Connecticut Lawmakers OK Amazon-Type Marketplace Sales Tax Bill

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Ryan Prete

Connecticut could soon become the sixth state to require marketplace facilitators like Amazon.com Inc. and Etsy Inc. to collect and remit sales and use tax on behalf of their third-party sellers.

As of May 16, S.B. 417 hadn’t been sent to Gov. Dannel Malloy (D) for his signature, but a representative from the Senate Clerk’s Office told Bloomberg Tax it must be sent by May 19. Malloy would then have five days to consider the bill.

Max Behlke, director of budget and tax for the National Conference of State Legislatures, told Bloomberg Tax he would be “shocked” if Malloy didn’t sign the bill into law.

If the bill is enacted, Connecticut would join Minnesota, Oklahoma, Pennsylvania, Rhode Island, and Washington as states with marketplace provider laws, which require e-commerce giants such as Amazon.com Inc., eBay Inc., and Etsy Inc. to collect and remit tax on transactions by third-party sellers that move merchandise over their platforms.

The bill would also raise the state’s current remote seller threshold from 100 transactions to 200 transactions or gross receipts exceeding $250,000 during a 12-month period.

The bill passed the Senate May 8 and the House May 9.

In 2015, Amazon sold $828 million worth of retail goods into Connecticut.

More to Come?

The proposal’s advancement comes as the U.S. Supreme Court weighs a monumental decision concerning online sales taxation.

The high court heard oral argument April 17 in South Dakota v. Wayfair, a direct challenge to the 1992 decision in Quill Corp. v. North Dakota.Quill, which states for years have tried to “kill” through lawsuits and legislation, prohibits states from imposing sales tax collection obligations on vendors lacking an in-state physical presence. Practitioners expect a decision by late June.

E-retailers Wayfair Inc., Overstock.com Inc., and Newegg Inc. have challenged South Dakota’s digital sales tax statute, S.B. 106 (S.D. Codified Laws Chapter 10-64), which the South Dakota Supreme Court last year found unconstitutional under Quill.

Behlke said more states might be waiting for the high court’s decision before proposing similar marketplace laws.

“As the majority of states have concluded their 2018 sessions, and most states that are still in session are nearing their completion, I don’t expect many other states to enact remote sales tax legislation this year,” Behlke said. “That said, it is possible that legislatures that are in year round, such as California and New York, are waiting on the South Dakota v. Wayfair case before they act.”

To contact the reporter on this story: Ryan Prete in Washington at rprete@bloombergtax.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

For More Information

Text of S.B. 417 is at http://src.bna.com/yRi.

Text of the amendment to S.B. 417 is at http://src.bna.com/yRj.

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