State finds new way to collect Sales Tax for online sales

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HARTFORD, Conn. (WTNH) — If you shop around online for websites that do not collect the Connecticut Sales Tax, watch out; the state is coming after you.

The Department of Revenue Services has found a way to pressure online retailers to send them a record of the stuff your buying online.  It’s been on the books for years. If you buy something out of state you’re supposed to pay the so-called ‘use tax‘ to the state; but there’s never been a way to enforce it so no one paid it, until now.

Thousands of Connecticut residents who have shopped online over the past three years and were not charged the Connecticut Sales Tax, are now hearing from the Connecticut Department of Revenue Services.  The letters have specific amounts and say “you owe state use tax on the items you purchased because you did not pay sales tax to a retailer.”

The letters to thousands of Connecticut residents have been prompted by another letter that the state tax department sent to online retailers saying “D.R.S. is requiring you to provide electronic sales records for all individual sales shipped to Connecticut addresses for calendar years 2014, 2015, and 2016.”  Two hundred online retailers responded by saying they would start collecting the Sales Tax; and many also sent thousands of online purchase records to the D.R.S.

D.R.S. Commissioner Kevin Sullivan estimates the state is losing hundreds of millions in sales tax revenue.

This is a way to put pressure as much on companies as it is on the taxpayers.”

Amazon, the nation’s largest online retailer, does collect the Connecticut Sales Tax on their own retail sales. Amazon came to an agreement with the state a few years ago, when they built their first distribution center here.  Said Sullivan, “The last thing I really want to do is be chasing individuals for their use tax. It makes much more sense to have the companies be collecting it, remitting it. We believe it’s their obligation to do that.”

All of the people with spoke to about this Thursday said they didn’t like it, but were reluctant to go on camera, saying they liked avoiding the tax.

There is an incentive to pay this; Sullivan says pay now and avoid interest and penalties because they will continue to come after you.  The U.S. Supreme Court is scheduled to rule on online state sales tax collections sometime in the spring.

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