Massachusetts Court Rules on Drop Shipments

A Massachusetts court found that a wholesale distributor was not responsible for sales or use tax on shipments it made on behalf of internet retailers. The property was shipped to Massachusetts but not delivered as defined by other relevant court cases. Under the arrangement between the internet retailer and the distributor, title passed to the retailer at the point of shipment, which was outside the State of Massachusetts. The court found that the connections between the distributor and the customers were not enough to qualify as a relationship between the two parties. (Memorandum Opinion, U.S. Bankruptcy Court, District of Delaware, MA – In re: Valley Media, Inc. December 29, 2004)

Posted on February 15, 2005