemption for taxes paid to any other state to support its conclusion that the imposition of the tax would not result in impermissible double taxation. Thus, the SJC upheld Massachusetts’s assessment of use tax against Regency.