Connecticut State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Connecticut, with full citations and the original source on every page.
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Are subscriptions to an online learning platform taxable in Connecticut as digital goods, or as an enumerated training service?
The online learning plans are generally NOT taxable as digital goods, because their true object is a nontaxable education or training service, not the sale of an audio-visual product. But depending on…
When Connecticut combined-group members that were allocated net operating losses merge into another member, do those NOLs survive so the surviving group can still use them?
Yes. Net operating losses allocated to combined unitary group members that merged into another member survive the merger and may be used by the surviving member -- or shared with any other member that…
Is the labor to install a fuel cell facility on real property a taxable service in Connecticut, or is it exempt as new construction / a site improvement?
The labor to install the fuel cell facility is a service to real property, not the installation of tangible personal property. And because the facility is a site improvement (construction of new real …
Is a Connecticut staffing company that employs healthcare workers and places them with client providers selling taxable personnel services?
Yes. Because the company employs the healthcare practitioners and the clients control what work they do and how, the true object is furnishing staff, so the charges are taxable personnel services unde…
In Connecticut, does a third-party food-delivery company have to charge sales tax on restaurant meals it resells, and is the delivery fee taxable?
The delivery company must charge sales tax on the meals it resells to customers and must include its delivery fee in the taxable price. Because the delivery company is reselling the meals, the restaur…
Is a transprostatic implant that corrects a urinary-tract deformity exempt from Connecticut sales tax as a correction for a functioning part of the body?
Yes. A permanent transprostatic implant that corrects a urinary-tract deformity is exempt from Connecticut sales tax under Conn. Gen. Stat. § 12-412(19)(C) as a correction or substitute for a function…
Are fees for premium content on restaurant table tablets taxable, is the vendor's device charge a taxable lease, and must the out-of-state vendor register in Connecticut?
Three yeses. Fees the restaurant charges customers for premium content (news, sports, games, music) on the table tablets are taxable computer and data processing services. The monthly fee the restaura…
Are spinal braces and cervical collars exempt from Connecticut sales tax when a medical provider customizes them for a specific patient?
Yes. Spinal orthotics such as back braces and cervical collars are exempt from Connecticut sales tax under Conn. Gen. Stat. § 12-412(19)(B) when a medical provider individually alters them (trimming, …
When are motor vehicle towing, transport, and roadside assistance services taxable in Connecticut, and can they be bought for resale?
It depends on how the vehicle is moved. Moving vehicles by automobile carrier truck (between lots or to auction) is not taxable, but moving them by wrecker or flatbed wrecker is taxable motor vehicle …
Is property management for a residential housing cooperative a taxable service to real property in Connecticut?
Yes. A residential housing cooperative is treated as income-producing real property -- the cooperative owns the property and members pay their share of its expenses as cooperative income -- so propert…
Does a public golf course owned by a nonprofit's single-member LLC have to charge Connecticut admissions tax on daily and seasonal greens fees?
It depends on the fee. Daily greens fees at the public course are exempt from Connecticut admissions tax as daily charges to participate in a sporting activity. But seasonal greens fees are taxable, b…
Are Connecticut sales and use taxes owed on a home warranty (home service contract), and does it matter whether the home is owner-occupied or a rental?
It depends on how the home is used. A home warranty on income-producing (rental) residential property is taxable on the entire contract price as a service to income-producing real property. On an owne…
Are orthodontists' clear aligners, protective gloves and masks, and give-away dental hygiene items subject to Connecticut sales and use tax?
It's a mix. Custom clear aligners are exempt as corrective equipment worn for a functioning part of the body under Conn. Gen. Stat. § 12-412(19)(C). The gloves and masks orthodontists and their staff …
Are herbal aloe beverages marketed with health claims taxable in Connecticut, or exempt as food products?
Exempt. The herbal aloe products — ready-to-drink, liquid concentrate, and powder-for-water — are exempt from Connecticut sales and use tax as food products for human consumption under Conn. Gen. Stat…
Are nutritional shakes, nutrition bars, and whole-food chewable tablets taxable in Connecticut, or exempt as food products?
