The Impact of Massachusetts Court Cases on State and Local Tax Policies with Richard Jones

Hosts & Guests

Judy Vorndran, Partner, State and Local Tax

Meredith Smith, State and Local Tax Senior Manager

Richard Jones, Partner, Sullivan & Worcester LLP

What You Will Discover:

In this episode of the SALTovation podcast, we speak with Richard Jones, an attorney at Sullivan & Worcester in Boston, specializing in state and local tax for over two decades. Richard dives into two significant Massachusetts court cases: Oracle USA Inc. and US Auto Holdings. In the Oracle case, the Massachusetts Supreme Judicial Court upheld the ability to apportion sales tax for software sales and clarified the parameters of the Commissioner of Revenue’s authority. In the US Auto Holdings case, the court struck down the concept of “cookie nexus” and denied the state’s ability to retroactively apply the Wayfair decision. Listen this week as Richard provides insights into the implications of these cases and their potential impact on other states.

Topics Discussed in this Episode:

  • Apportioning sales tax for software sales is a reasonable approach and should be considered in other states.
  • The concept of “cookie nexus” is not valid, as physical presence requires something tangible.
  • The Massachusetts Supreme Judicial Court’s decision in US Auto Holdings prevents the retroactive application of the Wayfair decision.

Quotables:

    • “Many states, like Massachusetts, have changed the definition of tangible personal property to say things that are tangible personal property plus software. We’re just calling it a fiction. Fine. Okay. But what happens then is that now you have something that can be used simultaneously and exists simultaneously in many different states at the exact same time.That doesn’t happen with the widget. So you have a new question.” -Richard Jones [09:57]

     

    • “After the oracle decision, the floodgates opened for everyone filing abatement claims that didn’t think they could before. And we’ve seen shifting sands in terms of the degree in which the department will be satisfied with the apportionment. I can’t say I am happy with the way the sands have been shifting. Sometimes you can find out exactly what percentage of your employee headcount use the software and where they are because the software has a technology and sometimes you can’t.” -Richard Jones [21:02]

     

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    Transcript

    0:00:02 Meredith Smith: Welcome to SALTovation. The SALTovation show is a podcast series featuring the leading voices in salt, where we talk about the issues and strategies to help you make sense of state and local tax. Today we want to welcome Richard Jones to our show. Rich is an attorney at Sullivan Worcester in Boston, where he’s been specializing in state and local tax for more than two decades. His work includes helping taxpayers prevail in key decisions in Massachusetts, so much so that he was recognized as a law 360 mvp for some of the cases we’ll talk about today.

    0:00:34 Meredith Smith: Thanks, Rich, for being with us today. We really appreciate your time.

    0:00:38 Richard Jones: Pleasure to be here. I’m a fan of this podcast.

    0:00:43 Meredith Smith: All right. And for those, Alex Korsian, the member of our SALTovation team, will be with us today. So it’ll be me and Alex talking with Rich, and we’re really looking forward to talking some cases. So, rich, state and local tax, we’ve seen and kind of had experiences talking with other people does not usually get a lot of play in law school or just kind of higher education. How did you land in state and local tax and kind of what motivates you as a tax?

    0:01:20 Richard Jones: You know, before I even got into state and local tax, there was just tax generally was not the path I thought I was headed on. A lot of my colleagues in our tax department here at Sullivan and Worcester really kind of tax people, and they knew it early on, but I was kind of the more common breed in law school. I think I was headed towards a career as a trial attorney that wasn’t involving tax. I probably had kind of that normal aversion to it seemed foreign to me. There was a musical review that did a spin of the meatloaf song, and the name of the song they did was, I do anything for law, but I won’t take tax.

    0:02:07 Richard Jones: And it went on to talk about how terrified we were. And I took one class, and it was very interesting. But then I started working in New York City at a commercial litigation firm for three years, and I was looking to change jobs. And a friend of mine in Boston at Pricewaterhouse Coopers was doing state and local tax exclusively. And I was chatting with him. He started sending me articles that he was working on.

