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Connecticut lawmakers are considering alternative methods to enhance the collection of sales tax. Under S.B. 1110, the Commissioner of Revenue would have flexibility to consider several collection alternatives and implement those alternatives if the Commissioner of Revenue determines that such alternatives are effective. One of the alternatives being considered would require credit card companies to do the heavy lifting by requiring such companies to collect sales tax on sales made to consumers located in Connecticut.


Under this alternative, the Commissioner of Revenue must consider “the benefits and drawbacks of instituting a payment system whereby the state may receive payment of said taxes electronically not later than two business days after the date of the taxable transaction, from an institution processing a credit or debit card payment or electronic funds transfer from a consumer[.]” In certain circumstances, this measure would make the credit card company ultimately responsible for collecting and remitting sales tax instead of the retailer.


This may sound like ingenuity at work; however, due in part to the brevity of the bill, citizens and the private sector are left with more questions than answers as far as how to practically implement such a measure. Among the many questions left unsettled by the bill are:

  • Would this bill require credit card companies to collect sales tax on remote sales?
  • If credit card companies are collecting sales tax on transactions involving payment by credit and debit cards, would the retailer still have to collect sales tax on transactions involving payment by cash and checks? This seems like a duplication of resources.
  • Who is ultimately responsible for the calculation, collection and remittance of sales taxes? In the event the consumer returns an item the sale of which is subject to sales tax, who is ultimately responsible for refunding the sales tax portion of the sale—the credit card company or the retailer?
  • How do the constitutional limitations on requiring remote sellers to collect and remit sales tax impact this proposal? Would requiring credit card companies to collect and remit sales tax withstand constitutional challenges?


Proponents argue the bill would raise at least $130 million a year without raising other taxes. It remains questionable how this bill would raise this level of revenue without collecting and remitting sales tax revenue on remote sales. However, S.B. 1110 is another example of a state getting creative in its efforts to expand the scope of its sales tax collection activities in order to generate additional tax revenue.