Regency Transportation, Inc. v. Commissioner of Revenue , 473 Mass. 459 ( 2016 )

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SJC-11873
REGENCY TRANSPORTATION, INC. vs. COMMISSIONER OF REVENUE.
Suffolk. November 5, 2015. - January 6, 2016.
Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, &
Hines, JJ.
Taxation, Sales and use tax, Abatement. Constitutional Law,
Taxation, Commerce clause, Interstate commerce. Interstate
Commerce.
Appeal from a decision of the Appellate Tax Board.
The Supreme Judicial Court granted an application for
direct appellate review.
Matthew A. Morris (Richard L. Jones with him) for the
taxpayer.
Marikae G. Toye (Joseph J. Tierney with her) for the
Commissioner of Revenue.
Elizabeth J. Atkinson, of Virginia, & Andrew J. Fay &
Patrick E. McDonough, for Massachusetts Motor Transportation
Association & others, amici curiae, submitted a brief.
CORDY, J. Regency Transportation, Inc. (Regency), appeals
from a decision of the Appellate Tax Board affirming in part the
denial of an abatement of the motor vehicle use tax assessed
2
against it under G. L. c. 64I, § 2. We granted Regency's
application for direct appellate review to decide whether an
unapportioned use tax imposed on Regency's interstate fleet of
vehicles violates the commerce clause of the United States
Constitution. For the reasons discussed herein, we conclude it
does not.1
1. Background. The essential facts are not disputed.
Regency is a Massachusetts S corporation that operates a freight
business with terminals in Massachusetts and New Jersey.
Regency is licensed by the Interstate Commerce Commission as an
interstate carrier to operate a fleet of tractors and trailers.
The Regency fleet carries and delivers goods throughout the
eastern United States.
Throughout the tax periods at issue, Regency maintained its
corporate headquarters in Massachusetts, as well as four
warehouses and a combined maintenance facility and terminal
location which it used for repairing and storing vehicles in its
fleet. Regency also operated five warehouses in New Jersey and
two combined maintenance facility and terminal locations there.
Regency performed thirty-five per cent of the maintenance and
repair work on its fleet at its Massachusetts locations and
thirty-five per cent of the work at its New Jersey locations,
1
We acknowledge the amicus brief filed by the Massachusetts
Motor Transportation Association and other State transportation
associations.
3
with the remainder being performed by third parties. All
vehicles in the Regency fleet entered into Massachusetts at some
point during the tax periods at issue, and during these same
periods Regency employed between sixty-three and eighty-three
per cent of its workforce in the Commonwealth.
Regency purchased the vehicles in its fleet from vendors in
New Hampshire, New Jersey, Indiana, and Pennsylvania and
accepted delivery and possession outside the Commonwealth. The
vehicles were registered in New Jersey and bore New Jersey
registration plates. Regency did not pay sales or use tax to
any jurisdiction on its purchases of the vehicles because New
Hampshire does not impose a sales tax and the remaining States
provide an exemption for vehicles engaged in interstate
commerce, known as a "rolling stock exemption." The majority of
States provides such an exemption from sales and use tax;
Massachusetts does not, having abolished its rolling stock
exemption in 1996.
In August, 2010, the Commissioner of Revenue (commissioner)
issued a notice of assessment to Regency pursuant to an audit of
its sales and use tax liabilities for the monthly tax periods
beginning October 1, 2002, and ending January 31, 2008. The
commissioner imposed a use tax on the full purchase price of
each tractor and trailer in Regency's fleet, totaling
$1,472,258.22, including $298,286.61 in interest and $391,323.95
4
in penalties for failure to file use tax returns and failure to
pay use tax. Regency requested full abatement of the
assessment, which the commissioner denied in November, 2010.
Regency timely appealed to the Appellate Tax Board (board) in
January, 2011.
In its appeal, Regency argued that the Commonwealth's
imposition of a use tax on vehicles engaged in interstate
commerce violated the commerce clause of the United States
Constitution and the equal protection clauses of the United
States and Massachusetts Constitutions. Regency also argued
that its reliance on a "letter ruling" issued by the Department
of Revenue (department) under prior law constituted reasonable
cause for the commissioner to abate the penalties assessed for
failure to file returns and pay the tax.