    0:02:35 Richard Jones: And while it never occurred to me to look in that direction before, I was reading those articles and I said, this is like early onset of economic nexus principles. And I said, this is constitutional law. I mean, it’s due process, commerce clause. It’s kind of interesting. I didn’t think anyone got to do that kind of thing. And he explained that it’s not just academic, it is really part of the daily practice. And I read more, and then I ended up meeting the people he worked with and was coached a little bit.

    0:03:07 Richard Jones: A fellow named Joe Donovan was the head of PwC’s northeast practice, and I happened to say things that I knew he’d be interested in. So he hired me, and I just shifted gears, and I kind of started from scratch, not knowing much about tax, let alone salt. But it was the salt that appealed to me first. And so I was really green, right? Someone would put up a structure like my first day with a corporation with a box and a triangle for yll.

    0:03:36 Meredith Smith: You got triangles, you got rectangles, you got the triangle in a rectangle. And all of those mean different things and show up on a tax return differently.

    0:03:49 Richard Jones: This was early on, so I knew I had to get up to speed fast, and fortunately, I really loved it. What motivates me is the second part is. So I went from PwC for three years, where I really got a lot of good technical training, worked with some great people, Joe Donovan, John Miroff, among others. And I came here to Sullivan and Worcester in 2003 where I could do the litigation. So it’s a nice blend of doing those two things, but the things that motivates me, in a nutshell, I do love the issues. I like talking about them, whether it’s economic nexus or extraterritorial values distortion.

    0:04:26 Richard Jones: When is something subject to a sales tax? Can it be sourced? There is just a lot of gray areas and some aggressive state taxing authorities, maybe some aggressive taxpayers. But that combination makes for a lot of controversy and a lot of unsettled issues, and sometimes they’re constitutional issues. So I like that. And the other thing I like probably is more in the nature of lawyering in any field, but just the opportunity to get a correct answer to maybe right a wrong. And that wrong might be not so much of an injustice, but an unfair interpretation of a statute. And sometimes it is an unjustice or an injustice. And so sometimes my pro bono cases have lingered with me as to some of the most gratifying things that I’ve done.

    0:05:17 Richard Jones: But that combination of just really interesting issues and the opportunity to maybe have an effect on policies that should be changed in the state of Massachusetts or elsewhere through litigation, that kind of thing, those are the things that motivate.

    0:05:34 Meredith Smith: Oh, go ahead, Alex.

    0:05:36 Alex Korsian: I was just going to say that it’s funny listening to you mean. My experience coming up was a little different. I was never at a law firm I went into CPA land directly, but as a young wet behind your attorney, that’s what drew me to it, was that the constitutional issues, the due process commerce clause, that’s the stuff I salivate over still to this day, 20 years later. But I think salt draws a lot of attorneys and highly educated masters of tax and these individuals who typically are just a little more comfortable in that uncertainty. Right. Because we do have a lot of gray area in this field, and that gray area is what gives us the opportunity to correct some of those injustices. Right.

    0:06:27 Alex Korsian: Sometimes there’s just a lack of guidance and you have this opportunity to craft the solution or the resolution through. Know, when somebody thinks of a, you know, kind of like your experience at Pricewaterhouse, Cooper’s or my career, you don’t typically think of that. But there is that opportunity, and certainly on the law firm side, too.

    0:06:50 Richard Jones: Yeah, no, it’s a wonderful opportunity to kind of, and it’s not maybe the most common blend. You’ve had guests where you see people that really excel in both the tax technical expertise and the interest in litigating and fighting the fight. And those are two very different skill sets. I love doing both, and I’m not the only one, but it’s still not the common direction for people that are interested in tax issues.

