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Ezel / Tax Rulings / CT
CT Ruling 90-70 Sales and Use Taxes 1990-12-20

May a Connecticut lessor exclude insurance charges from taxable gross receipts on a tangible-personal-property lease?

Short answer: Yes, but only when the insurance charge is separately stated and the lessee may either accept the lessor's insurance or obtain other coverage. Conn. Agencies Regs. § 12-426-25(c) excludes qualifying insurance charges from lease gross receipts; a lessor that does not separately state them cannot use that exclusion.

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 Ruling of the Connecticut Department of Revenue Services (DRS), typically issued to a specific taxpayer in response to that taxpayer's request and based on the specific facts presented and the Connecticut tax law in effect when it was issued. DRS may later declare a Ruling obsolete or supersede it by a subsequent Ruling, Policy Statement, or Announcement, so a taxpayer with different facts should not assume it still applies. Taxpayer-identifying details are redacted. Connecticut imposes its 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)

Plain-English summary

A lessor of tangible personal property could exclude an insurance charge from taxable gross receipts only if two conditions were met:

  • The insurance amount was separately stated.
  • The lessee could accept the lessor's insurance offer or obtain other coverage.

DRS based the answer directly on Conn. Agencies Regs. § 12-426-25(c). If the lessor wanted the exclusion, it had to follow the regulation's invoicing requirement.

What this means for you

Optionality and separate billing are both important. A bundled charge or mandatory lessor coverage does not match the facts stated in the ruling.

Common questions

Is every lease-insurance charge excluded? No. It must be separately stated and optional.

What if the lessee can buy its own coverage? That satisfies the optional-coverage element, assuming the charge is also separately stated.

Citations and references

  • Conn. Agencies Regs. § 12-426-25(c).

Source

Original ruling text

Ruling 90-70, Leasing Tangible Personal Property

Ruling 90-70

Leasing Tangible Personal Property

ISSUE:

Whether companies in the business of leasing tangible personal property can exclude insurance charges from their gross receipts when charging sales tax.

RULING:

Section 12-426-25(c) of the Regulations of Connecticut State Agencies states, "Gross receipts shall not include the cost of gasoline or insurance charges when such amounts are separately stated and the lessee has the option to either accept the lessor's insurance offer or to procure other coverage."

In order to exclude insurance charges from their gross receipts, companies in the business of leasing tangible personal property must follow the requirements set forth in Regulations Section 12-426-25(c) by separately stating the insurance charges.

LEGAL DIVISION

December 20, 1990

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