Exempt. Powdered nutritional shake mixes and nutrition bars sold as snacks or meal substitutes, and chewable tablets and capsules made from powdered whole fruits, vegetables and grains, are all exempt…
Is a lab's testing of medical marijuana for safety and potency subject to Connecticut sales and use tax?
No. A lab's services testing medical marijuana for safety and potency are not subject to Connecticut sales and use tax, because testing services are not among the enumerated taxable services in Conn. …
Is a subscription fee for streaming or accessing digital content over the Internet subject to Connecticut sales and use tax?
Yes. A recurring subscription fee for streaming or otherwise accessing digital content over the Internet is subject to Connecticut sales and use tax when sold to a Connecticut customer, because provid…
Does a Connecticut store have to charge sales tax on bottled kombucha, or is it exempt as a food product?
No — kombucha is not exempt; it is taxable. Because kombucha is a carbonated beverage, it is excluded from Connecticut's sales-tax exemption for food products for human consumption under Conn. Gen. St…
Is a prescription cancer-treatment device that uses electric fields exempt from Connecticut sales and use tax?
Yes. Gross receipts from the retail sale of the Product — an FDA-approved, prescription-only device that uses alternating electric fields to treat glioblastoma (an aggressive brain cancer) — are exemp…
Which of an executive-search and leadership-consulting firm's services are subject to Connecticut sales and use tax?
It depends on the specific service. Executive and middle-management search are taxable employment-agency services, and most of the firm's assessment and consulting offerings — executive/board/cultural…
Does a homeowner owe Connecticut sales tax on propane bought to fuel a standby generator at home?
No. The sale of propane used to run a standby generator at a residential dwelling is exempt from Connecticut sales and use tax under Conn. Gen. Stat. § 12-412(3)(A), which exempts gas -- including bot…
Are admissions to a nonprofit university's basketball games, held at a rented venue, exempt from Connecticut admissions tax?
Exempt. Admissions to a 501(c)(3) university's basketball games, held at a rented venue, are exempt from Connecticut's admissions tax under Conn. Gen. Stat. § 12-541(a)(3), because all of the event pr…
Are copies of medical records taxable in Connecticut, and does it matter whether they're delivered on paper, by online access, by fax, or by email?
It depends on how the records are delivered. Paper (hard-copy) medical records sold by a records-retrieval vendor are taxable sales of tangible personal property, and giving Requesting Parties access …
Does a nonprofit charitable hospital that runs a hotel owe Connecticut room occupancy tax on the rooms it rents?
It depends on the guest. A nonprofit charitable hospital operating a hotel owes Connecticut room occupancy tax on rent from the general public, but not on rent from 'Priority Guests' — patients, their…
Does a Connecticut photo booth business owe sales tax on the charge for a booth and attendant at a wedding or event?
Yes. A single, non-separately-stated charge for a photo booth and its attendant at an event is a taxable rental of tangible personal property under Conn. Gen. Stat. § 12-407(a)(2)(J). Because the even…
Is the electricity a wireless carrier uses at its Connecticut cell sites exempt as manufacturing utility use?
No. Electricity a wireless carrier uses at its Connecticut cell sites to transmit signals is not exempt under Conn. Gen. Stat. § 12-412(3)(A). That exemption covers electricity used directly to fabric…
Is leasing dark fiber taxed as a property lease and lit fiber as a telecommunications service in Connecticut?
Both are taxable, under different rules. Leasing 'dark fiber' -- the fiber-optic cable itself, without the equipment to light it -- is a taxable lease of tangible personal property under Conn. Gen. St…
Is a court-ordered qualified settlement fund subject to the Connecticut corporation business tax?
No. A 'qualified settlement fund' -- here a court-supervised fund holding disgorgement and penalties from an SEC enforcement action, as defined in 26 C.F.R. § 1.468B-1 -- is not subject to the Connect…
Does a company that arranges satellite TV for hotels, but doesn't transmit it, owe Connecticut's satellite gross earnings tax?