    0:07:23 Richard Jones: And so the courtroom stuff, it doesn’t take a backseat. They’re both equally important. One of my mentors, Bill Halmkin, who passed away a few years ago, but he was really one of the first lawyers doing state and local tax cases 20 years before I got involved. And he hired me here at Sullivan Worcester. But one of the things he would say is I rarely feel righteous indignation, but I often express it.

    0:07:53 Richard Jones: I tend to feel it more than he does. I actually get into these cases. So I will feel it, especially as you develop your case and you realize maybe you have one where it’s really all right and maybe the department’s policies change and so forth. But I always like that point of view.

    0:08:11 Meredith Smith: Well, kind of. With that, let’s maybe start because it seems like Massachusetts, you may have been busy, Massachusetts was busy talking tax, pushing some things out there. So maybe let’s start with Oracle USA Inc. What was the issue there, and how does it kind of potentially speak to a broader trend? And I think while we’re going to talk specifically about Massachusetts court cases, want to then kind of think about, as we talk through them, some of the national impacts of those. But for now, let’s start with Oracle.

    0:08:45 Richard Jones: Sure. Yeah. Happy to. Oracle is one of. There’s about seven cases that are pretty, I think, important in Massachusetts, but Oracle is one of four over the last two plus years that were decided at the state’s highest court and affected important tax policy, the supreme judicial court. And that’s unusual to have four cases on state tax policy get to that level. So Oracle was a case involving the sale of software by, it was Oracle and Microsoft to a company that was headquartered in Massachusetts but had employees.

    0:09:25 Richard Jones: So, you know, this is just one of the many questions that arise and are not entirely settled on issues involving tax and technology. When we have a sales tax, generally, traditionally, it’s always on tangible personal property. Sourcing isn’t that hard. You have an item, a widget, and the sales tax is due to the state where the thing is sold. If it’s in the store, if it’s delivered to a customer, we know it, and it’s one place.

    0:09:57 Richard Jones: But software to make software taxable, even though it’s not tangible. Many states, like Massachusetts, have changed the definition of tangible personal property to say things that are tangible personal property plus software. We’re just calling it a fiction. Fine. Okay. But what happens then is that now you have something that can be used simultaneously and exists simultaneously in many different states at the exact same time.

    0:10:26 Richard Jones: That doesn’t happen with the widget. So you have a new question. The Massachusetts legislature had some foresight around 2005 when they changed the definition to include software for tax tangible personal property. And they said the commissioner can also make rules about how to apportion the tax. So got a company based in Massachusetts when Oracle or Microsoft or a software vendor bills them. And these are very big bills. When large companies buy these software products, the sales tax is just 100% to Massachusetts, because that’s where the bill to address is.

    0:11:05 Richard Jones: And what should happen is it should be taxed to the state to the extent the thing sold, the software is actually used in Massachusetts. And a good way to do that is apportionate based on the users or the customers located in Massachusetts. So if the buyer has 50% of its workforce in Massachusetts and 50% everywhere else, that’s actually 50%. Okay. So two things that are important in this case that I think are influential elsewhere is just the notion that sales tax in these situations should be apportioned. That’s the right answer. But that’s also a very unusual concept, because the idea of apportionment is really only thought about in the terms of an income tax and never the sales tax. And I think that thinking has to change.

    0:11:57 Richard Jones: And so this SJC upheld the ability to apportion sales tax based on where it’s going to be used only to the extent of use in Massachusetts. And a good way to do that was based on employees. The real controversy in the case came up because Massachusetts said, I put a lot of restrictions on this ability, and they said, we will not let you apportion. We won’t ever let you seek an abatement to apportion it correctly.

    0:12:25 Richard Jones: If you didn’t apportion and give us some multi points of use certificate and MPU exemptions, if you don’t do that at the time of the sale or by the time the initial return is due, you lose your right to apportion. And so our argument was that’s taking away a statutory right, and not only to apportion, but also to abate your taxes. If you have overreported it by statute, you have three years from the filing date to do so. The apportionment issue is important, but the second issue is that the court came down hard on the Department of Revenue for its argument, which was that we can restrict your rights. The legislature gave conferred on us, the Department of Revenue, the right to decide whether to let taxpayers apportion. And we have decided, and so we can make any restrictions we want.

