Corporate Nexus — 830 CMR 63.39.1 (corporate excise tax jurisdiction, economic and virtual contacts, P.L. 86-272)

# Status

830 CMR 63.39.1 was promulgated October 18, 2019, replacing prior nexus guidance and asserting jurisdiction to the fullest extent permitted by the U.S. Constitution and federal law, including a $500,000 economic/virtual-contacts presumption reflecting South Dakota v. Wayfair. An amendment to section (4)(e) — the Public Law 86-272 exception — was promulgated October 10, 2025, adding internet-activity analysis consistent with the Multistate Tax Commission's 2021 revised Statement (e.g., internet cookies gathering search information for production, inventory, and product-development purposes as activity beyond protected solicitation). This document is a faithful extraction of the regulation as published on mass.gov; the Massachusetts Register publishes the official version.

# (1) General — purpose and background

(a) Purpose. In general, 830 CMR 63.39.1 describes the circumstances pursuant to which certain business corporations will be subject to the tax jurisdiction of Massachusetts for purposes of the excise due under M.G.L. c. 63.

(b) Background. Whether a business corporation is subject to the tax jurisdiction of Massachusetts is determined by the application of state law, as may be limited by the provisions of the U.S. Constitution or federal law. In general, except as otherwise provided under Massachusetts law (see 830 CMR 63.39.1(4)(a) through (d)), the Commissioner will construe the state's tax jurisdiction to the fullest extent permitted by the U.S. Constitution and federal law.

(c) Outline of topics:

(1) General;

(2) Definitions;

(3) General Business Corporation Tax Jurisdiction, M.G.L. c. 63, § 39;

(4) Exceptions to Jurisdiction Applicable under M.G.L. c. 63, § 39;

(5) Financial Institution Tax Jurisdiction, M.G.L. c. 63, § 2 or § 2A;

(6) Insurance Company Tax Jurisdiction, M.G.L. c. 63, §§ 20 through 29;

(7) Corporate Partners.

# (2) Definitions

Business Corporation: a business corporation as defined under M.G.L. c. 63, § 30. Code: the federal Internal Revenue Code, as in effect for the taxable year. Commissioner: the Commissioner of Revenue or the Commissioner's duly authorized representative. Employee: any person who, under the common law rules applicable to determine the employer-employee relationship, has the status of an employee; generally, a person will be presumed to be an employee if included by the taxpayer as an employee for purposes of Federal Insurance Contributions Act payroll taxes. Financial Institution: a business corporation as defined in M.G.L. c. 63, § 1, that may be subject to the excise due under M.G.L. c. 63, §§ 2 or 2B. General Business Corporation: a business corporation as defined in M.G.L. c. 63, § 30 that may be subject to the excise due under M.G.L. c. 63, § 39, as modified by § 32D for an S corporation and § 38Y for a Code § 501 entity. Independent Contractor: a person who performs services on behalf of a business corporation but who is not an employee and not otherwise subject to the direction or control of the corporation in performing such services; in general, a person is treated as an independent contractor if the person offers such services to the general public in the ordinary course of business. Insurance Company: a business corporation that may be subject to the excise due under M.G.L. c. 63, §§ 20 through 29E, and any other entity that may be subject to an insurance tax under state law. Partner: a partner or member of an entity classified for the taxable year as a partnership for federal income tax purposes. Partnership: an entity classified for the taxable year as a partnership for federal income tax purposes. Person: an individual, estate, trust, partnership, corporation or any other business entity. Related Person: a 'related member' as defined in M.G.L. c. 63, § 31I. Representative: an employee or independent contractor of a business corporation or any other person, including a related person, acting or operating on behalf of a business corporation. Tiered Partnership: a partnership arrangement in which some or all of the interests in one partnership (the lower tier partnership) are held by a second partnership (the upper tier partnership); a tiered partnership arrangement may have two or more tiers. Unitary Business: a 'unitary business' as defined in M.G.L. c. 63, § 32B and 830 CMR 63.32B.2, except that for purposes of 830 CMR 63.39.1 such definition applies with respect to all persons with which a business corporation may be engaged in a unitary business, and not merely corporate entities.

# (3) General business corporation tax jurisdiction — M.G.L. c. 63, § 39

(a) General Rule. M.G.L. c. 63, § 39 imposes an excise on a general business corporation that includes an income measure and a non-income measure and a minimum excise that applies when those two measures combined are below a certain dollar threshold for a particular taxable year. A general business corporation is typically subject to the tax jurisdiction of Massachusetts pursuant to M.G.L. c. 63, § 39 when it meets the statutory standards, including the circumstance where the corporation owns or uses any part of its plant or property in the state or is engaged in doing business in the state. The Commissioner will generally construe M.G.L. c. 63, § 39 as asserting the tax jurisdiction of the state to the fullest extent permitted by the U.S. Constitution and federal law.

