There are a number of options for Store Pickup via [these extensions](http://www.magentocommerce.com/magento-connect/catalogsearch/result/?q=store+pickup&pl=0)

To apply tax to purchases from Massachusetts in the admin go to  
`Sales -> Tax -> Manage Tax Zones and Rates`  
Click Add New Tax Rate and create the tax rate for Massachusetts and click save.

Then go to Sales -> Tax -> Manage Tax Rules and click Add New Tax Rule.  Here you can select your Massachusetts Zone/Rate and create a rule for when and who to apply the Tax Zone/Rate to (*i.e.* you may apply the rule to general customers but not wholesalers)

Alternatively this [blog explains](http://naileditdesign.com/how-to-add-store-pick-up-in-magento/) a way to use Flat Rate shipping instead of an extension. The only issue here is that it takes over your Flat Rate shipping turning it into In Store Pickup.  This may work for your project but only if you do not need Flat Rate shipping.