The board rejected Regency's arguments as to the commerce
and equal protection clauses and concluded that Regency was
liable for the Massachusetts use tax on the full sales price of
its vehicles that were either stored or used in the
Commonwealth. It ruled that the tax was permissible under the
commerce clause and administered in a manner consistent with the
equal protection clauses of the United States and Massachusetts
Constitutions. The board noted that "while the fact that
Massachusetts imposes a use tax on the use of interstate
vehicles in the Commonwealth when many [S]tates do not may
5
increase costs for taxpayers who use vehicles here, this
difference is not unconstitutional discrimination because
Massachusetts allows a credit for any taxes paid to other
jurisdictions."
The board, however, abated the penalties imposed after
finding that the commissioner's continued publication of
incorrect guidance created uncertainty constituting reasonable
cause for Regency's failure to file use tax returns and pay use
tax. Regency timely appealed the board's decision, and
petitioned this court for direct appellate review, which we
granted. On appeal to this court, Regency challenges only the
board's determination that the motor vehicle use tax does not
violate the commerce clause.
2. General Laws c. 64I, § 2. General Laws c. 64I, § 2,
imposes a tax on the "storage, use or other consumption in the
commonwealth of tangible personal property." "The use tax was
designed to prevent the loss of sales tax revenue from out-of-
State purchases." M & T Charters, Inc. v. Commissioner of
Revenue, 404 Mass. 137, 140 (1989). The use tax and the sales
tax "are complementary components of our tax system, created to
reach all transactions, except those expressly exempted, in
which tangible personal property is sold inside or outside the
Commonwealth for storage, use, or other consumption within the
Commonwealth" (quotation and citation omitted). Town Fair Tire
6
Ctrs., Inc. v. Commissioner of Revenue, 454 Mass. 601, 605
(2009). They are mutually exclusive and the tax rate is
identical. See G. L. c. 64H, § 2; G. L. c. 64I, § 2.
The statute creates a rebuttable presumption that property
brought into the Commonwealth by the purchaser within six months
of purchase was purchased for storage, use, or other consumption
in Massachusetts. G. L. c. 64I, § 8 (f). See 830 Code Mass.
Regs. § 64H.25.1(3)(c)(2) (1993). The use tax imposed under
c. 64I applies to transfers of title or possession of a motor
vehicle where the vehicle transferred is thereafter stored,
used, or otherwise consumed in Massachusetts. 830 Code Mass.
Regs. § 64H.25.1(3)(a) (1993).
A purchaser may be exempt from the use tax if it has paid a
comparable use or sales tax in another jurisdiction, and, if the
tax paid is less than the corresponding Massachusetts tax, the
purchaser may offset its Massachusetts tax liability by any
amount previously paid to the other jurisdiction. G. L. c. 64I,
§ 7 (c) (§ 7 [c] exemption).2 As amplified in the department's
2
General Laws c. 64I, § 7 (c), exempts from the use tax
"[s]ales upon which the purchaser has paid a tax or made
reimbursement therefor to a vendor or retailer under the laws of
any [S]tate or territory of the United States, provided that
such tax was legally due without any right to a refund or credit
thereof and that such other [S]tate or territory allows a
corresponding exemption with respect to the sale or use of
tangible personal property or services upon which such a sales
or use tax was paid to this [S]tate. To the extent that the tax
imposed by this chapter is at a higher rate than the rate of tax
7
regulations, a § 7 (c) exemption exists for the sale or transfer
of a vehicle that is subsequently brought to or used in
Massachusetts if (1) "the purchaser or the transferee [has paid]
a sales or use tax on the vehicle to the [S]tate or territory in
which the sale or transfer occurred"; (2) "the sales or use tax
[has been paid] by the purchaser or the transferee and [was]
legally due the State or territory"; (3) "the purchaser or the
transferee [has not received and does not] have a right to
receive a refund or credit of the sales or use tax from the
[S]tate or territory in which the sale or transfer occurred";
and (4) "the [S]tate or territory to which the sales or use tax
was paid [allows] a corresponding exemption with respect to
motor vehicle sales and use taxes paid to Massachusetts." 830
Code Mass. Regs. § 64H.25.1(7)(g) (1996). The department
regulations further provide that sales or transfers are exempt
from the imposition of a sales or use tax if their taxation is
impermissible under the Constitution or laws of the United
States. 830 Code Mass. Regs. § 64H.25.1(7)(h) (1996).
