Connecticut State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Connecticut, with full citations and the original source on every page.
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When a hotel guest pays a third-party vendor directly by in-room credit card reader for pay-per-view movies, who owes Connecticut sales tax, and does the room occupancy tax apply?
The guest owes the 6% Connecticut sales and use tax, and no room occupancy tax applies. In-room pay-per-view movies are a taxable 'community antenna television service' under Conn. Gen. Stat. § 12-407…
When a Connecticut retailer swaps a defective or unsatisfactory item for an identical or similar one at no extra charge, is any additional sales tax due -- even without the original receipt or more than 90 days later?
No additional Connecticut sales tax is due. When a retailer replaces a defective or unsatisfactory item with an identical or similar item for no additional charge (an "even exchange"), that is neither…
Can an asphalt-making paving contractor qualify for the manufacturing machinery exemption by splitting its paving jobs into separate contracts for the asphalt and the installation?
No. An asphalt-making paving contractor cannot qualify for the manufacturing machinery exemption (Conn. Gen. Stat. § 12-412(34)) by splitting its paving jobs into separate contracts for the asphalt an…
Does generating electricity count as 'processing' under Connecticut's Manufacturing Recovery Act, so that machinery and equipment used to generate electricity qualify for the partial sales and use tax exemption?
No. Generating electricity is not 'processing' under Connecticut's Manufacturing Recovery Act (MRA), so purchases of machinery and equipment used primarily to generate electricity do NOT qualify for t…
A wholesaler stores goods in Connecticut with an unaffiliated fulfillment company and drop-ships them to an out-of-state retailer's Connecticut customers -- must the wholesaler collect Connecticut sales tax, or does the fulfillment house exclusion relieve it?
The wholesaler must collect Connecticut sales tax, and the fulfillment house exclusion does not save it. Under the 'drop shipment rule' (Conn. Gen. Stat. § 12-407(a)(3)(A)), when a wholesaler delivers…
Are packet data-transmission offerings (X.25 and Frame Relay) taxable as telecommunications services or as computer and data processing services in Connecticut, and can the underlying telecom services be bought for resale?
They are taxed differently. The company's Frame Relay Service is a telecommunications service, taxable at 6%, and the telecommunications services the company buys to provide it CAN be purchased for re…
Are food-service management services at a for-profit assisted living facility taxable, and do the elderly-center or meals exemptions apply?
The management services are taxable, but direct meal sales to residents are exempt. A company that manages the food-service operation at a for-profit assisted living facility is providing taxable BUSI…
How do Connecticut's sales, use, admissions, and motor vehicle fuels taxes apply to a federally recognized Indian tribe's purchases and sales, both inside and outside its Indian country?
It depends on who legally bears the tax and where value is generated. Under U.S. Supreme Court doctrine, if a tax's legal incidence falls on the Tribe for a sale made inside Indian country, Connecticu…
For a company's 'procurement process management services,' which parts are taxable business management services and which qualify for Connecticut's outsourced computer-and-data-processing exemption?
It depends on the service. A company's 'procurement process management services' split two ways for Connecticut sales tax. Its accounts-payable and support functions are computer and data processing s…
Are a company's services helping nursing homes with the Medicaid resident-admissions process taxable in Connecticut as business management or business management consulting services?
Not taxable. A company's services helping nursing homes handle the Medicaid resident-admissions process are not taxable business management or business management consulting services under Conn. Gen. …
When a financial institution outsources its whole computer and data processing operation, which of those services are exempt as 'outsourced' -- and what about work it used to do for its clients rather than for itself?
Only the 'own use' work is exempt. When a financial institution outsources its entire computer and data processing operation to an unrelated provider, the services the institution formerly performed f…
Does a pathology-testing company that analyzes patient specimens for physicians qualify for Connecticut's biotechnology sales-and-use-tax exemption on its purchases?
