Online retailers pressed to collect sales tax

HARTFORD, Connecticut (AP):

Connecticut officials are not giving up on requiring Internet sellers to collect state sales taxes, despite signs from online retailer Amazon.com that it has no immediate plans to abide by the state's new Internet tax law.

State officials confirmed to The Associated Press that Amazon wrote the Department of Revenue Services this month, saying the company is not obligated to abide by the law because it does not have a physical presence in Connecticut. Amazon contends that by not having a physical presence, it does not have to collect and remit taxes to the state, a protection of the US Constitution.

Connecticut plans to press Amazon for the taxes the state believes it should have collected at least during the month or so when the new law was in effect, and Amazon still had affiliations with websites in Connecticut through its Amazon Associates Programme. Amazon severed those ties in June.

The state could expect up to $9.4 million a year in additional revenue if remote sellers, including Amazon, complied with the new law, according to an estimate by the General Assembly's Office of Fiscal Analysis. That estimate was based on data from a comparable New York law.

Cash-strapped states across the US are grappling with how to capture the sales tax revenues that go uncollected from online purchases, with at least six states enacting laws similar to Connecticut's as of June, according to the National Conference of State Legislatures.

It is estimated that all states are losing $23 billion each year, a figure that climbs annually as more people shop on the Internet instead of in their local stores.

Connecticut, he said, is estimated to lose $152 million a year from uncollected sales taxes from Internet retailers that don't currently collect the tax.