Regency does not dispute that it used and stored its
tractors and trailers in Massachusetts during the tax periods at
issue, nor does it dispute that it did not pay sales or use tax
to any other State on the purchase of the vehicles. The § 7 (c)
in the first taxing jurisdiction, this exemption shall be
inapplicable and the tax imposed by this chapter shall apply to
the extent of the difference in such rates."
8
exemption delineated in 830 Code Mass. Regs. § 64H.25.1(7)(g)
therefore does not apply. Consequently, we focus our inquiry on
whether the use tax is otherwise impermissible under the United
States Constitution, as Regency contends.
3. Commerce clause. The Commonwealth's taxing powers are
limited by the commerce clause's broad grant of authority to the
Federal government to "regulate commerce with foreign nations
and among the several [S]tates." Art. 1, § 8, of the United
States Constitution. The United States Supreme Court has
interpreted the clause to comprehend a negative, or dormant,
command that prevents the States from unduly burdening
interstate commerce, even where Congress has not otherwise
acted. See D.H. Holmes Co. v. McNamara, 486 U.S. 24, 29-30
(1988). "The dormant commerce clause seeks to prevent economic
'Balkanization,' . . . and to protect an area of free trade
among the several States" (quotations and citation omitted).
DIRECTV, LLC v. Department of Revenue, 470 Mass. 647, 653, cert.
denied, 136 S. Ct. 401 (2015). The dormant commerce clause is
implicated where, as here, a State imposes a tax that touches on
interstate commerce. Aloha Freightways, Inc. v. Commissioner of
Revenue, 428 Mass. 418, 421 (1998).
Our review of commerce clause challenges to State taxes
focuses on "the practical effect of a challenged tax" (citation
omitted). Commonwealth Edison Co. v. Montana, 453 U.S. 609, 615
9
(1981). Interstate commerce does not enjoy a "'free trade'
immunity from State taxation," George S. Carrington Co. v. State
Tax Comm'n, 375 Mass. 549, 551-552 (1978), but rather "may be
made to pay its way" within the bounds of the commerce clause.
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 281 (1977)
(Complete Auto). A State tax will be sustained under the
commerce clause if it meets the test articulated by the Supreme
Court in Complete Auto, supra at 279, which requires that the
tax "[1] is applied to an activity with a substantial nexus with
the taxing State, [2] is fairly apportioned, [3] does not
discriminate against interstate commerce, and [4] is fairly
related to the services provided by the State" (Complete Auto
test).
4. Discussion. In reviewing the board's final decision,
we affirm findings of fact by the board that are supported by
substantial evidence. M & T Charters, Inc., 404 Mass. at 140.
"We review conclusions of law, including questions of statutory
construction, de novo." New England Forestry Found., Inc. v.
Assessors of Hawley, 468 Mass. 138, 149 (2014), citing
Bridgewater State Univ. Found. v. Assessors of Bridgewater, 463
Mass. 154, 156 (2012).
Because the parties agree that Regency's activities in
Massachusetts constitute a "substantial nexus" with the
10
Commonwealth, we begin our analysis with the second prong of the
Complete Auto test.
a. Fair apportionment. The fair apportionment requirement
of the Complete Auto test ensures "that each State taxes only
its fair share of an interstate transaction." Goldberg v.
Sweet, 488 U.S. 259, 260-261 (1989). "Apportionment also seeks
to avoid multiple taxation by different States." Aloha
Freightways, Inc., 428 Mass. at 421.
