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Archive for Monday, October 10, 2011

Connecticut not backing down from fight with Amazon on new tax law

October 10, 2011

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— Connecticut officials are not giving up on requiring Internet sellers to collect state sales taxes, despite signs from online retailer Amazon.com that it has no immediate plans to abide by the state’s new Internet tax law.

State officials confirmed to The Associated Press that Amazon wrote the Department of Revenue Services this month, saying the company is not obligated to abide by the law because it does not have a physical presence in Connecticut. Amazon contends that by not having a physical presence, it does not have to collect and remit taxes to the state, a protection of the U.S. Constitution.

Connecticut plans to press Amazon for the taxes the state believes it should have collected at least during the month or so when the new law was in effect and Amazon still had affiliations with websites in Connecticut through its Amazon Associates Program. Amazon severed those ties in June.

The state could expect up to $9.4 million a year in additional revenue if remote sellers, including Amazon, complied with the new law, according to an estimate by the General Assembly’s Office of Fiscal Analysis. That estimate was based on data from a comparable New York law.

Connecticut officials believe Amazon is obligated in other ways, as well.

“All we have to do is get in the door. Once we get in the door, there are some more opportunities that come,” DRS Commissioner Kevin Sullivan said. Connecticut plans to evaluate some other connections Amazon has with people in the state and start building a case that Sullivan predicted will ultimately be decided in court. He said he didn’t know how much money the state could expect to collect from the month or so that’s in question.

“They’re not fighting against a burden on their ability to do business in the state of Connecticut,” Sullivan said. “They’re fighting to protect an advantage against everybody else who’s doing business in the state of Connecticut.”

Cash-strapped states across the country are grappling with how to capture the sales tax revenues that go uncollected from online purchases, with at least six states enacting laws similar to Connecticut’s as of June, according to the National Conference of State Legislatures. NCSL estimates that all states are losing $23 billion each year, a figure that climbs annually as more people shop on the Internet instead of in their local stores, said Neil Osten, director of NCSL’s Washington, D.C., office.

Connecticut, he said, is estimated to lose $152 million a year from uncollected sales taxes from Internet retailers that don’t currently collect the tax.

Gov. Dannel P. Malloy, who pushed for the Internet tax law as part of his budget plan to fill a $3.3 billion deficit, said he’s committed to the cause for the long haul and believes Connecticut and other states will eventually win the battle.

“This is our initial request, their initial response. This has got miles to go before we sleep,” Malloy said in an interview. “I also believe there are trends at play in the United States that are going to move in the right direction to dissipate the unfair advantage that these kinds of retailers have over job-producers in our state.”

Comments

usesomesense 2 years, 11 months ago

Funny how the state of Kansas jumped on the bandwagon for the 'Streamlined Salestax Project' that was supposed to get states standardized on how they collect sales tax to enable the collection of sales tax across state lines, yet the only impact that it has had here has been to make it FAR more complex for in state businesses that either deliver product or provide on site services.

The feds act like having sales tax on internet sales is an impossible task. This is simply not true. The fact is that local businesses have always suffered due to what's practically a 10% price difference right out of the chute. The fact is that businesses that want to do businesses across state lines should be required to track the destinations and should be subject to a 15% tax rate. The online retailers can't complain about trying to keep track of each jurisdictions salestax and the fed could keep 3% for the handling and reducing the national debt.

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skinny 2 years, 11 months ago

This is stupid! That's makes about as much sense as saying because I go to Texas on vacation Texas should pay sales taxes to Kansas..

Number one, if the online Company does not have a store in the state that is trying to collect the sales tax they is no Federal law that requires them to collect the sales tax. The state law is not enforceable outside the state trying to collect the tax!

Number two, if there becomes a Federal law that requires the states to collect sales tax the online stores will simply move outside the country and once again the sales tax law will not be enforceable!!

I shop online because I don't have to pay the sales tax! 1/3 of my income already goes to taxes. I am not giving them any more then I already do, period!!!

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