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Update on Connecticut SB 806

The news on Connecticut SB 806 is a bit shocking. The  Joint Finance Committee vote was held yesterday and the bill was  approved with a vote of 53 to 0 ( 3 absent and not voting).  Aside from the overwhelming support from Senators and Representatives it is crucial to note that they voted to amend the bill with a lower sales threshold. The sales threshold is $2,000.  The joint bill is now filed with Legislative Commissioners’ Office. After fiscal analysis it will go to the Houses for vote and then on to the Governor. I am not sure of the timeline involved in the next steps but I would imagine that this will be pushed through as rapidly as possible.

Connecticut SB 806 now reads:

and (L) every person making sales of tangible personal property or services through an independent contractor or other representative, if the retailer enters into an agreement with a resident of this state, under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet web site or otherwise, to the retailer, provided the cumulative gross receipts from sales by the retailer to customers in the state who are referred to the retailer by all residents with this type of an agreement with the retailer, is in excess of two thousand dollars during the preceding four quarterly periods ending on the last day of March, June, September and December. Such retailer shall be presumed to be soliciting business through such independent contractor or other representative, which presumption may be rebutted by proof that the resident with whom the retailer has an agreement did not engage in any solicitation in the state on behalf of the retailer that would satisfy the nexus requirement of the United States Constitution during such four quarterly periods.

Link to Connecticut Raised Bill SB 806

{ 7 comments… add one }

  • Rhea March 25, 2009, 9:31 am

    Bummer. CT is usually so business-friendly.

    Mellie, do you have the text from the “…nexus requirement of the United States Constitution…” published somewhere on your blog? I’d like to read it but I’m not sure where in the Constitution I might find it.

  • Lisa Riolo March 25, 2009, 10:09 am

    Unfortunately this creates the kind of momentum that gives other states even greater reason to enact the legislation.

  • James Lillig March 25, 2009, 10:23 am

    I am not an atty. nor am I a tax professional, but I do run a CPA network. These types of Bills will become more prevalent as states seek a work around to getting their due. Sales taxes charged for online transactions are a revenue source that the state governments will not let go of. There is a movement, the Streamlined Sales Tax Governing Board (http://www.streamlinedsalestax.org/index.html) that seeks to simplify the over 6000 tax codes in the US today.

    “Today twenty-two states have adopted the simplification measures in the Agreement (representing over 31 percent of the population) and more states are moving to adopt the simplification measure.” reports the Board.

    On the heels of the NY state tax law which Amazon recently lost, I foresee a day when charging state sales tax on all transactions done online, like the way the EU requires the Value Added Tax (VAT) for all online purchases by member country residents, will become a reality for ecommerce merchants here.

    I guess the party is coming to a close. Quickly.

    If you would like to read more on the NY Affiliate Tax issue, go here: jimlillig.com

    Jim Lillig
    The Offeratti Network

  • beth Kirsch March 26, 2009, 3:07 am

    I’m so sorry to hear this. That bill will go through. Lisa is right, it just gives other states ideas.

    Thanks for keeping us in the loop Melanie

  • peter bordes March 26, 2009, 12:54 pm

    this is very disapointing and troubling. It seems that we as an industry really need to do an impact study to understand how this effects all the moving pieces of our industry.

  • Brook Schaaf March 26, 2009, 1:44 pm

    This is indeed troubling news.

    It seems like the cribbed language from New York and California and hedged it against a constitutional challenge.

    Get the word out: affiliate marketing is a form of advertising; these bills are unconstitutional.

    On a somewhat positive note, “did not engage in any solicitation” means that merchants can have their affiliates not send out emails while this is being sorted out, rather than end the relationship to avoid nexus.

  • Brook Schaaf March 26, 2009, 1:53 pm

    Jim, I have to take issue with your language above: “I guess the party is coming to a close.”

    I disagree that this is a party in the sense that this is something that out of state retailers are getting away with. They have no constitutional obligation to collect a sales/use tax in these states because they have no tax nexus there.

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