http://www.courant.com/politics/hc-pol-online-sales-tax-20180214-story.html#ampshare=http://www.courant.com/politics/hc-pol-online-sales-tax-20180214-story.htmlConnecticut Hunting Down Online Shoppers Who Didn't Pay Sales Taxby Russell Blair
February 15, 2018
The state Department of Revenue Services is combing through customer records from major online retailers to hunt down taxpayers who skipped out on the often-ignored use tax.
Kevin Sullivan, commissioner of the tax department, said it’s part of an effort to ramp-up collection of the use tax; Connecticut taxpayers are supposed to pay the state a 6.35 percent tax on any purchases made out-of-state or online where no sales tax is paid, but the vast majority do not.
“Usually we don’t have the data, but in several cases companies have said … we’ll squeal on our customers and you can beat up on them,†Sullivan said. “The people who sold to them have ratted them out.â€
A tax expert in Washington, D.C., said Connecticut is the first state to take this approach: requesting data from retailers about online purchases by state residents that were not subject to sales tax and checking to see if the customers made required tax payments.
An estimated $70 million of the use tax is evaded in Connecticut annually and compliance with the tax stands at about 12 percent, according to the department.
“The states at large have been reticent to pursue customers for use tax,†said Stephen P. Kranz, a partner and tax attorney at McDermott Will & Emery, a Washington, D.C. law firm. “It’s much easier from an efficiency perspective to get the retailer to collect the tax. But data makes it possible to pursue customers, and Connecticut is the first state to go down that path in a real way.â€
Several taxpayers told The Courant they received letters from the Department of Revenue Services this week detailing information about purchases they made from Newegg, an online retailer of computer components and other electronics headquartered in California.
“Newegg Inc. has provided the Department of Revenue Services records of your online purchases during taxable years 2014, 2015 and 2016,†the letter reads. “According to these records, you made purchases from Newegg in at least one of these years but were not charged Connecticut sales tax. Therefore, you owe state use tax on the items you purchased because you did not pay sales tax to a retailer.â€
The letters contain the total amount of purchases made and the tax due, plus interest and penalties. Sullivan said the state is waiving interest and penalties for taxpayers who send a check promptly, acknowledging that many individuals are still unfamiliar with the use tax. An estimated 3,000 state taxpayers have received the letters.
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