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Ezel / Tax Rulings / CT
CT Ruling 89-91 Sales and Use Taxes 1989-09-06

When did Connecticut Ruling 89-91 impose sales tax on a gift certificate transaction: at purchase or redemption?

Short answer: The gift certificate purchase was not taxable. The certificate became consideration when redeemed, and sales or use tax then applied to the total sales price of taxable merchandise purchased with it.

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 law then in effect to gift-certificate purchases and redemptions. Different stored-value products or later changes in law or guidance may produce a different result, and another taxpayer should not assume this historical ruling controls a current program. 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 treatment.
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

Buying a gift certificate was not subject to sales and use tax. Instead, the certificate was treated as consideration when the customer redeemed it.

At redemption, tax applied to the total sales price of any taxable merchandise purchased with the certificate.

What this means for you

The ruling deferred the taxable event from the certificate sale to the later purchase of taxable merchandise. It did not say that every redemption was taxable regardless of what was bought.

Common questions

Was the initial gift-certificate purchase taxable? No.

When was the certificate treated as consideration? When the retailer redeemed it.

What amount was taxed? The total sales price of taxable merchandise purchased at redemption.

Source

Original ruling text

Ruling 89-91, Gift Certificates

The purchase of a gift certificate is not subject to sales and use tax. The gift certificate is deemed to be consideration at the time it is redeemed by the retailer.

The sales or use tax applies to the total sales price for the purchase of taxable merchandise when the gift certificate is redeemed by the retailer.

LEGAL DIVISION

September 6, 1989

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