Do you remember getting those colorful little book catalogues on flimsy paper in elementary school? Scholastic Books is the biggest distributor of them, and it's a great idea -- use the purchasing power of bulk buys to get discounted books to kids, and facilitate the ordering by having classroom teachers distribute and collect the orders.
But the governments of Connecticut and Tennessee see this as a big tax-evasion scheme, apparently.
Scholastic doesn't pay the teachers a commission. Teachers can earn bonus points from Scholastic, which they then can use to get classroom books. Pretty devious, hunh?
The Tax Foundation explains:
In March, Connecticut's state supreme court ruled that Scholastic is "physically present" in the state for tax collection purposes despite having no property or employees there....
In 2007, the Connecticut Department of Revenue asserted that SBC [Scholastic Book Club] must collect sales and use taxes on books sold in the state.... Revenue officials argued that teachers were operating as representatives of SBC and thus were effectively employees.
The story is similar in Tennessee. Read the Tax Foundation's account, and mull over just how intrusive, disruptive, and absurd tax laws can be.