No. A company that performs pathology testing on patient specimens to help physicians diagnose, prognose, or monitor disease does not qualify for Connecticut's biotechnology exemption in Conn. Gen. St…
When a company places its own computer-skilled staff at a customer's site to run a defined IT project, is it selling taxable personnel services or taxable computer and data processing services?
It's computer and data processing, not personnel services. A company that places its own computer-skilled staff at a customer's site to complete a prearranged, predetermined IT project is providing ta…
Do heavy trailers used only for on-site storage still qualify for Connecticut's commercial-truck sales-and-use-tax exemption if they weigh over 26,000 pounds?
Yes, they qualify. Trailers with a gross vehicle weight rating over 26,000 pounds can be bought or leased exempt under Connecticut's commercial-truck exemption (Conn. Gen. Stat. § 12-412(70)) even whe…
Which of a health-care management company's many services -- managed care advice, credentialing, quality assurance, claims processing, member services, contract, pre-certification, and utilization review -- are taxable in Connecticut, and under which service category?
It's service-by-service. DRS classified each service a health-care management company sells against Conn. Gen. Stat. § 12-407(2)(i)(J). Because the customers' core business is providing health care, s…
When a manufacturer outsources its entire computer division, are the outsourced services and the equipment the provider buys exempt -- and what about equipment the provider buys as the manufacturer's agent?
Mostly exempt, with one taxable piece. When a manufacturer outsources its whole computer division to an unrelated provider, the outsourced computer and data processing services are exempt under Conn. …
Are a company's computer-link services -- routing credit-card authorizations between merchants and card issuers, and connecting PC users to Internet service providers -- taxable Connecticut computer and data processing services?
Yes, both are taxable. A company that uses computers to link merchants' card-authorization devices to card-issuing banks, and to link PC users to an Internet/computer service provider, is providing ta…
Does a manufacturer's multi-building campus qualify for Connecticut's 75% gas-and-electricity exemption when most of the utility-metered energy is used for fabrication and R&D, measured by the utility's meter?
Yes, it qualifies. Gas and electricity are exempt from Connecticut sales and use tax under Conn. Gen. Stat. § 12-412(3)(A)(ii) when, at a metered building, location, or premises, at least 75% of the e…
Is boarding and training other people's horses 'agricultural production,' so that the operator can get a Farmer Tax Exemption Permit even though it sells no animals or produce?
Yes. Boarding and training horses that belong to others is 'agricultural production' under Conn. Gen. Stat. § 12-412(63), because the statute's definition -- raising, feeding, caring for, training, or…
Is running (or removing) telephone/data cabling behind walls and above ceilings a taxable service to real property, or is it excludible installation of tangible personal property?
It's a taxable service to real property. Running (or removing) telephone and data cabling that is concealed behind walls and above ceilings -- not obvious and not readily accessible -- is a service to…
Is a gut renovation that leaves the wall studs and floor/ceiling joists in place treated as nontaxable 'new construction,' or as a taxable service to existing commercial real property?
It's taxable -- not new construction. A renovation that converts a building to a new use but leaves the interior and exterior wall studs and the floor and ceiling joists in place is a taxable service …
Are satellite-based data communications services (monitoring pipelines, messaging trucks, sending distress signals, tracking cargo) taxed in Connecticut as telecommunications services, or as computer and data processing services?
It turns on the label, and it's still taxable either way the company hoped to avoid. Connecticut's satellite-based data communications service is NOT taxable as a telecommunications service under Conn…
Is Connecticut sales or use tax owed on construction equipment and materials sold or rented for use on a Connecticut tribe's reservation — when sold to the tribe itself, and when sold to the non-Indian contractors building for the tribe?
It depends on WHO buys and WHERE title or delivery passes. Sales and rentals of construction equipment made DIRECTLY to the Connecticut tribe or its enrolled members are exempt (federal preemption, Co…
Does Connecticut sales tax apply when a store sells a prepaid long-distance phone card, and does it apply when a customer later uses the card to make calls?
