## Facts

- Circuit City Stores, Inc., a national electronics retailer, operated multiple retail stores in Massachusetts and neighboring states, including New Hampshire.
- Circuit City offered “alternative location sales,” allowing a customer to purchase merchandise at a Massachusetts store and select a New Hampshire store as the pickup location.
- In these transactions, Massachusetts sales staff negotiated the sale, completed the agreement, accepted payment, and entered the transaction into Circuit City’s inventory system to reserve goods at the designated pickup store.
- The Massachusetts store issued the customer a receipt used to obtain the merchandise at the New Hampshire store.
- Circuit City credited these sales to the Massachusetts store, and Massachusetts sales representatives received commissions.
- Following an audit for April 1, 1993 through March 31, 1996, the Commissioner of Revenue assessed additional Massachusetts “sales/use” tax, plus interest and penalties, on Massachusetts-purchase/New Hampshire-pickup transactions.
- Circuit City paid and sought an abatement, asserting the transactions were New Hampshire sales not subject to Massachusetts sales tax.

## Issues

1. Whether purchases made at Massachusetts Circuit City stores but picked up at New Hampshire Circuit City stores were “sales at retail in the commonwealth” taxable under G. L. c. 64H, § 2.
2. Whether such transactions instead constituted out-of-state purchases subject, if at all, only to Massachusetts use tax under G. L. c. 64I, § 2 when the goods were later brought into Massachusetts.

## Decision

- The Supreme Judicial Court affirmed the Appellate Tax Board’s decision sustaining the assessment.
- The court held the transactions were taxable Massachusetts sales under G. L. c. 64H, § 2 because title passed in Massachusetts.
- The court rejected Circuit City’s argument that the sales occurred in New Hampshire merely because customers took physical possession there.
- The court noted that any unresolved matters about credits or the precise net liability were to be addressed by the Commissioner through the abatement process under G. L. c. 62C, § 37.

## Legal Principles

- Massachusetts sales tax under G. L. c. 64H, § 2 applies to “sales at retail in the commonwealth,” determined by the legal situs of the sale rather than the location of customer pickup.
- Under the UCC (G. L. c. 106), the place where title passes—based on the parties’ agreement or, absent explicit agreement, where the seller completes performance as to delivery—guides where the sale occurs for sales-tax purposes.
- Where negotiation, agreement, and payment occur in Massachusetts, and the retailer treats the transaction as a Massachusetts sale (including crediting the Massachusetts store and paying Massachusetts commissions), title may be found to pass in Massachusetts even if the buyer later takes possession out of state.
- The use tax under G. L. c. 64I, § 2 does not displace the sales tax when the transaction is properly characterized as a Massachusetts sale.

## Conclusion

Massachusetts could impose sales tax on Circuit City’s Massachusetts-purchase/New Hampshire-pickup transactions because the sales were completed in Massachusetts and title passed there, making them “sales at retail in the commonwealth,” with any credit or abatement computations left to the Commissioner.


Circuit City Stores, Inc. v. Comm’r of Revenue, 439 Mass. 629, 790 N.E.2d 636 (2003)