WTNH News Channel 8 / News / 1999

	State cracking down on tax of Internet sales (Hartford-AP) _ Some consumers may consider shopping on the Internet quick, easy and tax-free. State officials say those shoppers should think again. As Internet sales boom, the state is cracking down on consumers who don't pay sales or use tax on big-tickets items they buy online. A 1994 federal study found Connecticut was losing $50 million annually in unpaid use taxes to mail-order and Internet sales. But state Department of Revenue Services Commissioner Gene Gavin called that a conservative estimate given the rate the Internet is growing. "I think the number is probably $100 million," Gavin said. "That's a lot of sales tax cuts. That's a lot of gas tax cuts. That's a lot of rebates." Connecticut enacted both a sales and use tax in 1947. The 6 percent sales tax is levied on the purchaser, but collected by the Connecticut vendor when someone makes a purchase. The money is then transferred to the Department of Revenue Services. Catalogs or Internet firms which have no physical presence in Connecticut have no obligation to collect the state sales tax, but Gavin said the consumer still should self-assess the tax. The business or individual who made the purchase can then list the amount on the "use tax line," established in 1995, of the state tax form. With sales and use taxes the greatest revenue generator behind personal income taxes _ bringing in $2.8 billion in 1998_ Gavin said he is working to track down people who aren't paying so the state can collect interest and penalties as well as overdue taxes. With Internet sales booming, Gavin is not alone. Experts estimate consumers spent $8 million through the Internet in the last Christmas shopping season alone, drawing the attention of officials throughout the nation. "It's a great concern," said Gov. John G. Rowland, who added the Internet was a hot topic at a recent National Governors Conference. "That's taking a lot of jobs from Main Street USA." Gavin has notified fellow revenue collectors of a new state law that allows the commissioner to share 50 percent of the use taxes with any state that provides information needed to track down the tax evader. In addition to the 50 percent of the unpaid use tax, Connecticut would also reap 12 percent in interest and a 10 percent tax penalty. "If I don't make some effort to make sure that everybody pays their fair share, then I'm going to lose all the people in businesses that are paying ... and saying, 'Well DRS isn't doing anything to try to enforce this, so why am I a dope in paying it?' " Gavin said. Gavin said he has no plans to track down every tax cent not paid for a book or Beanie Baby purchased on the Internet. But he said he wants to make sure, at the very least, that state use taxes are paid on big-ticket items like jewelry and computers. "I see it more importantly as a jobs issue," Gavin said. "I've got to make sure those Main Street businesses are kept at a level playing field with anybody who wants to sell into the state." On the federal level, a 19-person commission was established last October with passage of the Internet Tax Freedom Act. Charged with devising plans to bring uniformity among the 45 states with sales and use taxes, the commission has become mired in a legal battle over membership. Today's News Page. WTNH Home Page. ©1999 WTNH/WTNH-DT A LIN station.

State cracking down on tax of Internet sales
(Hartford-AP) _ Some consumers may consider shopping on the Internet quick, easy and tax-free.

State officials say those shoppers should think again. As Internet sales boom, the state is cracking down on consumers who don't pay sales or use tax on big-tickets items they buy online.

A 1994 federal study found Connecticut was losing $50 million annually in unpaid use taxes to mail-order and Internet sales. But state Department of Revenue Services Commissioner Gene Gavin called that a conservative estimate given the rate the Internet is growing.

"I think the number is probably $100 million," Gavin said. "That's a lot of sales tax cuts. That's a lot of gas tax cuts. That's a lot of rebates."

Connecticut enacted both a sales and use tax in 1947. The 6 percent sales tax is levied on the purchaser, but collected by the Connecticut vendor when someone makes a purchase. The money is then transferred to the Department of Revenue Services.

Catalogs or Internet firms which have no physical presence in Connecticut have no obligation to collect the state sales tax, but Gavin said the consumer still should self-assess the tax.

The business or individual who made the purchase can then list the amount on the "use tax line," established in 1995, of the state tax form.

With sales and use taxes the greatest revenue generator behind personal income taxes _ bringing in $2.8 billion in 1998_ Gavin said he is working to track down people who aren't paying so the state can collect interest and penalties as well as overdue taxes.

With Internet sales booming, Gavin is not alone. Experts estimate consumers spent $8 million through the Internet in the last Christmas shopping season alone, drawing the attention of officials throughout the nation.

"It's a great concern," said Gov. John G. Rowland, who added the Internet was a hot topic at a recent National Governors Conference. "That's taking a lot of jobs from Main Street USA."

Gavin has notified fellow revenue collectors of a new state law that allows the commissioner to share 50 percent of the use taxes with any state that provides information needed to track down the tax evader.

In addition to the 50 percent of the unpaid use tax, Connecticut would also reap 12 percent in interest and a 10 percent tax penalty.

"If I don't make some effort to make sure that everybody pays their fair share, then I'm going to lose all the people in businesses that are paying ... and saying, 'Well DRS isn't doing anything to try to enforce this, so why am I a dope in paying it?' " Gavin said.

Gavin said he has no plans to track down every tax cent not paid for a book or Beanie Baby purchased on the Internet. But he said he wants to make sure, at the very least, that state use taxes are paid on big-ticket items like jewelry and computers.

"I see it more importantly as a jobs issue," Gavin said. "I've got to make sure those Main Street businesses are kept at a level playing field with anybody who wants to sell into the state."

On the federal level, a 19-person commission was established last October with passage of the Internet Tax Freedom Act. Charged with devising plans to bring uniformity among the 45 states with sales and use taxes, the commission has become mired in a legal battle over membership.

Today's News Page.

WTNH Home Page.