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Ezel / Tax Rulings / CT
CT Ruling 89-156 Sales and Use Taxes 1989-10-26

Were X Company's purchases exempt when an exempt resource-recovery facility reimbursed the company for the tax as an operating expense?

Short answer: No under this historical ruling. X Company was not exempt, reimbursement did not convert its purchases into exempt purchases, and only direct purchases by the Bristol Resource Recovery Facility were exempt. The incorporated-materials exemption did not apply.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1989 Connecticut Department of Revenue Services Ruling applying the governmental direct-purchase exemption then in effect. Its result depended on X Company being nonexempt, the facility merely reimbursing tax as an operating expense, and the incorporated-materials rule not covering the transaction; different purchasing authority or title arrangements may differ. Connecticut imposes sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

X Company bought goods and services and was not tax-exempt. The Bristol Resource Recovery Facility reimbursed X Company for sales and use tax as an operating expense.

DRS said reimbursement did not make X Company's purchases exempt. Only purchases made directly by the Bristol Resource Recovery Facility were exempt, and the regulation for materials incorporated into tax-exempt property did not apply to the described situation.

What this means for you

The historical exemption followed the direct purchaser rather than the party that ultimately reimbursed the expense.

Common questions

Were X Company's purchases exempt? No.

Did reimbursement by the facility change the result? No.

Which purchases were exempt? Purchases made directly by the Bristol Resource Recovery Facility.

Did the incorporated-materials exemption apply? No.

Citations and references

  • The published ruling text does not cite a specific statute or regulation number.

Source

Original ruling text

Ruling 89-156, Exemption - Governmental

Ruling 89-156

Exemption - Governmental

You have requested that purchases made by X Company on your behalf be regarded as exempt from sales and use tax.

X Company is a corporation that is not exempt from tax on purchased goods and services. The sales and use taxes paid by X Company are an operating expense which is then reimbursed by the Bristol Resource Recovery Facility. Only purchases made directly by the Bristol Resource Recovery Facility are exempt from sales and use tax.

While our regulations contain an exemption for materials incorporated in tax exempt property, those provisions do not apply to the described situation. Accordingly, I must advise you that the described purchases by X Company are subject to tax.

TIMOTHY F. BANNON

COMMISSIONER

October 26, 1989

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