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Connecticut: In Search of Remote Sales Tax Revenue


 Connecticut takes aggressive stance on remote sales tax.

Online retailer Amazon.com has been collecting sales tax from Connecticut customers since November 1, 2013. Nonetheless, the state is still losing millions every year from untaxed internet sales.

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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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.