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Ezel / Tax Rulings / CT
CT Ruling 90-29 Sales and Use Taxes 1990-02-26

Were architectural services for the State of Connecticut exempt when a Connecticut contractor subcontracted some or all work to a related foreign corporation?

Short answer: Yes under this historical ruling. Architectural services rendered to the State were exempt whether performed directly or through the subcontract. The Connecticut corporation could issue the foreign affiliate a resale certificate for the subcontracted work. DRS marks the ruling not current and obsoleted by AN 94(3).

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1990
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 1990 Connecticut Department of Revenue Services Ruling reflecting the architectural-service and government-contract rules then in effect. DRS expressly marks it 'not current' and says Announcement (AN) 94(3) obsoleted it. Its state-contract exemption and resale-certificate treatment should not be assumed current or applied to different contracting parties. 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 ruling "not current" and states that it was obsoleted by Announcement (AN) 94(3).

Plain-English summary

A Connecticut corporation owned equally by four individuals was licensed to provide architectural services. It planned to contract with the State of Connecticut and subcontract some, or sometimes all, of the architectural work to a foreign corporation owned by three of the four individuals.

DRS ruled that architectural services rendered to the State were exempt from sales tax, whether performed directly or indirectly through the subcontractor.

The Connecticut corporation could issue a resale certificate to the foreign corporation for its subcontracted work. The final architectural services sold by the Connecticut corporation to the State remained exempt.

What this means for you

Under the historical ruling, using a related out-of-state subcontractor did not destroy the State contract's exemption. The prime contractor used a resale certificate for the subcontracted service, while the sale to Connecticut remained exempt.

Common questions

Did the foreign affiliate's work have to be performed directly for the State? No. The ruling covered services performed indirectly through a subcontract.

Could all architectural work be subcontracted? The proposed arrangement contemplated subcontracting some or, in some cases, all of it.

Can this ruling establish current treatment? No. DRS marks it not current and obsoleted by AN 94(3).

Citations and references

  • Announcement (AN) 94(3) -- identified by DRS as obsoleting this ruling.

Source

Original ruling text

Ruling 90-29, Architectural Services

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

Ruling 90-29

Architectural Services

This Ruling has been obsoleted by   AN 94(3)

You have inquired whether the sales tax on architectural services applies to the following proposed transaction.

A Connecticut corporation owned equally by four individuals (A, B, C & D) is licensed to provide architectural services. This corporation is entering into architectural contracts with the State of Connecticut and expects to subcontract some or, in some cases, all of the architectural work to a foreign corporation owned by A, B, and C.

It is ruled that architectural services rendered to the State of Connecticut, either directly or indirectly pursuant to a subcontract are exempt from the sales tax. The Connecticut corporation may issue a resale certificate to the foreign corporation with respect to work performed by the foreign corporation. Thus, the architectural services sold to the State of Connecticut by the Connecticut corporation are exempt from the sales tax.

LEGAL DIVISION

February 26, 1990

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