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Commissioner says it’s a matter of fundamental fairness

Commissioner of Revenue Services Kevin Sullivan said today that the state is stepping up its effort to collect sales taxes not paid by on-line and other out-of-state retailers with a significant volume of sales into Connecticut.  Current state law requires out-of-state sellers of goods that have a substantial economic presence in the state to collect and remit sales tax.  If not, the Department of Revenue Services (DRS) is authorized to require disclosure of untaxed sales and pursue collection.  While compliance has significantly increased in recent years, DRS estimates that at least $70 million is being evaded annually. 

“This is a matter of fundamental fairness,” Commissioner Sullivan said. “Businesses should be able to compete on a level playing field.  That’s not possible when out-of-state retailers promote, facilitate, contract and deliver the same goods and services as in-state businesses but only Connecticut businesses bear the burden of tax collection and the pricing disadvantage of including sales tax.  It’s also a burden on consumers who are legally responsible to pay use tax for untaxed purchases of goods and services.  And, when any group does not pay its fair share, everyone else pays for it.”

Added Sullivan, “We are not going to chase out-of-state retailers that make a modest amount of sales into Connecticut.  We are going to close this tax loophole for big retailers doing big business in Connecticut and not competing fairly.  States have waited for decades in the hope that Congress would help, but that is clearly not going to happen.  So it’s up to the states to assure the promise of the federal Commerce Clause that neither in-state nor out-of-state retailers will have an unfair advantage in the marketplace and in taxes paid to help maintain that marketplace.”


Tim Phelan, President of the Connecticut Retail Merchants Association, commended the efforts by DRS, saying, “All that our main street retailers expect is a chance to compete fairly.  That’s not happening when out-of-state on-line retailers and other sellers of goods operate tax free online.”