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Connecticut Owed Millions in Taxes by Scholastic Book Clubs

The U.S. Supreme Court’s decision not to take up the case is a $3.2 million victory for the state and its coffers.

Scholastic Book Clubs, the company that for decades has sold books to school children in classrooms across Connecticut, must pay the state $3.2 million in uncollected sales taxes on those sales. Scholastic is the owner of Grolier, which had its headquarters on Old Sherman Turnpike in Danbury.

That’s the upshot of the U.S. Supreme Court’s refusal this week to hear an appeal challenging a state court ruling that the book sales are taxable and that Scholastic Book Clubs owes sales taxes dating back to 2005.

The state had argued in the case that although it is based in Missouri, Scholastic Book Clubs is liable for in-state taxes because it uses Connecticut teachers as its local sales representatives. There are some 14,000 school teachers in Connecticut who sell books through Scholastic, the state argued.

Being exempt from sales taxes, the state had maintained, was also unfair to Connecticut retailers.

“This decision levels the playing field for Connecticut-based retailers who rightly collect and remit the sales tax,” said Kevin Sullivan, the commissioner of the Department of Revenue Services.

The case has broader implications for the state’s efforts to tax online sales and other goods ordered from companies based out of state, according to a Hartford Courant columnist.

sharon October 12, 2012 at 06:45 PM
No!!!! Scholastic has had a relationship with Connecticut's schools for decades. They have funded literacy programs that would not happen without their contribution. It is in many cases the only way kids in some of Danbury's more impoverished districts, would ever get a book in their hands. Online retailers may be at the root of lost revenue, but going after one of the few businesses that give so much to the community is lazy and short sighted. The state needs to be more diligent about going after the companies that don't pay their taxes but who also do nothing for Connecticut. Spend our tax dollars wisely, work hard and go after the real tax delinquents.

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