The U.S. Supreme Court let stand a decision requiring Scholastic Inc. to collect sales tax in Connecticut on sales through its school book club operations, in deciding not to hear a company appeal of a Connecticut Supreme Court ruling.
The Connecticut Supreme Court had ruled New York City-based Scholastic has sufficient presence in the state to be subject to the same sales tax provisions as Connecticut retailers, and that it owed $3.3 million in back taxes and associated payments.
According to the Connecticut Department of Revenue Services (DRS), about 14,000 Connecticut classroom teachers solicit sales, process orders, and deliver books to students on behalf of Scholastic book clubs, essentially acting as representatives of the company. Teachers do not receive monetary compensation from Scholastic for their work, but DRS said they are the only avenue for students and their families to receive catalogues, submit orders and payments, and collect the delivered items.
“The department has long believed that the use of schoolteacher representatives by Scholastic provided sufficient nexus within Connecticut to uphold taxability,” said DRS Commissioner Kevin Sullivan, in a prepared statement. “This decision levels the playing field for Connecticut-based retailers who rightly collect and remit the sales tax.”