(b) Examples of Tax Jurisdiction. Examples of contacts or other incidents that will typically subject a general business corporation to tax jurisdiction under M.G.L. c. 63, § 39 include, without limitation, where the corporation: 1. is incorporated or organized in the state; 2. is headquartered or commercially domiciled in the state; 3. owns real or tangible personal property in the state, including property possessed, held or used by another person pursuant to a lease, license, consignment or other arrangement; 4. uses real or tangible personal property that it does not own in the state; 5. has a full or part-time employee acting on its behalf in the state, irrespective of the nature of the employment; 6. has an independent contractor or other non-employee representative acting on its behalf in the state for the purpose of selling, delivering, installing, assembling, maintaining or repairing the corporation's products, or taking orders for or otherwise establishing or maintaining a market for the corporation's products and/or services in the state; 7. owns or uses intangible property in the state where (a) the intangible property generates or is otherwise a source of gross receipts within the state, including through a license, sublicense or franchise, and (b) the activity through which the corporation obtains such gross receipts is purposeful; or 8. does not have the contacts referenced in 1 through 7 but has considerable in-state sales derived through either economic or virtual contacts (see South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)). Other contacts or incidents may subject a corporation to tax jurisdiction depending upon the specific facts.

(c) Employee or Representative Visits. Where a corporation's contacts with the state are limited to visits by an employee or other representative(s) from outside the state, such contacts will generally establish jurisdiction where the visits are lengthy, continuous, regular or systematic. Jurisdiction will also generally be established where in-state visits of an employee provide management or technical oversight or other business assistance with respect to a related person's in-state business activities when the corporation and the related person are engaged in a unitary business. In making this determination the Commissioner will consider the nature of the visits, including the benefits that inure to the corporation's business. A corporation subject to jurisdiction under (3)(b)5. or 6. may nonetheless be exempt from the income measure of the corporate excise — though not the non-income measure or minimum excise — by reason of Public Law 86-272; see 830 CMR 63.39.1(4)(e).

(d) Economic and virtual contacts. The Commissioner will presume that a general business corporation's virtual and economic contacts subject the corporation to the tax jurisdiction of Massachusetts under M.G.L. c. 63, § 39 where the volume of the corporation's Massachusetts sales for the taxable year exceeds five hundred thousand dollars ($500,000). Massachusetts sales for this purpose are sales attributed to Massachusetts pursuant to M.G.L. c. 63, § 38. A corporation subject to jurisdiction under this presumption may nonetheless be exempt from the income measure — though not the non-income measure or minimum excise — by reason of Public Law 86-272. In applying the presumption, the Commissioner will include, with respect to any corporation that has Massachusetts sales, the Massachusetts sales of a related person engaged in a unitary business with such corporation if absent this inclusion no corporation engaged in the unitary business would be subject to the excise.

# (4) Exceptions to jurisdiction under M.G.L. c. 63, § 39 — (a)-(d)

In certain circumstances where a general business corporation would otherwise be subject to Massachusetts tax jurisdiction, an exception may apply:

(a) Property in a Licensed Public Warehouse. A corporation is not subject to the corporate excise solely because of its ownership of tangible personal property stored in a licensed public warehouse in Massachusetts (M.G.L. c. 63, § 39; M.G.L. c. 105, § 1), even where such goods are shipped by common or contract carrier from the public warehouse to locations within or outside Massachusetts — though the exception does not extend to the carrier whose vehicles enter or depart from Massachusetts.

(b) Property in Transit. A corporation is not subject to the excise solely because of its ownership of tangible personal property in actual transit through Massachusetts in the possession and control of a common or contract carrier (without precluding jurisdiction over the carrier itself).

(c) Ownership of Shares. A corporation is not subject to the excise solely because of ownership of shares of stock in a corporation that does business in Massachusetts.

(d) Maintenance of Accounts. A corporation is not subject to the excise solely because of its depositing of funds or maintenance of securities brokerage accounts with financial institutions, unrelated to the corporation, that do business in Massachusetts.

