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The trial court held that consulting services did not constitute a taxable activity. However, the retroactive application of the amended statute clarified the terms "sale" and "selling" to include the installation and implementation of software programs and systems, even where such services are rendered in connection with the creation, development, or production of canned or custom software subjected the consulting company's services to sales and use tax. (Anderson Consulting LLP, Connecticut Supreme Court, SC 16296, March 27, 2001)


The Connecticut Supreme Court ruled that customized computer software was found to be considered a computer data processing service which is taxable in the state of Connecticut. (Connecticut Supreme Court, Anderson Consulting LLP v. Gavin, No. SC 16296 3/23/01)


In H.B. 7030, Section 12-408(1) (E) has been amended and, effective 7/1/97, the sales and use tax on computer and data processing services will be phased out. The phase out will be over a six year period with the phase out tax rates as follows:
7/1/97 through 6/30/98 – 5%
7/1/98 through 6/30/99 – 4%
7/1/99 through 6/30/00 – 3%
7/1/00 through 6/30/01 – 2%
7/1/01 through 6/30/02 – 1%
7/1/02 and thereafter – Exempt



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