How were utility-tax refunds, miscellaneous utility charges, service plans, fees, and exemption certificates handled under Connecticut Ruling 89-168?

Note -- superseded historical guidance. DRS marks this information "not current" and states that Policy Statement (PS) 94(3) superseded the ruling.

Plain-English summary

Utilities were to process refunds by crediting customer accounts and deducting the amount from sales tax currently or later due to the state, depending on whether the exemption certificate arrived before or after the utility had remitted the tax. DRS would not process the refund directly.

Utility service charges were taxable. The utility tax did not apply to installation charges or replacement or repair of utility-owned equipment. Maintenance or repair of customer-owned equipment instead was subject to the separate tax on tangible-personal-property repair services. Service plans were taxable under Special Notice LSN-92. Late-payment and bad-check charges were not taxable.

A utility could rely on an exemption certificate even when the customer omitted SIC codes or a tax-registration number.

What this means for you

The historical ruling separated utility-tax charges from separately taxed repair services and assigned refund administration to utilities. PS 94(3) later superseded it.

Common questions

Who processed utility-tax refunds? The utility, through an account credit and remittance offset.

Were utility service charges taxable? Yes.

Were installation and utility-owned equipment work taxable under the utility tax? No.

Were customer-owned equipment repairs tax-free? No; they were taxed separately as tangible-personal-property repair services.

Were late and bad-check fees taxable? No.

Citations and references

• Conn. Gen. Stat. § 12-407(2)(i)(DD), as cited in the ruling.
• Special Notice LSN-92, as cited in the ruling.
• Policy Statement (PS) 94(3) -- identified by DRS as superseding this ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-168

Original ruling text

Ruling 89-168, Utility Sales Tax

This information is not current and is being provided for reference purposes only

Ruling 89-168

Utility Sales Tax

This Ruling has been superseded by  PS 94(3)

The Legal Division has reviewed your request for guidance on behalf of utility companies concerning the implementation of the sales tax on gas and electric services.

1. Tax refunds should be processed by each utility by crediting the customer's account and by deducting the refund amount from a subsequent sales tax payment. Thus, the Department of Revenue Services will not be directly involved in this process.

When the customer completes the exemption certificate before the utility has paid the customer's sales tax to the State, the utility may credit the customer's account and deduct the refund amount from the sales tax then due and payable to the State.

When the customer completes his exemption certificate after the utility has paid the customer's sales tax to the state, the utility may credit the refund amount to the customer's sales tax and deduct the refund amount against a subsequent sales tax payment due and payable to the State.

2. With respect to the miscellaneous charges outlined in your letter, the utility sales tax would apply to service charges. The sales tax on utility bills does not apply to:

a. installation charges;

b. charges for the replacement or repair of utility-owned equipment;

c. charges for maintenance or repair to customer-owned equipment is subject to the sales tax on maintenance and repair services to tangible personal property under Conn. Gen. Stat. § 12-407(2)(i)(DD);

d. service plans are taxable in accordance with Special Notice LSN-92 enclosed herewith;

e. late payment charges are not subject to the sales tax; and

f. bad-check charges are not subject to the sales tax.

3. The utility may rely on an exemption certificate even though the customer fails to state its SIC Code(s) or tax registration number.

LEGAL DIVISION

October 27, 1989