# (4)(e) Public Law 86-272 — certain out-of-state vendors of tangible personal property (as amended Oct. 10, 2025)

Massachusetts is generally precluded from subjecting a general business corporation to the income measure of the corporate excise under M.G.L. c. 63, § 39 when such corporation is protected by the statutory standards set forth in federal law, Public Law 86-272 (15 U.S.C. § 381 et seq.). The Commissioner will generally construe M.G.L. c. 63, § 39 as asserting the tax jurisdiction of Massachusetts to the fullest extent permitted by such federal law. In general, the Public Law 86-272 statutory standards are met with respect to the income measure for a particular year when the exclusive business activity by or on behalf of such corporation in Massachusetts is the solicitation of orders of tangible personal property, provided that all such orders are sent outside the state for approval or rejection, and provided that the orders are filled by shipment or delivery from a location outside the state. Public Law 86-272 does not preclude subjecting a corporation to the income measure when the corporation sells services or licenses intangible property in the state. Also, the statutory standard is not met if the in-state business activity by or on behalf of a corporation, however conducted, includes activity that is not entirely ancillary to the solicitation of orders of tangible personal property. See Wisconsin Dept. of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214 (1992). As an example, in-state activities that are conducted by a vendor through an Internet website accessible by persons in the state may include activity that is not entirely ancillary to the solicitation of orders of tangible personal property, such as the placement of Internet cookies onto the computers or other electronic devices of in-state customers that gather customer search information used to adjust production schedules and inventory amounts, develop new products, or identify new items to offer for sale. Cf. South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018). Activities that take place after a sale will ordinarily not be considered entirely ancillary to the solicitation of such sale. See Wrigley, 505 U.S. 214. The statutory exception set forth in Public Law 86-272 applies only to the income measure of the corporate excise and not to the non-income measure or the minimum excise.

# (5) Financial institution tax jurisdiction — M.G.L. c. 63, § 2 or 2A

(a) General Rule. M.G.L. c. 63, §§ 2 and 2B impose an excise on a financial institution consisting of an income measure and a minimum excise. A financial institution is generally subject to Massachusetts tax jurisdiction pursuant to M.G.L. c. 63, § 1 when it meets the statutory standards, including where the entity is engaged in doing business in the state, construed to the fullest extent permitted by the U.S. Constitution and federal law. (b) Examples of Tax Jurisdiction. Contacts that will generally subject a financial institution to tax jurisdiction include, without limitation, where the institution: 1. is incorporated or organized in the state; 2. has a business location in the state; 3. has employees, representatives or independent contractors conducting business activities on its behalf in the state; 4. maintains, rents or owns any tangible or real property in the state; 5. regularly performs services in the state; 6. regularly engages in transactions with customers in the commonwealth that involve intangible property and result in income flowing to the taxpayer from residents of the state; 7. regularly receives interest income from loans secured by tangible personal or real property located in the state; or 8. regularly solicits and receives deposits from customers in the state. With respect to activities 5 through 8, the Commissioner will presume that one or more such activities are conducted on a regular basis within the state if, with respect to a taxable year: (1) any of such activities are conducted with one hundred or more residents of the state; (2) the taxpayer has $10,000,000 or more of assets attributable to sources within the state; or (3) the taxpayer has in excess of $500,000 in receipts attributable to sources within the state. Where the presumption applies, the taxpayer is required to file a return on the basis that it is subject to Massachusetts tax jurisdiction, but may seek to rebut the presumption in a manner prescribed by the Commissioner.

# (6) Insurance company tax jurisdiction — M.G.L. c. 63, §§ 20 to 29

M.G.L. c. 63, §§ 20 through 29 impose a premiums-based excise on an insurance company when the entity meets the statutory jurisdiction standard set forth in the relevant section. The Commissioner will generally construe those jurisdictional standards as asserting Massachusetts tax jurisdiction to the fullest extent permitted by the U.S. Constitution and federal law (see, e.g., 15 U.S.C. §§ 1011-1015), and will similarly apply this broad jurisdictional standard to all insurance taxes imposed under state law, including the taxes that apply under M.G.L. c. 175 and 176I.

# (7) Corporate partners — partnership activities attributed to partners

(a) General Rule; Partnership Activities Attributed to Partners. Except as provided by 830 CMR 63.39.1(7)(b), a business corporation is subject to the excise under M.G.L. c. 63, §§ 2, 2A or 39, if the corporation is a general or limited partner in a partnership whose activities, if conducted directly by the business corporation, would subject that corporation to the corporate excise under those provisions. In the case of a tiered partnership arrangement the activities of the partnership(s) occupying the lower tier(s) are imputed to all partners holding interests in partnership(s) occupying higher tier(s). In applying this provision, the Commissioner will consider whether the assertion of jurisdiction is limited by the provisions of the U.S. Constitution or federal law. (b) Exception for Publicly Traded Partnerships. A business corporation that merely holds a limited partnership interest in a publicly traded partnership, as defined in Code § 7704, that conducts business activity in Massachusetts, is not subject to the excise under M.G.L. c. 63, §§ 2, 2A or 39, unless the other activities of that corporation establish nexus with Massachusetts.