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Services provided in the voluntary evaluation, prevention, treatment, containment, or removal of hazardous waste or other air, water, and soil contaminants are subject to Connecticut sales and use tax when provided to industrial, commercial, or income-producing real property, effective as of July 1, 2011. If a sample is taken from industrial, commercial, or income-producing real property and sent to a lab for testing, the lab is required to charge tax on its testing services. Environmental drilling services are subject to Connecticut sales and use tax when performed on industrial, commercial, or income-producing real property. Such services remain nontaxable when they are performed on residential real property. Environmental consulting services are not subject to tax. Businesses providing consulting services, lab testing services, and remediation services should separately state the taxable and nontaxable services on their invoices. Charges for evaluation, prevention, treatment, containment, or removal services should be separately stated, and tax should be charged on those services performed to industrial, commercial, or income-producing real property. Separately stated environmental consulting services are not subject to tax. If a business hires a subcontractor to remove contamination from industrial, commercial, or income-producing real property, the business is acting as a general contractor for the evaluation, prevention, treatment, containment, or removal of hazardous waste or other air, water, or soil contaminants and should provide a resale certificate to the subcontractor and include the services in taxable services on the bill to the end customer. The services are taxable regardless of where performed if they relate to industrial, commercial or income producing real property located within Connecticut. (Services Relating to Hazardous Waste and Other Contaminants of Air, Water, or Soil, Connecticut Department of Revenue Services, August 2011)

(05/21/2012)

Connecticut has revised a special notice pertaining to amendments made in the 2011 session of the state general assembly affecting the requirement for nonresident contractors to provide bonds for sales and use tax and withholding tax purposes. The 2011 legislation created two classes of nonresident contractors – verified and unverified. A nonresident prime or general contractor can gain verified status and eliminate the requirement to file a surety bond with the Connecticut Department of Revenue Services (DRS). A nonresident subcontractor who gains verified status eliminates the requirement for the prime or general contractor to hold back a portion of the amount owed to the subcontractor under the contract. Under the amended law, a single surety bond for 5% of the entire project price is required to be filed with the DRS by an unverified prime or general contractor when the contract price for the entire project is $250,000 or more. A prime or general contractor must hold back 5% of the amount due to an unverified subcontractor until the subcontractor obtains and furnishes Form AU-968, Certificate of Compliance, from the DRS. Prior law required compliance with one of three options to secure payment of Connecticut taxes for contracts with a nonresident prime or general contractor and with a nonresident subcontractor. This is replaced by the procedures described above. The notice also includes guidance on how to remit amounts held back from an unverified subcontractor by a prime or general contractor to the DRS. (Special Notice 2012(2), Connecticut Department of Revenue Services, March 22, 2012)

(05/21/2012)

Connecticut Governor Dannel Malloy signed the budget bill for the 2012/2013 biennum which includes a provision enacting click-through-nexus. The provision, effective as of May 4, 2011, amends the definition of “retailer” and “engaged in business” to include anyone making sales of taxable items or services through an independent contractor or representative who is located in Connecticut. Nexus would be imposed on a retailer who enters into an agreement with anyone who directly or indirectly refers potential customers to the retailer for a commission or other consideration, whether by a website link or otherwise. The retailer’s cumulative gross receipts from sales to Connecticut residents who are referred to the retailer by anyone located in Connecticut with this type of agreement must exceed $2,000 during the preceding four quarterly periods ending on the last day of March, June, September, and December. The provision presumes that such retailers are soliciting business through independent contractors or other representatives who are located in Connecticut. The proposed bill included a rebuttable presumption. However, the enacted bill eliminated this provision. (S.B. 1239, Laws 2011; Act 61 (H.B. 6652), Laws 2011)

(09/12/2011)

Effective July 1, 2011, a number of sales and use tax changes take place in Connecticut. The general sales and use tax rate – previously 6% - increases to 6.35%. The room occupancy tax rate increases from 12% to 15%. The tax on rental or lease of a motor vehicle for 30 days or less increases from 6% to 9.35%.

A higher tax rate of 7% applies to the sale of most motor vehicles for more than $50,000, the sale of a vessel for more than $100,000, the sale of jewelry for more than $5,000, and the sale for more than $1,000 of clothing or footwear, handbags, luggage, umbrellas, wallets, or watches.

Effective July 1, 2011, sales of the following services are taxable: services rendered in the voluntary evaluation, prevention, treatment, containment or removal of hazardous waste or other contaminants of air water or soil; airport valet parking; yoga instruction; motor vehicle storage services; packing and crating services; motor vehicle towing and road services; intrastate transportation services with certain exceptions; pet grooming, boarding and obedience services; services connected to a cosmetic medical procedure; manicure, pedicure and nail services; and spa services.

Effective July 1, 2011, exemptions on the following are repealed: clothing and footwear under $50; nonprescription drugs and medicines; smoking cessation products; cloth or fabric for noncommercial sewing; and yarn for noncommercial use.

In addition, the exemption for equipment installed in motor vehicles for persons with physical disabilities is expanded to apply to the portion of the sales price attributable to the equipment when a motor vehicle is resold. (Special Notice 2011(6), Connecticut Department of Revenue Services, June 10, 2011)

(06/30/2011)

The Connecticut Department of Revenue has issued a new informational publication that answers commonly asked questions about Connecticut use tax. This publication modifies and supersedes Informational Publication 2007(27), Q & A on the Connecticut Individual Use Tax. The new publication discusses various topics including: who must pay use tax, what kinds of goods or services are subject to use tax, exemptions available, how to report use tax liabilities, purchases made for use in the trade or business, purchases made from an out-of-state mail-order company, television shopping channel, or over the Internet, use tax filing requirements for motor vehicles, snowmobiles, vessels, and aircraft, and the penalties and interest for not paying the use tax. (Informational Publication 2009(33), Connecticut Department of Revenue Services, December 29, 2009)

(01/14/2010)

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