There is no set formula for determining whether a tax is
fairly apportioned; rather, we examine whether the tax is both
internally and externally consistent. Aloha Freightways, Inc.,
428 Mass. at 422, quoting Goldberg, 488 U.S. at 261.
i. Internal consistency.3 A tax is internally consistent
if it is "structured so that if every State were to impose an
3
The parties disagree about whether we may reach the issue
of internal consistency on appeal. In the proceedings below,
Regency Transportation, Inc. (Regency), acknowledged that the
tax is internally consistent. On appeal, however, it takes the
opposite position, and further argues that it may challenge the
statute as internally inconsistent in spite of its concession
below because "the issue of law presented on appeal is whether
the use tax is fairly apportioned [and] not the precise means
. . . by which this Court could conclude that the use tax is not
fairly apportioned," i.e., whether it meets both prongs of the
fair apportionment test. The Commissioner of Revenue
(commissioner) is of the view that Regency's concession
effectively waived the argument, barring its revival on appeal.
See G. L. c. 58A, § 13 ("The court shall not consider any issue
of law which does not appear to have been raised in the
proceedings before the [Appellate Tax Board (board)]"); Minchin
v. Commissioner of Revenue, 393 Mass. 1004, 1005 (1984) ("[t]o
raise a constitutional question on appeal to this court from the
11
identical tax, no multiple taxation would result." Aloha
Freightways, Inc., supra, quoting Goldberg, supra.
In Regency's view, the § 7 (c) exemption is rendered
unconstitutional by the language in 830 Code Mass. Regs.
§ 64H.25.1(7)(g)(1)(a), which exempts from liability a taxpayer
who has paid taxes "to the [S]tate or territory in which the
sale or transfer occurred." Regency believes that this language
limits the exemption such that it is not available where a sales
or use tax was paid to a State where sale or transfer did not
occur, potentially subjecting purchasers to multiple taxation.
To illustrate this possibility, Regency proposes a hypothetical
situation whereby an interstate carrier purchases a tractor in
New Hampshire (which has no sales tax) and drives the tractor to
New Jersey, where it is registered. The carrier pays no sales
or use tax in New Jersey because the State provides a rolling
stock exemption. The carrier then drives the tractor to
board, the taxpayer must present the question to the board and,
in so doing, make a proper record for appeal. Otherwise, the
taxpayer waives the right to press the constitutional argument."
We have not had occasion to decide whether an appellant may
raise an argument in support of its constitutional claim on
appeal where it raised the claim below but then conceded the
argument. For the purposes of this appeal, we assume without
deciding that Regency waived its internal consistency argument
by conceding the matter below. We nevertheless reach the issue
because the matter has been fully briefed on the merits, there
is a public interest in promptly resolving the issue, and the
answer to be given is reasonably clear and dependent on issues
of general application and not on factual determinations
specific to the case at hand. See Brown v. Guerrier, 390 Mass.
631, 632-633 (1983).
12
Vermont, which provides no rolling stock exemption, and is
assessed the Vermont use tax. The carrier then drives the truck
to Massachusetts, where it is assessed the Massachusetts use
tax. According to Regency, Massachusetts will not credit the
Vermont use tax paid because the tax was not paid "to the State
or territory in which the sale or transfer occurred" per the
language of § 64H.25.1(7)(g). The result, Regency asserts, is
that the carrier is assessed the use tax twice because the
language precludes its eligibility for the exemption and renders
the scheme internally inconsistent.
We do not agree with Regency's interpretive legerdemain,
which ignores the "catch-all" exemption provided by 830 Code
Mass. Regs. § 64H.25.1(7)(h), which exempts a taxpayer from
Massachusetts' use tax liability, beyond the exemptions set
forth in § 64H.25.1(7)(g):
"if the use of the vehicle in Massachusetts as part of
interstate commerce is exempt from use tax under the
Constitution or laws of the United States. For the
purposes of this subsection, the use of such a vehicle in
Massachusetts as part of interstate commerce is exempt from
Massachusetts use tax under the Constitution or laws of the
United States only if application of the use tax violates
the test applied by the United States Supreme Court
in [Complete Auto]."
