We have bad news if you live in Connecticut and purchased items online without paying sales tax. The state's Department of Revenue Services (DRS) is looking to collect, and it's putting pressure on certain online sites to share purchase records for that purpose. Newegg is one of them.
As you probably noticed, for years many ecommerce sites did not charge customers sales tax for online orders. The onus fell on the buyer to report purchases and pay any applicable taxes, but there did not seem to be any repercussion for not doing so. For the most part, state agencies focused their attention on online vendors, not online shoppers.
Those efforts eventually paid off, as many online sites that didn't previously charge a sales tax now do. However, Connecticut is not stopping there. It wants online vendors to pay up for past purchases, or share purchase records so that it can go after consumers directly.
According to WFSB, a local CBS affiliate in Connecticut, Newegg chose the latter route. As a result, some customers who purchased electronics and other items from Newegg in 2014 through 2016 are receiving bills in the mail for taxes owed.
"Newegg threw all of their customers under the bus, frankly, I will not be making a purchase with them ever again," Michael-Jared Hunter Gillis told WFSB.
WFSB says Gillis is a new father and husband who previously bought a 65-inch TV and several parts to build a PC from Newegg. Because Newegg did not (and does not) have a physical presence in Connecticut, it did not collect a state sales tax on those purchases, as well as ones made by others.
According to Hartford Courant, Connecticut taxpayers are supposed to pay a state tax of 6.35 percent on purchases made out-of-state or online where no sales tax is collected. There is a place on the last page of the 1040 tax form to do that. Many people didn't, of course, and the DRS is coming after them.
"Usually we don’t have the data, but in several cases companies have said… we’ll squeal on our customers and you can beat up on them," said Kevin Sullivan, commissioner of the tax department. "The people who sold to them have ratted them out."
It's unsettling to see Sullivan acknowledge 'beating consumers up' financially for past purchases, just as it's unsettling that some online vendors are apparently willing to "squeal" on customers for that purpose. And while this news is specific to Connecticut for now, this could mark a trend for other states as well. Keep that in mind next time you're shopping online at a site that doesn't collect taxes for your state.