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Tax Alert: Connecticut: Amazon to Charge Sales Tax on Sales in Connecticut


Synopsis:
The State of Connecticut and Amazon.com, Inc. have come to an agreement whereby the internet retailer will begin collecting sales tax from Connecticut consumers beginning in November, 2013.

Suggested Action:
After reading this Alert, please contact a CohnReznick tax professional to discuss how this agreement may affect you.

Issue:
In May 2011, Connecticut passed a “click-through” nexus law for sales tax. The law expanded the definitions of “retailer” and “engaged in business in the state” for sales tax purposes. Both definitions now include any person making sales through an agreement with another person located in Connecticut under which the in-state person refers potential customers to the seller in exchange for a commission.  Amazon uses this “affiliate” model in many states. Once the new rules passed, Amazon cut ties to all of its affiliate businesses in the state of Connecticut.

After extensive negotiations, Amazon and the State of Connecticut negotiated an agreement and announced on February 4, 2013 that Amazon will collect sales tax from customers in Connecticut starting in November  2013. Amazon will also invest $50,000,000 into an order fulfillment center to be built in Connecticut within two years, a project expected to create 300 jobs. In exchange, Connecticut agreed not to attempt to recover back sales tax from Amazon.

Contact:
For more information, please visit CohnReznick’s State and Local Tax webpage and contact Patrick Duffany, Partner and National Director of State and Local Tax Services, at 860-368-3607.

 


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters

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