Two separate answers. Selling the prepaid long-distance phone card is NOT taxable — a phone card is a 'cash equivalent' (like a gift certificate or voucher), so its sale is the sale of an intangible f…
Are the data processing services a provider performs after taking over a bank's in-house 'item processing' operations exempt from Connecticut sales tax under the outsourcing exemption?
Yes. When a service provider takes over ALL of the data processing functions a customer formerly performed for itself at a specific location of the customer's business premises, those services are exe…
Is a heavy truck chassis a tax-exempt 'commercial truck' in Connecticut when a bucket lift is mounted on it — and when it's still bare?
It depends on whether it hauls freight. A heavy truck chassis (GVWR over 26,000 lbs) with an aerial lift mounted on it is NOT an exempt 'commercial truck' under Conn. Gen. Stat. § 12-412(70), because …
When a business buys copywriting and graphic design for employee newsletters, sales brochures, and community economic-impact statements, is that a taxable service in Connecticut — and can the fee for the design's reproduction/ownership rights be carved out?
Yes, they're taxable — the only question is which category and where. Copywriting and graphic-design services a business buys to influence a group are taxable Connecticut services: work for employee/i…
Are in-room hotel pay-per-view movie charges taxed in Connecticut as sales tax, as room occupancy tax, or both — and who owes what?
Both taxes apply, at two different links in the chain. The pay-per-view movie service a company provides to a hotel is a taxable 'community antenna television service' under Conn. Gen. Stat. § 12-407(…
Is renting a large locked wire-mesh storage cage in a condo basement a taxable 'locker rental,' or a nontaxable rental of space, in Connecticut?
It's a nontaxable rental of space, not a taxable locker rental. Connecticut taxes 'locker rental' (except cold storage) as a miscellaneous personal service under Conn. Gen. Stat. § 12-407(2)(i)(FF). B…
If a 'sale and leaseback' is really a secured loan — the customer keeps title and possession and the lender just holds a security interest — are the 'lease' payments subject to Connecticut sales tax?
No. When a 'sale and leaseback' is really a disguised financing — the customer's 'Bill of Sale' expressly grants only a security interest, the customer keeps legal title and possession, and the 'lease…
When a company sells online access to the Connecticut DMV computer plus the software to use it, which parts are taxable — the online access, the software fee, the support, and the revenue-share payments?
It splits four ways. (1) The online service giving customers direct access to the DMV computer — to file registrations and make inquiries — IS taxable computer and data processing service under Conn. …
Is a phone-based auto-parts locating service — where employees use a computerized directory but do the finding by telephone — a taxable computer and data processing service in Connecticut?
No. A telephone auto-parts locating service is NOT a taxable computer and data processing service under Conn. Gen. Stat. § 12-407(2)(i)(A). Applying the 'true object' test, DRS found the computer here…
Is a 'phone flea market' — where sellers pay to be listed and buyers call in for the listings — a taxable sales-agent service or a taxable advertising service in Connecticut?
Neither — but this ruling is dated and only partly good law. As DRS decided it in 1994, a 'phone flea market' (sellers pay a flat fee to be listed; buyers call in for the listings and deal directly wi…
Are subscription sales of scientific/technical trade magazines exempt from Connecticut sales tax under the magazine-by-subscription exemption?
Yes. Subscription sales of the publisher's scientific and technological periodicals are exempt from Connecticut sales tax under Conn. Gen. Stat. § 12-412(6) as 'sales of magazines by subscription.' Be…
Are 'outplacement services' — counseling laid-off executives to find new jobs, paid for by their former employer — taxable in Connecticut as business management consulting or as employment-agency services?
No — outplacement services are not taxable in Connecticut, under either category considered. Counseling an employer's terminated executives/managers to help them find NEW jobs is NOT taxable 'personne…
Is document scanning and indexing a taxable computer and data processing service in Connecticut, and is supervising a customer's own scanning staff taxable business management?
Document imaging is taxable; supervising the customer's staff is not. Scanning paper documents into electronic images and indexing them IS a taxable computer and data processing service under Conn. Ge…
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These are official tax letter rulings and advisory opinions issued by Connecticut's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.