In a decision that could cost Scholastic millions, the U.S. Supreme Court has declined to hear a case that questions whether the educational publishing house must pay state taxes on sales from their book catalogs to students.
Back in March, a Connecticut judge ruled that teachers who hand out Scholastic catalogs, collect orders, and help students pick books to purchase actually serve as in-state "representatives" even though they don't receive any money from the publishing house. Marketplace K-12 reported on the Connecticut ruling in March.
According to the ruling, teachers are considered salespeople, meaning Scholastic Book Clubs Inc., a unit of New York City-based educational publisher Scholastic Inc., has to pay $3.3 million in back sales tax charged by the state of Connecticut over a period from 1995 to 2005. In Scholastic Book Clubs, teachers receive a monthly catalog containing information on books and flyers that they hand out to students. After parents make their orders, the teacher sends them to Scholastic and distributes the books in class when they arrive. The state said that teachers perform tasks related to the company's "in-state marketing" and "distribution," among others, by Scholastic's own choice.
Scholastic Book Clubs Inc., based in Jefferson City, Mo. and with no physical presence in Connecticut, said in its appeal to the Supreme Court, that it has been selling books by mail order to teachers and students in the state for over 60 years, without having to collect the state's use tax.
The justices declined without comment to hear the appeal in Scholastic Book Clubs Inc. v. Connecticut Commissioner of Revenue Services.
Education Week's School Law has the whole story.