SALT Report 1585 – The US Supreme Court has been asked to review a decision by the Connecticut Supreme Court that determined that Scholastic Book Club, Inc., located in Missouri, created a presence in Connecticut through their teacher representatives thereby requiring them to collect and remit sales tax to the state.
The Connecticut Supreme Court based their decision on the fact that 14,000 Connecticut teachers solicit sales on behalf of the company. The teachers receive catalogs from the company, distribute them to their students, collect orders and payments, forward the orders and payments to Scholastic Books, and distribute the books to their students. While the teachers do not receive compensation for their participation they are able to earn bonus points that allow them to purchase items from the company’s catalog for use in the classroom.
In their decision the Connecticut Supreme Court stated that substantial nexus existed between the company and the state under the Commerce Clause of the US Constitution because the retailer had an implied relationship with the teachers and that the teachers provide the nexus required under the Commerce Clause to require the collection and remittance of sales tax.
Scholastic Book Club has filed a petition for a writ of certiorari. A written response is due by July 26, 2012.
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