The commissioner responds to this hypothetical by
explaining that, because the hypothetical imposition of the use
tax would violate the Complete Auto test due to its potential
for multiple taxation, it is, by its terms, otherwise exempted
13
under § 64H.25.1(7)(h). Consequently, Massachusetts would
either not impose a use tax, or if the Vermont tax rate was
lower than the Massachusetts tax rate, Massachusetts would
credit the amount of the tax paid to Vermont. We agree with the
commissioner's reading of the regulations. See Biogen IDEC MA,
Inc. v. Treasurer & Receiver Gen., 454 Mass. 174, 187 (2009)
("We accord substantial deference to the agency's regulations
and apply all rational presumptions in favor of the validity of
the administrative action and [do] not declare it void unless
its provisions cannot by any reasonable construction be
interpreted in harmony with the legislative mandate"). Because
any potential for multiple taxation under § 64H.25.1(7)(g) is
averted by the language of § 64H.25.1(7)(h), with respect to use
taxes paid to another jurisdiction, we conclude that the use tax
is internally consistent. See, e.g., M & T Charters, Inc., 404
Mass. at 143. This conclusion is dependent upon the
commissioner's interpretation of the department's regulations as
presented to the court.
ii. External consistency. We turn next to the question of
whether the use tax is externally consistent. This inquiry is
satisfied where "the State has taxed only that portion of the
revenues from the interstate activity which reasonably reflects
the in-state component of the activity being taxed." Aloha
Freightways, Inc., 428 Mass. at 422, quoting Goldberg, 488 U.S.
14
at 262. To make this determination, we examine the "in-state
business activity which triggers the taxable event and the
practical or economic effect of the tax on that interstate
activity." Goldberg, supra. Here, the in-State activity at
issue is the "storage, use or other consumption in the
commonwealth of tangible personal property." G. L. c. 64I, § 2.
There are ample facts to support the board's finding that
Regency's tax liability reasonably reflects the in-State
activity being taxed. Regency has used all of the tractors and
trailers in its fleet in Massachusetts, and stores and maintains
its fleet, at least in part, in the Commonwealth.
Nevertheless, Regency contends that the tax is externally
inconsistent because the tax base on the property engaged in
interstate commerce (tractors and trailers) is not apportioned
reasonably to reflect the in-State activity being taxed, which
it says is its use of Commonwealth's roads.4 We disagree with
this characterization, as G. L. c. 64I, § 2, is not so limited
4
For this proposition, Regency cites a decision from the
Alabama Court of Appeals, Boyd Brothers Transp., Inc. v. State
Dep't of Revenue, 976 So. 2d 471, 482 (Ala. App. 2007), which
struck down an unapportioned use tax on the value of trucks used
in interstate commerce as violating the commerce clause. We are
not bound by this decision, but note that the court failed to
consider the issue of credit provisions in lieu of
apportionment, and deviated from a decision of its own supreme
court, which upheld a use tax where a credit was available to
prevent multiple taxation. See Ex parte Fleming Foods of Ala.,
Inc., 648 So. 2d 577, 579-580 (Ala. 1994). Accordingly, Boyd
Brothers Transp., Inc., is irrelevant to our analysis.
15
in its scope and application. The statute, by its terms,
applies to use, storage, or consumption, and Regency's
activities in the Commonwealth are not limited only to its use
of the Commonwealth's roads.
Moreover, the Supreme Court has, in considering a challenge
to a sales tax, rejected the argument that a tax must be
apportioned to satisfy the external consistency requirement,
stating that it has "consistently approved taxation of sales
without any division of the tax base among different States, and
[has] instead held such taxes properly measurable by the gross
charge for the purchase, regardless of any activity outside the
taxing jurisdiction that might have preceded the sale or might
occur in the future." Oklahoma Tax Comm'n v. Jefferson Lines,
Inc., 514 U.S. 175, 186 (1995) (Jefferson Lines, Inc.). The
taxpayer in that case argued that Oklahoma should be limited to
imposing sales tax only on an apportioned value of a bus ticket
that represented the miles of the journey traversed in Oklahoma.
Id. at 191-192.
The court rejected the argument that the tax must be
apportioned based on mileage simply because it was possible to
do so where the taxpayer had otherwise failed to demonstrate
that the unapportioned tax was grossly out of proportion to
taxed activity transacted in Oklahoma. Id. at 195-196. The
Court explained that there was "no reason to leave the line of
16
longstanding precedent and lose the simplicity of our general
rule sustaining sales taxes measured by full value." Id. at
196. It concluded that the Oklahoma tax was therefore
externally consistent, "reaching only the activity taking place
within the taxing State, that is, the sale of the service." Id.
