Circuit City Stores, Inc. v. Commissioner of Revenue

439 Mass. 629, 790 N.E.2d 636 (2003)

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Circuit City Stores, Inc. v. Commissioner of Revenue

Massachusetts Supreme Judicial Court
439 Mass. 629, 790 N.E.2d 636 (2003)

Facts

Circuit City Stores, Inc. (Circuit City) (plaintiff) operated retail electronics stores throughout New England. For customers’ convenience, Circuit City offered customers the option of purchasing merchandise at one Circuit City store but picking up the merchandise from a different Circuit City store. Circuit City called such sales “alternative-location sales” and determined how each sale would be taxed based on the location where the customer picked up the merchandise. In an alternative-location-sale transaction, a Circuit City employee entered the sale into Circuit City’s computerized inventory system and reserved the purchased merchandise for the customer at the designated pickup store. The purchasing store then gave the customer a receipt that the customer could present at the pickup store to receive the reserved merchandise. One common example of alternative-location sales involved Circuit City stores in Massachusetts and New Hampshire. Because New Hampshire collected no state sales tax, customers often purchased merchandise at Massachusetts stores and picked up the merchandise at New Hampshire stores to avoid Massachusetts sales tax. The Massachusetts Commissioner of Revenue (the commissioner) (defendant) conducted an audit of Circuit City in the mid-1990s and determined that Circuit City owed over $172,000 in sales tax on alternative-location sales over a three-year period in which customers had purchased merchandise in Massachusetts but picked up that merchandise in New Hampshire. Circuit City paid the assessed tax and then sought an abatement of the amount paid. The commissioner denied Circuit City’s abatement petition, and the Appellate Tax Board (the board) affirmed, holding that the alternative-location sales qualified as Massachusetts sales subject to Massachusetts sales tax. Circuit City appealed the board’s decision.

Rule of Law

Issue

Holding and Reasoning (Greaney, J.)

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