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JerrySJD
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My son attends a parochial school that is also a 501c tax exempt

Customer Question

My son attends a parochial school that is also a 501c tax exempt organization in the State of Connecticut. A recent ruling of the State of Connecticut Supreme Court ruled in favor of The State of Ct Department of Revenue Services. The State Supreme Court indicated that teachers act as "sales agents" for the Scholastic Book Company located in Illinois. As their representative the teachers are required to collect sales tax. Does this also apply to the librarian and teachers at my son's private catholic school?
Submitted: 2 years ago.
Category: Business Law
Expert:  JerrySJD replied 2 years ago.

JerrySJD :

Yes. Why would it not? Public school teacher work for a tax exempt entity - the town. So the tax exempt status did not effect the sales tax collection duty in that case. Does this make sense?

JerrySJD :

If you want more clarification , you can ask the state, but their answer will always be yes.

JerrySJD :

Do you need more guidance on this issue?

JerrySJD :

Thank you for using JustAnswer! Please click "Accept". If you need more, please let me know.

JerrySJD :

We are here to help, so any further questions, please write back.

Customer :

Isn't a 403b treated differently than a 501c?

JerrySJD :

They are both tax exempt.

JerrySJD :

403b is a teacher's retirement plan. The teachers worked for the town in the case you cited. Towns are tax exempt, just like a parochial school.

Customer :

Yes I realize that - I was referring to the tax code that teahers and certain school employees fall under as a means to distinguish a public school from a private entity. So the state classifies both as the same?

JerrySJD :

Yes, because the issue is whether the teachers, or in this case teachers and librarians, act as sales agents for the Scholastic Book Company.

JerrySJD :

See Scholastic Book Clubs, Inc. v. Commissioner of Revenue Services, SC 18425 (Conn. Mar. 27, 2012)

JerrySJD :

The issue in the case was whether Scholatic had a significant presence in the state for state tax liablility to attach. Held that Scholastic does have a sufficient nexus and therefore sales agents must collect sales tax on book sales in CT. Under this rational, all sales agents, whether at a parochial school, a public school or even a home school teacher are agents for Scholastic and must collect CT sales tax.

JerrySJD :

By the way, CT sales tax people are more agressive than the IRS. They will take the most expansive reading of this case.

JerrySJD :

In other words, the ruling applies to all sales in the state of CT.

JerrySJD :

I realize that this may not be the answer that you wanted, but at least you know.

JerrySJD :

Thank you for using JA. Please click "Accept". If you need more, please let me know.

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Attorney for business formation, business sales, tax, partnerships, sole proprietors and buy/sell agreements.