Scholastic Book Clubs, Inc. v. Comm’r of Revenue Servs.

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Plaintiff Scholastic Book Clubs, Inc. sells its products to Connecticut schoolchildren by having schoolteachers submit to Plaintiff book orders the teachers have collected from students. The books are delivered to the teachers, who then distribute the books to the students. In 2006, the commissioner of revenue services imposed a sales and use tax deficiency assessment on Plaintiff for more than $3 million. Plaintiff protested the assessments. The commissioner upheld the assessments, reasoning that Plaintiff had sold its products using "in-state representatives" pursuant to Conn. Gen. Stat. 12-407(a)(15)(A). The trial court reversed. The Supreme Court reversed the trial court, holding (1) the trial court incorrectly determined that the teachers were not Plaintiff's "representatives" within the meaning of section 12-407(A)(15)(a)(iv), as the teachers serve as the exclusive channel through which Plaintiff markets, sells and delivers its products to Connecticut schoolchildren; and (2) the trial court incorrectly determined that the taxes could not be imposed under the commerce clause, as the activities of the Connecticut schoolteachers who participate in Plaintiff's program provide the requisite nexus under the commerce clause to justify imposition of the taxes. View "Scholastic Book Clubs, Inc. v. Comm'r of Revenue Servs." on Justia Law