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Ezel / Tax Rulings / CT
CT Ruling 89-178 Sales and Use Taxes 1989-10-30

How were engine-repair labor and parts taxed for personal versus business vehicles under Connecticut Ruling 89-178?

Short answer: Labor was exempt for a personal vehicle but taxable for a vehicle used in a trade or business; repair parts were taxable in both cases. Subcontracted parts and labor could be bought for resale with a valid certificate. DRS says AN 2000(8) obsoleted the ruling.

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 reflecting the motor-vehicle repair rules then in effect. DRS expressly marks the information 'not current' and says Announcement (AN) 2000(8) obsoleted it. Its labor, parts, resale-certificate, and invoice-statement outcomes depended on personal versus trade-or-business vehicle use. 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)

Note -- obsolete historical guidance. DRS marks this information "not current" and states that Announcement (AN) 2000(8) obsoleted the ruling.

Plain-English summary

Engine-repair labor for a vehicle not used in a trade or business was exempt, even when the customer removed the engine and brought it to the repair company. Engine-repair labor for a business vehicle was taxable. Repair parts were taxable in both situations.

When a motor-vehicle repair shop subcontracted engine work, it could buy parts and labor for resale by issuing a bona fide resale certificate. The invoice also needed a purchaser-signed statement showing whether the service concerned a personal or business vehicle.

What this means for you

The historical labor result turned on vehicle use, while parts stayed taxable. AN 2000(8) later obsoleted the guidance.

Common questions

Was labor on a personal-vehicle engine taxable? No under the ruling.

Was labor on a business-vehicle engine taxable? Yes.

Were repair parts taxable? Yes in both cases.

Could subcontracted repairs be purchased for resale? Yes with a bona fide resale certificate.

Citations and references

  • Announcement (AN) 2000(8) -- identified by DRS as obsoleting this ruling.

Source

Original ruling text

Ruling 89-178, Motor Vehicle Repairs

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

Ruling 89-178

Motor Vehicle Repairs

This Ruling has been obsoleted by   AN 2000(8)

The labor charges for repairs to the engine of a motor vehicle, which is not used in a trade or business, are exempt from the sales and use tax even if the engine is removed from the automobile by the customer and brought into X Company for repair services.

The labor charges for repairs to the engine of a motor vehicle which is used in a trade or business are subject to sales and use tax.

In both of the above situations, the charges for repair parts are taxable.

In the event that a motor vehicle repair shop subcontracts engine repair work to X Company, the parts and/or labor may be purchased for resale provided the motor vehicle repair shop issues a bona fide resale certificate to you.

Enclosed is a Special Notice Regarding Taxation of Repair Services to Motor Vehicles Used in a Trade of Business. Please refer to IV. Illustrations for information concerning the statement that must be printed or stamped on the invoice and signed by the purchaser. The statement should indicate whether you are rendering services to a personal vehicle or business vehicle.

LEGAL DIVISION

October 30, 1989

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