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Ezel / Tax Rulings / CT
CT Ruling 93-7 Sales and Use Taxes 1993-05-18

Is separately-stated labor to install a product excluded from Connecticut sales tax when the product is attached to real property?

Short answer: It depends on the type of real property. A company sold mailboxes and offered separately-stated installation (sinking a post, attaching the box). Conn. Gen. Stat. § 12-407(8)(e) and (9)(e) exclude separately-stated 'labor rendered in installing the property sold' from the taxable 'sales price' and 'gross receipts' -- BUT only 'exclusive of charges for any service rendered within the purview of' the tax on services to industrial, commercial or income-producing real property (Conn. Gen. Stat. § 12-407(2)(i)(I)). Reading the statute so that phrase isn't superfluous, DRS held that installation labor IS included in the taxable measure (taxable) when the property is installed into industrial, commercial or income-producing real property, and is EXCLUDED (not taxable) when installed into any other real property. So for these residential mailboxes, the separately-stated installation labor is NOT taxable, because a home is not industrial, commercial or income-producing real property.

Apply this to your situation

This page answers the general question as of 1993. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1993
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. The installation-labor exclusion and the services-to-real-property rules have been amended over time; confirm the current statute. 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 company sold mailboxes to homeowners and offered, for a separately stated fee, to install them — sinking a post and attaching the mailbox. The question: is that separately-stated installation labor excluded from the taxable measure of the sale (so the customer pays tax only on the mailbox, not the labor), given that the mailbox ends up attached to real property?

Connecticut measures sales and use tax on "sales price" / "gross receipts." Conn. Gen. Stat. § 12-407(8)(e) and (9)(e) exclude from that measure separately-stated charges for "labor rendered in installing … the property sold" — but with a crucial qualifier: the exclusion applies only if the charge is "exclusive of charges for any service rendered within the purview of" the tax on services to industrial, commercial or income-producing real property (Conn. Gen. Stat. § 12-407(2)(i)(I)).

DRS gave that qualifier meaning. Under settled statutory-construction rules (no word should be treated as superfluous — IBM v. Brown; Doe v. Institute of Living), the qualifier only makes sense if installation labor can sometimes be a taxable service to real property. So the answer turns on what kind of real property the item is installed into:

  • Installed into industrial, commercial or income-producing real property → the installation labor is a taxable service to real property, so it is included in the taxable measure (taxable).
  • Installed into any other real property (for example, residential property) → the installation-labor exclusion applies, so the labor is excluded from the taxable measure (not taxable).

Applied to these facts: the mailboxes go to residential customers, so the separately-stated installation labor is not taxable — the customer pays tax on the mailbox itself but not on the labor to install it.

What this means for you

Retailers and installers who sell a product plus installation

Whether your separately-stated installation labor is taxable depends on the property it's installed into. Install into a home or other non-commercial real property, and the separately-stated labor is generally excluded (not taxed). Install into commercial, industrial, or income-producing real property, and that same labor is generally taxable as a service to real property.

Separately state the labor — and know the property type

The exclusion only reaches separately stated installation labor. Beyond that, track whether the job site is residential vs. commercial/income-producing, because that classification flips the tax result on the labor.

The product is still taxable

This ruling is about the labor. The sale of the mailbox (or other product) itself remains taxable; only the separately-stated installation labor is excluded in the residential case.

Common questions

Q: Is installation labor taxable in Connecticut?
A: It depends on the real property. Separately-stated labor to install a product is excluded from tax when installed into residential (non-commercial) real property, but included/taxable when installed into industrial, commercial or income-producing real property.

Q: I install products in people's homes — is the labor taxed?
A: Not the separately-stated installation labor. A home is not industrial, commercial or income-producing real property, so that labor is excluded from the taxable measure. The product itself is still taxable.

Q: What if I install the same product in a commercial building?
A: Then the installation labor is a service to commercial real property and is included in the taxable measure — it's taxable.

Q: Does the labor have to be separately stated?
A: Yes. The exclusion applies to separately-stated installation-labor charges. If it isn't separately stated, it isn't carved out of the taxable sales price.

Citations and references

Statutes, regulations, and case law:

  • Conn. Gen. Stat. § 12-407(8)(e), (9)(e) (installation-labor exclusion from sales price/gross receipts)
  • Conn. Gen. Stat. § 12-407(2)(i)(I) (services to industrial, commercial or income-producing real property); Conn. Agencies Regs. § 12-407(2)(i)(I)-1
  • International Business Machines Corp. v. Brown, 167 Conn. 123, 134-135, 355 A.2d 236 (1974); Doe v. Institute of Living, Inc., 175 Conn. 49, 58, 392 A.2d 491 (1978)

Source

Original ruling text

Ruling 93-7, Sales and Use Taxes / Labor Rendered in Installing or Applying Tangible Personal Property

FACTS:

The Company sells mailboxes to residential customers. It offers its customers the option of having the mailboxes installed for an additional, separately stated fee. Installation involves the sinking of posts onto which the mailbox is then attached.

ISSUE:

Whether the Company's charges for labor rendered in installing tangible personal property are excluded from "gross receipts" and "sales price"--the measure of sales and use taxes--if the tangible personal property is installed into real property.

DISCUSSION:

Conn. Gen. Stat. § 12-407(8)(e) and (9)(e) exclude from the definitions of "sales price" and "gross receipts," respectively, charges for "labor rendered in installing ... the property sold, provided such charge is separately stated and exclusive of charges for any service rendered within the purview of [Conn. Gen. Stat. § 12-407(2)(i)(I)]."

"In construing a statute, no clause, sentence or word shall be treated as superfluous, void or insignificant unless there are compelling reasons why this principle cannot be followed." International Business Machines Corp. v. Brown, 167 Conn. 123, 134-135, 355 A.2d 236 (1974). "[Statutes should be construed so that no part of a legislative enactment is to be treated as insignificant and unnecessary, and there is a presumption of purpose behind every sentence, clause or phrase. State ex rel. Kennedy v. Frauwirth , 167 Conn. 165, 168, 355 A.2d 39; Charlton Press, Inc. v. Sullivan , 153 Conn. 103, 109, 214 A.2d 354." Doe v. Institute of Living, Inc ., 175 Conn. 49, 58, 392 A.2d 491 (1978).

The services rendered in installing or applying tangible personal property may encompass services to real property; otherwise, the phrase "exclusive of charges for any service rendered within the purview of [Conn. Gen. Stat. § 12-407(2)(i)(I)]" is superfluous. It cannot be presumed that the General Assembly would enact pointless legislation.

RULING:

Charges for labor rendered in installing tangible personal property are included in "gross receipts" and "sales price"--the measure of sales and use taxes--if the tangible personal property is installed into industrial, commercial or income-producing real property, as defined in Conn. Agencies Regs. § 12-407(2)(i)(I)-1, and excluded from "gross receipts" and "sales price" if the tangible personal property is installed into real property other than industrial, commercial or income-producing real property.

LEGAL DIVISION

May 18, 1993

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