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Sharper Image Corp. v. Miller, 240 Conn. 531, 692 A.2d 774

Facts

Sharper Image Corporation, a Delaware corporation with headquarters in San Francisco, California, engaged in retail sales and mail order business, including sales to Connecticut residents. The corporation published monthly catalogs advertising its products, which were printed and mailed from Nebraska to customers, including those in Connecticut. The Connecticut Commissioner of Revenue Services assessed a use tax on these catalogs, leading Sharper Image to challenge the assessment in court. The courts upheld the commissioner's decision, leading to an appeal to the Supreme Court.

Sharper Image is a Delaware corporation with headquarters in San Francisco, California. It is engaged nationally and internationally in the retail sale of merchandise, and makes both in-store and mail order sales. … The commissioner imposed the use tax on Sharper Image pursuant to General Statutes §§ 12–411 and 12–407(5).

Issue

Whether Sharper Image Corporation is liable for the payment of a use tax on catalogs mailed to Connecticut residents from outside the state.

The main thrust of Sharper Image's argument is that it did not exercise a right or power over the catalogs in Connecticut within the meaning of the word 'use' provided for in § 12–407(5).

Rule

The use tax applies to the storage, acceptance, consumption, or any other use in Connecticut of tangible personal property purchased from any retailer, as defined in General Statutes §§ 12–411 and 12–407(5).

General Statutes § 12–411(1) provides in pertinent part: 'An excise tax is hereby imposed on the storage, acceptance, consumption or any other use in this state of tangible personal property purchased from any retailer for storage, acceptance, consumption or any other use in this state…'

Analysis

The court determined that Sharper Image exercised a right or power over its catalogs by orchestrating their distribution to Connecticut residents, which constituted a taxable use under the state's tax statutes. Although the catalogs were mailed from outside the state, the corporation's control over the mailing process and its intent to target specific residents in Connecticut satisfied the definition of 'use' as outlined in the relevant statutes.

We conclude that distribution falls within the plain language of 'other use.' … Simply put, the catalogs entered the state at the command and direction of Sharper Image.

Conclusion

The Supreme Court affirmed the judgment of the Appellate Court, concluding that Sharper Image was liable for the use tax on the catalogs mailed to Connecticut residents.

The judgment of the Appellate Court is affirmed.

Who won?

The Commissioner of Revenue Services prevailed in the case, as the court upheld the imposition of the use tax on Sharper Image's catalogs, finding that the corporation had sufficient control over the distribution of the catalogs to be subject to the tax.

The commissioner imposed a use tax on the catalogs mailed to Connecticut residents… The revised assessment consists of $52,466.70 in use taxes, a $2218.33 penalty and $45,471.35 in interest through March 31, 1994.

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