HARTFORD, Conn. (AP) - Connecticut's Supreme Court has ruled that a Missouri seller of books and educational products to schools must pay millions in state sales taxes and penalties because teachers have acted as local salespeople in the classroom.
In a decision released Monday, the court unanimously reversed a trial court judge who ruled that teachers made no money for themselves as surrogate parents helping students select and order items from Scholastic Book Clubs Inc. of Jefferson City.
The Missouri book seller has no presence in Connecticut, the court ruled. But it said Scholastic Book Clubs' program places teachers in a position in which they are "functioning in much the same way as salesmen," bringing books into the classroom for sale.
The justices said the teachers, who earn bonus points allowing them to purchase other items from the book seller, are the "exclusive channel" used by Scholastic Book clubs to market, sell and deliver its products to Connecticut students.
The state Department of Revenue Services assessed Scholastic Book Clubs more than $3 million in taxes and penalties dating to 1995, insisting that Scholastic Book Clubs used "in-state representatives."
Scholastic Books appealed in court, winning a decision that said the teachers were customers who purchased materials for themselves and acted in the place of parents by helping students select and order books.
The lower court also rejected the state tax, saying there was no link or connection between the state and the Missouri company.
Revenue Commissioner Kevin Sullivan hailed the Supreme Court decision Monday for providing "a more level playing field for commercial competition and a common sense understanding" that state taxation is not intended to be more or less burdensome on out-of-state sellers operating in Connecticut than state businesses.
Lawyers for Scholastic Book Clubs did not immediately return calls seeking comment.