Were X's broad real-estate development consulting services taxable as architectural, building-engineering, or commercial-property services?

Note -- partially obsolete historical guidance. DRS marks this ruling "not current" and states that it was obsoleted in part by Announcement (AN) 94(3).

Plain-English summary

X provided a wide range of real-property development consulting, beginning with feasibility, market, financing, zoning, encumbrance, utility, and community-acceptance analysis. Later work could include demographics, site and permit review, budgets, financing, planning and zoning assistance, design coordination, preconstruction marketing, construction management, final financing, and tenant negotiations.

DRS ruled that the services as described were not taxable architectural or building-engineering services and were not taxable services to commercial real property.

What this means for you

The historical ruling treated X's broad development-consulting role as outside the listed taxable service categories. AN 94(3) later obsoleted the guidance in part.

Common questions

Were feasibility and market studies taxable? No under the described engagement.

Did the result cover construction management and design coordination? Yes, as part of the services described by X.

Did DRS classify the work as architectural or building engineering? No.

Citations and references

• Announcement (AN) 94(3) -- identified by DRS as partially obsoleting this ruling.
• The published ruling cites no specific statute or regulation.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-246

Original ruling text

Ruling 89-246, Engineering

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

This Ruling has been obsoleted in part by AN 94(3)

In your letter you state that X Group, Inc. and X Consulting Services [hereinafter jointly referred to as "X"] serve their clients as consultants in real property development, creating development opportunities and providing a wide range of development services. The services typically begin with a feasibility study of a project, with X analyzing the market conditions, determining available sources of financing, and researching and analyzing various constraints on a proposed project, such as zoning limitations, property encumbrances, availability of utilities and the likelihood of community acceptance.

If a project is deemed feasible, X then offers services entailing detailed investigatory work into the project, such as area demographics and market research, site evaluation, permit requirements, budget estimates and location of financing. Finally, upon a commitment to do a project, X's services can extend to assistance in the planning and zoning process, coordination of the project design, preconstruction marketing, construction management, final coordination of financing and the location of and negotiation with prospective tenants of the project.

The services that X provides to its clients, as set forth above, are not taxable architectural or building engineering services nor are they taxable services to commercial real property.

TIMOTHY F. BANNON

COMMISSIONER

November 29, 1989