Similarly, the motor vehicle use tax need not be
apportioned, so long as we can discern the "economic
justification for the State's claim" and determine that the use
tax does not "reach[] beyond that portion of value that is
fairly attributable to economic activity within the taxing
State." Id. at 185. The use tax is intended to "to prevent the
loss of sales tax revenue from out-of-State purchases."
Commissioner of Revenue v. J.C. Penney Co., 431 Mass. 684, 687
(2000), quoting M & T Charters, Inc., 404 Mass. at 140. Given
this intent, the tax is properly measurable by the sale value of
a vehicle that is subsequently brought to the Commonwealth for
storage, use, or other consumption. Here, the use tax imposed
on Regency is reasonably related to the in-State activity being
taxed, which includes a great deal more than the mere use of its
roads, and Regency is not subject to the imposition of multiple
use or sales taxes in other jurisdictions. Accordingly, the tax
is externally consistent. Because both internal and external
consistency requirements are met, we hold that the use tax is
17
fairly apportioned in keeping with the requirements of the
commerce clause.
b. Discrimination against interstate commerce. The third
prong of the Complete Auto test examines whether a tax
discriminates against interstate commerce. Although the use tax
is imposed at the same rate as the sales tax and is levied on
residents and nonresidents alike, see G. L. c. 64I, § 2, Regency
argues that the use tax is nevertheless discriminatory because
the tax, when divided by the miles actually driven by Regency
vehicles in Massachusetts, is significantly greater for Regency
than for intrastate companies. As a result, Regency says, the
Massachusetts use tax places it at a competitive disadvantage as
compared to companies doing business in States that impose no
sales tax or provide rolling stock exemptions, and this
disadvantage must be ascribed to the discriminatory nature of
the use tax. See Comptroller of Treasury of Md. v. Wynne, 135
S. Ct. 1787, 1802 (2015). We disagree.
As an initial matter, Regency fails to articulate why we
should assess the impact of the use tax based on the miles
traveled by the Regency fleet within the Commonwealth. As noted
earlier, the use tax is imposed in connection with Regency's use
and storage of the fleet within the Commonwealth, and not solely
based on its use of roads within the Commonwealth.
18
For this reason, Regency's reliance on the holdings in
American Trucking Ass'ns, Inc. v. Scheiner, 483 U.S. 266 (1987),
and American Trucking Ass'ns, Inc. v. Secretary of Admin., 415
Mass. 337 (1993), is misplaced. In both cases, the courts found
that flat, unapportioned user fees imposed on trucking companies
for the use of State roads placed an impermissible burden on
interstate trucking companies that were potentially required to
pay similar fees in multiple jurisdictions, whereas their purely
intrastate competitors would have only one fee to pay. See
American Trucking Ass'ns, Inc., 483 U.S. at 284-285; American
Trucking Ass'ns, Inc., 415 Mass. at 345. Regency believes that
the use tax similarly discriminates against interstate commerce
because, when broken down by cost per mile, the result is that
Regency bears a heavier burden than other interstate carriers
not subject to the Massachusetts use tax and intrastate carriers
traveling only in Massachusetts, rendering the tax
unconstitutional.
This argument misconstrues the courts' decisions in the
American Trucking Ass'ns cases. First, the fees in both cases
were flat fees imposed solely for the use of the roads. See
American Trucking Ass'ns, Inc., 483 U.S. at 273, 283-284;
American Trucking Ass'ns, Inc., 415 Mass. at 339-340. As we
have emphasized throughout this decision, the use tax is not a
tax on the use of the Commonwealth's roads, but rather on the
19
privilege of using and storing the tractors and trailers in the
State. Thus, "miles traveled within the State simply are not a
relevant proxy for the benefit conferred upon the parties[']
[use and storage]" of the fleet within Massachusetts. Jefferson
Lines, Inc., 514 U.S. at 199.
Second, in the American Trucking Ass'ns cases, the courts
found that the flat fee was internally inconsistent in violation
of the commerce clause because taxpayers were potentially
subject to the same tax in multiple jurisdictions, which
resulted in the additional cost per mile for interstate
carriers. See American Trucking Ass'ns, Inc., 483 U.S. at 284-
285; American Trucking Ass'ns, Inc., 415 Mass. at 345-346. As
discussed supra, the use tax is internally consistent because of
the exemptions provided in G. L. c. 64I, § 7 (c), and 830 Code
Mass. Regs. § 64H.25.1(7)(g) and (h). For these reasons,
Regency's reliance on these cases is inapposite.
