Online sales tax in CT, a possibility

HARTFORD, Conn. (WTNH) - More and more states are passing laws that require websites like Amazon to collect sales taxes and today Connecticut took a step in that direction.

Regular retailers say this would just level the playing field, but at least one, Connecticut based on-line business says it would cost them, big time.

That online business is the new Middletown headquarters for Freeshipping.com. They are a Connecticut based affiliate of Amazon.com , they've got twenty-two employees and need more, but the owner is worried that Amazon will pull the plug on him and stop his growth.

"Essentially they come and shut the advertising off, we make a significant amount of revenue from advertising," says Tom Caporaso of Freeshipping.com .

The threatened shut off by Amazon is because of a bill that passed the tax writing Finance, Revenue and Bonding Committee today.

The proposal would require Amazon, and other online retailers that have affiliates in Connecticut to charge and collect the Connecticut Sales Tax on the stuff they sell.

"A competitive advantage over brick and motar retailers who have to charge the Sales Tax and have to remit it to the state," says Tim Phalen on CT Retail Merchants Association.

Legally you are supposed to pay the sales tax on the stuff you buy on Amazon, but they are not required to collect it and don't want to unless there is a uniform federal law that forces them to do so.

Regular stores referred to as brick and motar retailers don't have any choice, they have to collect it.

"This bill helps to level the playing field between internet sales and what we consider traditional sales, which is the business community," says Sen. Andrea Stillman (D) of Waterford.

But those voting against this bill note that the state tax department isn't sure it's the right way to go.

"Right now, there's a disagreement; the state of Connecticut Tax Department and the legislature as to how best to fix this very glaring problem," says Sen. Andrew Roraback (R) of Goshen.

Freeshipping.com is sure that Amazon will follow through on their threat.

"They've done it in Illinois, North Carolina, Rhode Island, so it's kind of a road map for them," says Caporaso.