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Ezel / Tax Rulings / CT
CT Ruling 89-6 Sales and Use Taxes 1989-04-27

Could a private developer buy sewer-system materials tax-free under Connecticut Ruling 89-6?

Short answer: No. The governmental contractor exemption required a municipal-improvement contract paid with public funds. A municipality's benefit from developer-funded improvements required as a subdivision condition was not enough. The ruling is obsolete in part.

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 1989 Connecticut Department of Revenue Services Ruling is not fully current. The official page says it was obsoleted in part by Announcement 2000(8), so it is provided only as historical reference and should not be used as current authority without further review. It addressed one private developer's sewer project and the governmental construction exemption under the law then in effect. 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 current municipal-project exemptions.
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

A municipal planning and zoning commission required a private developer to install a sanitary sewer system, including pumping stations, as a condition of subdivision approval.

The developer could not use the governmental contractor exemption. That exemption applied to contractors working under municipal-improvement contracts paid with public funds and covered materials and supplies physically incorporated into the project.

A municipality's benefit from improvements to municipal property was not enough when the municipality did not contract for the improvements.

The official archive says the ruling was obsoleted in part by Announcement 2000(8).

What this means for you

The historical ruling distinguished a public contract funded by the municipality from privately funded work required as a development condition. Current exemptions must be checked separately.

Common questions

Did the municipality benefit from the sewer system? Yes, but that alone did not establish the exemption.

What did the exemption require? A contract for municipal improvements paid with public funds.

Could the private developer buy the materials tax-free? No under the described facts.

Citations and references

  • Conn. Gen. Stat. § 12-412(1), Conn. Agencies Regs. § 12-426-18(b), and Connecticut Water Co. v. Barbato, 206 Conn. 337 (1988), as cited in the ruling.

Source

Original ruling text

Ruling 89-6, Exemption - Governmental

Ruling 89-6

Exemption - Governmental

This Ruling is obsoleted in part by   AN 2000(8)

You have asked for a ruling as to whether a private developer who has been required by a Municipal Planning and Zoning Commission to install a sanitary sewer system, including pumping stations as a condition of subdivision approval, can purchase materials for said project without payment of the Connecticut sales tax.

Sales to political subdivisions of the State of Connecticut are exempt from sales tax; Conn. Gen. Stat. §12-412(1). There is an extension of this exemption which pertains to contractors who enter into construction contracts with inter alia municipalities. Under this exemption, such contractors:

may purchase . . . materials and supplies as are to be physically incorporated in and become a permanent part of the projects being performed under [the] contracts without payment of the tax. Conn. Agencies Reg. §12-426-18(b).

This exemption is to be narrowly construed. Connecticut Water Company v. Barbato, 206 Conn. 337 (1988). It applies only in those instances where a contract for municipal improvements that are paid for by public funds exists. In instances where the municipality benefits from, but does not contract for, improvements to municipal property, the exemption does not pertain.

LEGAL DIVISION

April 27, 1989

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