Finds teachers act as in-state sales representatives

For Immediate Release:                                                                                         Monday, March 19, 2012

Hartford – Overturning the trial court’s ruling and upholding the state’s Department of Revenue Services (DRS), the Connecticut Supreme Court today decided that Missouri-based Scholastic Book Club Inc. has sufficient presence in the state to meet the requirements for collecting and remitting sales tax in Connecticut. The decision marks an important step in holding out-of-state retailers to the same taxation rules as their Connecticut counterparts.

The court’s decision is based on the fact that some 14,000 Connecticut classroom teachers acted as the company’s representatives soliciting, processing, and delivering book sales to students. While not compensated for their services, teachers received book catalogs from the company, distributed the catalogs to students, collected orders and payment from students, forwarded the orders and payment to the out-of-state company, received shipment and distributed the books to the students. New teachers are also asked to contact the company by telephone in order to learn this sales process.

Commenting on the decision, DRS Commissioner Kevin Sullivan said, “Justice Zarella’s careful and thoughtful opinion on behalf of the unanimous court makes clear that the activities of teachers in Connecticut on behalf of this out-of-state bookseller objectively fall well within the scope of acting as sales representatives for purposes of doing taxable business in our state. The decision is also a masterful review of the state of constitutional law under the federal Commerce Clause and the practical circumstances in this case establish sufficient contacts or nexus within Connecticut to uphold taxability. As such, the Connecticut Supreme Court’s decision offers a more level playing field for commercial competition and a common sense understanding that the framers never intended to bar state taxation that is no more or less burdensome on out-of-state sellers doing business here than on Connecticut-based businesses.”

A copy of the court’s decision is attached.

Media calls should be directed to the communications office at (860) 297-5610 or emailed to sarah.kaufman@po.state.ct.us.

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