Discerning shoppers may have noticed certain websites weren’t charging state sales tax.
Now, the free ride has ended for hundreds, if not thousands of local shoppers.
A cash-strapped Connecticut is cracking down and looking to collect on those purchases that you thought were tax free.
If you shopped on newegg.com over the last four years, there’s a good chance you’re getting a bill. Many sites, like Amazon for example, charge state tax.
Others, like Newegg, don’t, and now the state is coming for them and for you.
As a new father and husband, Michael-Jared Hunter Gillis is always looking for ways to save. He built a computer with parts purchased from newegg.com.
His 65-inch TV also came from Newegg. A great deal, especially when the tax read zero.
“I think 90 percent of people are going to go right to the order total, say, ok, that’s what I have to pay, that’s my bill,” Gillis said.
For years, this is how, Gillis and hundreds, if not thousands of Connecticut shoppers operated.
“Most everything that I get, gets pushed over to Newegg because they have the cheapest prices,” Gillis said.
Reality hit recently when customers got letters from the state Department of Revenue, looking for taxes on Newegg purchases from 2014, 2015 and 2016.
“I don’t think it’s fair, honestly,” Gillis said.
State officials say it appears some online companies that didn’t charge the tax were banking on the fact that some states just weren’t aggressive enough to hound them and their customers down.
“That’s where I think they’re playing a game. That allows some of them to basically advertise, ‘if you purchase through us, it’s tax-free.’ It’s not tax free. They’re just not doing their job,” said Kevin Sullivan, commissioner of the Department of Revenue.
Initially, the state gave companies that didn’t charge a sales tax, two options: start collecting taxes from here on out, or turn over customer spending records and expose buyers to several years’ worth of taxes on items they bought.
So far, Sullivan says more than 100 companies, Amazon for example, chose to collect tax going forward and their customers weren’t bothered.
Newegg refused, gave up spending records, and now their customers have bills.
“Newegg threw all their customers under the bus, frankly, I will not be making a purchase with them ever again,” Gillis said.
Newegg’s argument, according to Sullivan, is that Newegg believes they have to have a physical presence in the state in order to collect a tax.
That argument is in front of the Supreme Court right now, but in the meantime, customers like Gillis are caught in the middle, with an extra headache to deal with.
“I really don’t have much of an option, but to bite the bullet and pay it,” Gillis said.
“The easiest, fairest, simplest way for this to work is for the retailer, just like any other retailer, to charge the tax, collect the tax and remit the tax,” Sullivan said.
On the last page of the 1040 for the state is the ‘use tax.’ That’s where online purchases with no sales tax are supposed to go.
If you filled it out, you won’t need to pay. However, if you racked up $1,500 in purchases, expect a bill.
Customers will have 6-8 months to pay with no penalties, but the commissioner says that grace period will eventually end.