We also reject Regency's position that because
Massachusetts chooses to tax an activity that other States do
not, the tax is discriminatory. Regency urges us to consider
"not the formal language of the tax statute but rather its
practical effect." Comptroller of Treasury of Md., 135 S. Ct.
at 1795, quoting Complete Auto, 430 U.S. at 279. In doing so,
we agree with the board, and not Regency, that "[d]iscrimination
results when a [S]tate subjects taxpayers doing business outside
20
of the [S]tate to disparate tax treatment from those based
inside the [S]tate, not when a [S]tate subjects all taxpayers to
tax on a transaction that another [S]tate may exempt." "The
adverse economic impact in dollars and cents upon a participant
in interstate commerce for crossing a [S]tate boundary and thus
becoming subject to another State's taxing jurisdiction is
neither necessary to establish a commerce clause violation . . .
nor [is it] sufficient" (citations omitted). American Trucking
Assn's, Inc., 483 U.S. at 283, n.15.5 Regency "seeks to use the
commerce clause of the United States Constitution not as
protection against multiple or discriminatory taxation, but as
an escape from any taxation at all. This the Constitution does
not permit." M & T Charters, Inc., 404 Mass. at 143-44.
c. Relation to State services. The final prong of the
Complete Auto test requires that the use tax be "fairly related"
to the services provided by the State. Regency again invokes
its argument that because the use tax is not apportioned based
on miles traveled in the Commonwealth, the measure of the use
5
Nor do we agree with Regency's assertion that the statute
and regulations give the commissioner unfettered authority to
assess the use tax on all interstate tractors and trailers
brought into the Commonwealth. Such a result is contrary to the
plain language of G. L. c. 64I, § 7, and 830 Code Mass. Regs.
§ 64H.25.1(7)(c), (g), and (h). Not only may a party rebut the
presumption that it is bringing a vehicle into the Commonwealth
for storage, use, or other consumption, it is also exempted from
the use tax where it has already paid a sales or use tax to
another State and otherwise meets the statutory requirements for
the exemption.
21
tax imposed cannot bear a reasonable relation to the services
provided to it by the State. This argument fails, however,
because the commerce clause does not require such an exacting
measurement. The fair relation prong
"requires no detailed accounting of the services provided
to the taxpayer on account of the activity being taxed,
nor, indeed, is a State limited to offsetting the public
costs created by the taxed activity . . . [rather] Complete
Auto's fourth criterion asks only that the measure of the
tax be reasonably related to the taxpayer's presence or
activities in the State."
Jefferson Lines, Inc., 514 U.S. at 199-200.
Thus, the tax need not relate directly to the interstate
activity at issue, that is, driving the trucks; rather, the
strictures of the commerce clause are satisfied where the
taxpayer receives "police and fire protection, the use of public
roads and mass transit, and the other advantages of civilized
society." Goldberg, 488 U.S. at 267, citing D.H. Holmes Co.,
486 U.S. at 32. See Towle v. Commissioner of Revenue, 397 Mass.
599, 606 (1986); George S. Carrington Co., 375 Mass. at 553-554
(1978). Regency is incorporated and headquartered in
Massachusetts. The majority of its workforce is employed here.
It also uses, stores, and maintains its vehicles in the
Commonwealth. Given the nature and extent of Regency's
activities in the Commonwealth, and the benefits it receives
consonant with its presence here, we conclude the tax is fairly
related to Regency's activities in the Commonwealth.
22
Conclusion. Based on the foregoing analysis, we conclude
that the motor vehicle use tax, G. L. c. 64I, § 2, meets the
requirements of the Complete Auto test and therefore does not
violate the commerce clause. On account of Regency's use and
storage of its trucking fleet in the Commonwealth, the
Commonwealth may require Regency to "pay its way," and the
Commonwealth's method of doing so is well within the bounds of
the commerce clause. Accordingly, we affirm the decision of the
board.
So ordered.