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‘Cookie nexus’ does not constitute physical presence for Commerce Clause purposes in pre-Wayfair periods, the Massachusetts Appellate Tax Board (ATB) stated in its finding of facts and report released recently. The ATB also rejected the Department of Revenue’s alternative argument that the Wayfair decision should be applied retroactively.

For consideration: The ATB does not analyze the technical functioning of website ‘cookies’ and ‘apps,’ and therefore its ruling may not be helpful in considering whether such ‘virtual presence’ might be deemed to constitute in-state business activity for income tax purposes under P.L. 86-272. Further, the Department of Revenue is expected to appeal this ruling, and taxpayers should consider their options for preserving their refund rights in light of Massachusetts’ statute of limitations and abatement procedures.