    0:13:23 Richard Jones: That was incorrect, and this is part of our argument. That’s not what the legislature conferred. The statutory language is a little confusing, but it could never do that, because while the Department of Revenue has the power to implement tax policy consistent with the statute, it cannot make tax policy and it can’t be conferred the right to make tax policy. What was the right to make tax policy in this case? It was whether the question of whether sales tax can be apportioned or not, that cannot be the department of Emily’s job. We went into the Massachusetts constitution to hammer that out. But what that does in Massachusetts, but elsewhere, is the language is strong enough that it’s an important reminder of the authorities of state taxing revenue agencies.

    0:14:12 Richard Jones: So there were multiple incidents or examples where their authority seems to be unchecked in terms of interpreting the statute being inconsistent or saying that we have the right to decide these things. So I think it was important that way. It’s important guidance on apportioning sales tax for software sales, and secondly, on the ability or the parameters of the commissioner of revenues authority.

    0:14:42 Alex Korsian: Well, congratulations on that win. That’s huge. So Massachusetts has an MPU. Minnesota, where I sit, has an MPU as well. And the Department of Revenue here has issued guidance identical to what you referenced, where a MPU has to be claimed at the time of sale. To my knowledge, I don’t believe that has been litigated here yet, but this oracle case certainly gives me a little hope that maybe if it was litigated here in Minnesota, it would maybe land the same way.

    0:15:17 Richard Jones: I hope so. You know what the problem with that rule is? The MPU, all that is, is an exemption certificate. What are exemption certificates? They are not statutory final orders. They are shiftings of burdens of proof. If you have an MPU, the Department of Revenue that’s submitted will assume that things were properly apportioned or things were properly exempt, and they could still look at it, they could still flip it. But they’re going to give you the benefit of the doubt more often than not.

    0:15:52 Richard Jones: If you don’t have an MPU or you don’t have an exemption certificate, all right, you have to show them that you’re exempt or you’re entitled to a portion, but it shouldn’t foreclose your ability to do that because all it is is shifting a burden of proof. The other thing that’s unusual about that, what I can respect is that if the MPU does two things, the MPU also transfers the obligation to report the tax from the vendor to the customer.

    0:16:22 Richard Jones: Now, if you were to say you can’t do that shift, if it wasn’t done by the time the initial tax return is filed, that’s fair. That’s not talking about whether the tax exempt or properly apportioned or not. It’s about whose obligation it is. And you’ve got to file something. And if the vendor doesn’t file anything, it better have an MPU so that I get. But it can’t take away your right to apportion. I’d love to see it litigated in Minnesota and hopefully come up with the same.

    0:16:52 Alex Korsian: You know, the whole concept of MPU is fascinating with, with the select few states that do have this burden shifting process through a certificate. Typically, I think this answer is a little bit clearer, but there’s a host of other states that don’t have a formal certificate. Right. But if you read the standard sourcing provisions that are based on use language, as you alluded to before, the argument could be made that you could still apportion there.

    0:17:28 Alex Korsian: Right. They just don’t have this MPU mechanism to document it. So the right to apportion, and I use those terms habitually, that’s an income tax term. But that ability to apportion the sales tax should still exist. Again, it just, does it shift the burden? Likely not right, without that cert, and the mechanics of all that becomes incredibly complex. So it’s a very interesting mechanism to think through and to work through both legally, conceptually, academically, but also practically.

    0:18:09 Richard Jones: I completely agree. And you know what? I love the question, what if a state has a normal sales tax, normal use tax, because we’re really talking about a use tax here, and no language whatsoever about apportioning or right to apportionment, at least in Massachusetts, we could glob on to some language that seemed to suggest it, even if it was unclear. But what if a state doesn’t say, you have a right to apportion sales on software, you still have a use tax statute, and what do you need for a use tax will apply. You need to have a sale.

