Connecticut: In Search of Remote Sales Tax Revenue
- Apr 9, 2015 | Gail Cole
According to a February 2014 Sales Tax Initiative Collection Report created by the Connecticut Tax Commissioner, Governor Malloy “took a big step” in addressing the problem of remote sales tax when he reached an agreement Amazon in February 2013. The online retailer built a fulfillment center in the state (taking advantage of generous state and local incentives) and now collects Connecticut sales tax. Many other remote sellers, lacking a physical presence in the state, do not.
Finding a way to collect that untapped remote sales tax revenue is top of mind for Revenue Commissioner Kevin Sullivan. The commissioner recently told Tax Analysts that “the Amazon agreement, along with other factors involving similar retailers” is generating $15 million in annual revenue – “and then some.” Nonetheless, “the state is missing out on $80 million to $90 million a year in revenue from untaxed transactions with remote sellers,” according to his estimations.
To capture that missing revenue, said Sullivan, the state will continue to “push the envelope hard, on what’s called economic nexus… it’s the far edge of being able to demonstrate that you have a presence in the state of Connecticut and therefore are subject to paying sales tax.”
A federal solution
As Connecticut strives to capture remote sales tax revenue, federal lawmakers are once again considering legislation that would allow states with simplified sales tax to collect sales tax from certain remote sellers. The Marketplace Fairness Act of 2015 is similar to the 2013 version that passed the Senate but failed to come to a vote in the House. Read the text of Senate Bill 698.
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