    0:18:39 Richard Jones: It needs to be actually used. And I think in most states, that has to be intended to be used in the state purchased for use, those three things. But the middle one was it actually used. You really can’t impose a tax on something if it wasn’t used there. And so even if you don’t have specific apportionment statutes, I think there’s a good argument that 100% tax just because the headquarters of the company is there isn’t, correct. Because it’s not reflective of use. And you have to think differently when you have nontangible property that is subject to a sales tax.

    0:19:21 Richard Jones: And then you have these really interesting questions. How do you portion? If we can get to that point, states should make that easy enough based on headcount, based on other things. But I’d love to see that issue come up in states that don’t have anything about apportionment. Just.

    0:19:44 Alex Korsian: Yeah, and that’s a great point about the required documentation, because even if you can get comfortable statutorily in one of those states, then you have to ask yourself, all right, well, how do I paper this? You know, and to use New York as an example, and I don’t remember the level of guidance that was issued. It was a number of years ago. I want to say maybe it was some sort of, maybe it was an ALJ, but there was some specific guidance on the kind of documentation that would be acceptable in New York because New York doesn’t have a certificate nor a burden shifting provision. Right. But you can still claim the MPU.

    0:20:19 Alex Korsian: It just doesn’t shift the, you know, the scenario that we’re talking about. But they were very specific, the ALJ. And again, forgive me if I’m misquoting the level of authority. But it was very specific that there had to be headcount percentages listed out by jurisdiction. So it wouldn’t have been enough to just have the New York percentage listed. They wanted it to tie out to 100. Right. They needed everything listed. So what level of documentation is enough in each one of these states is just.

    0:20:52 Alex Korsian: We have no idea. Right.

    0:20:53 Richard Jones: Right.

    0:20:53 Alex Korsian: So if you even get there, how do you cover yourself? How do you protect your.

    0:21:01 Richard Jones: You know, after the oracle decision, the floodgates opened for everyone filing abatement claims that didn’t think they could before. And we’ve seen shifting sands in terms of the degree in which the department will be satisfied with the apportionment. I can’t say I am happy with the way the sands have been shifting. Sometimes you can find out exactly what percentage of your employee headcount use the software and where they are because the software has a technology and sometimes you can’t.

    0:21:37 Richard Jones: But you know, what’s more important than who actually used it under the law? Who was it purchased for? If it was purchased for anybody in the company to use and ended up being used by a smaller portion, because we know not everybody needs it, but we don’t know who’s going to need it and who uses it from one year or one month to the next could change. So you don’t buy the same number of licenses as employees. You have 30,000 employees. You buy 30,000 licenses, you don’t need that many. But then you might have the department saying, well, I can’t let you apportion based on headcount. I need to know who exactly who used it. That’s something we’re dealing with, which I don’t think is reasonable when the question really has to be who was it purchased for?

    0:22:25 Richard Jones: Now, if it was purchased and really only useful to one department within the company, then you don’t use worldwide population. You probably use the population of that department wherever they sit. That makes sense. But companies shouldn’t have to be forced to litigate to prove their apportionment when we don’t have an exact headcount because the software tracking doesn’t do that well.

    0:22:48 Meredith Smith: And something we’ve seen generally in audits, that auditors are amenable. Right. When you’re kind of on the hook for proving it’s mostly shipped or billed to. Right. Where’d you send your bill? And that’s where we’re talking. Right. But what we have to be cautious of and what we warn our clients on of all right. Well, if you’re going to use an MPU argument for sourcing out, you also have the contrary of those build tos that are out but could have users in. So it’s like you can’t just use that language to go out.

    0:23:28 Meredith Smith: When do you really want to open up Oracle for. Right. They have an office in Colorado, California. Right. Just kind of picking on them from a company. Let’s say they have users in Massachusetts, but a bill to Colorado, like you just got to be careful. Right. Who are your customers and does the outward. Right potentially or where you didn’t send that bill potentially have a presence in that state that you’re not charging on or you don’t have a certificate for that, you could be kind of brought into your pool.

    0:24:00 Alex Korsian: It’s not a one way street.

    0:24:01 Richard Jones: No. That sounds like a compliance or audit nightmare or headache or difficult but not unfair. Right.

    0:24:11 Meredith Smith: Right.

    0:24:12 Richard Jones: It just depends on every state’s law. Right. But what they can’t. So that seems right. But what doesn’t seem right is the department saying to you, I know you want to apportion and I have your apportionment numbers, but for the percentage of apportionment that will go to another state like New York or something, show me you paid tax to New York. No, I don’t have to do that because that’s not part of the law. And New York’s law is going to be different than Massachusetts and every state’s law is different and that’s not part of the equation.

    0:24:50 Richard Jones: So I get your point, Merida. I can see a state saying, well, you do owe tax to the extent you have users here, but the bill to address or the headquarters of the company was somewhere else. But that’s where I draw the line. And I’ve seen that question asked and I don’t see it asked as often now. Maybe they’ve moved past it, that question. Show us if you want a portion, show us you paid tax to the other states for the reasons I said.

    0:25:20 Richard Jones: We don’t know that taxes do in the other states. Maybe it is, maybe it isn’t, but it doesn’t change what the tax is in Massachusetts.

    0:25:28 Meredith Smith: Right.

    0:25:30 Alex Korsian: Again, kind of jumping a little bit to a different tax type and a different scenario, but we see the same question being asked for 86 to 72 public cloud, 86 to 72 issues. Well, or right to apportion issues, kind of using the terminology I said before, prove that you are taxable elsewhere, prove that you paid the tax. And not all states have that statutory requirement.

    0:25:56 Richard Jones: Right. I can see it coming up in a credits question, right? You’re taxing me. But I already paid tax somewhere else. Every state allows a credit. If they want to tax a use of something in the state, but sales tax or use tax been paid elsewhere, then you have to show it. But it shouldn’t affect apportionment questions. By their very nature, apportionment is different than a credit system.

    0:26:22 Meredith Smith: So then, kind of sticking with some kind of sales tax cases, us auto holdings kind of struck down cookie nexus and kind of denied the state the ability to retroactively apply Wayfair. Why was this significant, and what can we expect from mean?

    0:26:44 Richard Jones: It’s a great case. It put, like, the final stake in the heart of this concept of cookienexis. Right. Which is, here’s how Massachusetts has applied it. And this is pre wavefair. Massachusetts said, and it wasn’t able to tax Internet vendors that had no physical presence in Massachusetts, and it put out a regulation. There’s some history to it, but I’ll cut to what they did in 2017. And they said, all you Internet vendors that aren’t present here in Massachusetts, but you have a sufficient amount of sales here, we’re all going to subject you to a sales and use tax collection obligation. You have nexus here. You have nexus here. Why?

    0:27:26 Richard Jones: Just because invariably, you have physical presence here. And you have physical presence here because your customers are using your websites. And when they do or when they download your app, there are cookies. And those cookies from your website are stored on the Massachusetts customer or user’s devices, their computers or their phones. And that’s enough physical presence to satisfy quill. There was another theory, you know, right off the bat, that struck me as, and many as outrageous. And the Department of Revenue didn’t call it cookienexis, but everyone else did.

    0:28:06 Richard Jones: They didn’t love that term. But I think it finally, you know, Wayfair comes out. But then the question in us auto is, pre Wayfair, the cookienexis regulation still made this taxable, and is that permissible or not? And I’m so grateful for this supreme judicial court. We’re happy with the Oracle case I wasn’t involved with, but they just took a reasoned, thoughtful approach, and so did the appellate tax board in that case. That was the trial level four.

    0:28:39 Richard Jones: And finally, declaring that just because you, the Department of Revenue, say that’s physical presence, it isn’t. One of the questions at oral argument from one of the justices is why is it that you say that that constitutes sufficient physical presence to create a taxable nexus with the state. You’re saying it’s the electrons, really? And that kind of question, it wasn’t much of an answer to that. But physical presence means something physical. I mean, I have a lot of problems, obviously.

    0:29:11 Richard Jones: I have cookies, tangible personal property in the state, like your inventory in the state that creates nexus in quail, a handful of floppy disks. That wasn’t enough. But you could at least hold those floppy disks. You could see them, you could feel them, you could weigh them. Internet cookies, you could have a billion of them, and you still can’t see them. You can’t hold them. They don’t weigh anything.

    0:29:33 Richard Jones: They’re not know. It was just important because the concept had been kicking around in Massachusetts and other states. It was important for them to put an end to the idea that that is physical presence under Quill. The court said it’s not. And then the department, Massachusetts also argued that, okay, even if you don’t like this cookie nexus theory and this cooking x’s reg, we have Wayfair and Wayfair. We could apply Wayfair retroactively.

    0:30:04 Richard Jones: And there was some reason to think that in that Wayfair, the Supreme Court said physical. They didn’t just say physical presence. Was it in 2018. They didn’t just say, physical presence isn’t going to be the standard anymore. They said it was never right to be a standard for Nexus. And so people got worried about it being applied retroactively. What happened in this case was, it looks like the Supreme Court denied the ability for anyone to apply Wayfair retroactively. That’s not exactly what happened. What they said is, we really don’t have to get into that.

    0:30:42 Richard Jones: They didn’t say it explicitly, but that’s what they did. They looked at the regulation Massachusetts wanted to apply. Prior to Wayfair, the only authority Massachusetts could use to claim nexus was this regulation. And this regulation was founded. The cookie nexus regulation was based on Quill. It said, we are applying a quill physical presence standard. And because the cookies aren’t physical presence, that’s the end of the story.

    0:31:13 Richard Jones: You, Massachusetts, your statutes, your rules, your laws didn’t permit you to assert Nexus on Wayfair’s principles, even if constitutionally it might have been permissible. So we don’t have to go there. But I think the idea of electrons or Internet cookies being considered physical, it has applications in other areas of state tax, not just nexus, but how to categorize things for sourcing and other principles. You know, another thing, these cookies, the reason under dear watch theory that they would be physical presence in Massachusetts or wherever the customer has his device or computer is because the vendor, the software, the website company owns property located in the state. The cookie that presumes that the Internet vendor owns those cookies and is storing them here.

    0:32:13 Richard Jones: But it doesn’t. If it did, could I delete the cookie? Could I have any control over the cookies around my device? I can’t destroy someone else’s property if it doesn’t belong to me. But it does. It does belong. Those cookies were not property of the website. That didn’t come up. But I could never get past that part of it. Of course, it’s not physical. If it is physical, it’s not substantial enough and it’s not even the property of the website company. So all of those things kind of just offended common sense. And I’m just pleased that the court came down the way they did. And hopefully that’s the end of the concept of cookienexis.

    0:32:55 Meredith Smith: Well, we’ll just take those cookies and kind of apply them now to 86 272 and their nonsense of what’s happening in the kind of expansion of the technology side of 86 272, which is a whole other conversation and a whole other bunch of nonsense, and we can come back in what, a year or two and talk about the cases that are going to evolve out of 86 272 and all of that.

    0:33:21 Richard Jones: Yeah, great example where folks might look to the US audit decision as they think about that issue. But yeah, it’s still a head stretch. At least we have that decision in California. For now.

    0:33:37 Meredith Smith: This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal, tax, accounting or investment meant. Advice should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.