No. A company that arranges and resells satellite television programming to hotels -- collecting payments and earning a commission, but not itself transmitting the signal -- is not subject to Connecti…
Are the gross earnings from the first Connecticut sale of a 5% biodiesel / 95% petroleum blend subject to the petroleum products gross earnings tax -- and does it matter whether the blend is motor vehicle fuel or heating oil?
It depends on how the blend is used. A blend that is 95% petroleum diesel and 5% pure biodiesel, sold as motor vehicle fuel, IS subject to Connecticut's petroleum products gross earnings tax on its fi…
When a hotel guest pays a third-party vendor directly by in-room credit card reader for pay-per-view movies, who owes Connecticut sales tax, and does the room occupancy tax apply?
The guest owes the 6% Connecticut sales and use tax, and no room occupancy tax applies. In-room pay-per-view movies are a taxable 'community antenna television service' under Conn. Gen. Stat. § 12-407…
When a Connecticut retailer swaps a defective or unsatisfactory item for an identical or similar one at no extra charge, is any additional sales tax due -- even without the original receipt or more than 90 days later?
No additional Connecticut sales tax is due. When a retailer replaces a defective or unsatisfactory item with an identical or similar item for no additional charge (an "even exchange"), that is neither…
When a Connecticut resident exercises a testamentary power of appointment to create a new trust, is that appointive trust's residency set by the residency of the person who gave the power (the donor) or the person who exercised it (the donee)?
It depends on the type of power. If the power exercised is NOT a general power of appointment (a 'special' power), the appointive trust's Connecticut residency is determined by the residency of the DO…
Can an asphalt-making paving contractor qualify for the manufacturing machinery exemption by splitting its paving jobs into separate contracts for the asphalt and the installation?
No. An asphalt-making paving contractor cannot qualify for the manufacturing machinery exemption (Conn. Gen. Stat. § 12-412(34)) by splitting its paving jobs into separate contracts for the asphalt an…
Does generating electricity count as 'processing' under Connecticut's Manufacturing Recovery Act, so that machinery and equipment used to generate electricity qualify for the partial sales and use tax exemption?
No. Generating electricity is not 'processing' under Connecticut's Manufacturing Recovery Act (MRA), so purchases of machinery and equipment used primarily to generate electricity do NOT qualify for t…
When you sell or exchange your interest in a unit investment trust that holds Connecticut state or local bonds, how is the gain or loss treated for Connecticut income tax?
Gain is subtracted and loss is added back. A holder who sells or exchanges an interest in a unit investment trust (UIT) must, in figuring Connecticut adjusted gross income, SUBTRACT any gain -- and AD…
When corporations make a federal I.R.C. section 338(h)(10) election to treat a stock sale as an asset sale, is the resulting gain apportionable business income for Connecticut, and is it a sale of stock or of assets in the receipts factor?
The gain is apportionable, and it is treated as a sale of ASSETS. When corporations make a federal I.R.C. section 338(h)(10) election -- treating a stock sale as a deemed sale of the target's assets -…
A wholesaler stores goods in Connecticut with an unaffiliated fulfillment company and drop-ships them to an out-of-state retailer's Connecticut customers -- must the wholesaler collect Connecticut sales tax, or does the fulfillment house exclusion relieve it?
The wholesaler must collect Connecticut sales tax, and the fulfillment house exclusion does not save it. Under the 'drop shipment rule' (Conn. Gen. Stat. § 12-407(a)(3)(A)), when a wholesaler delivers…
Is blended biodiesel (about 20% biodiesel, 80% petroleum diesel) subject to Connecticut's motor vehicle fuels tax, and if so at what rate?
Yes. Blended biodiesel -- here about 20% pure biodiesel mixed with 80% petroleum diesel and usable in most diesel engines -- is subject to Connecticut's motor vehicle fuels tax at the DIESEL FUEL rate…
Are packet data-transmission offerings (X.25 and Frame Relay) taxable as telecommunications services or as computer and data processing services in Connecticut, and can the underlying telecom services be bought for resale?
They are taxed differently. The company's Frame Relay Service is a telecommunications service, taxable at 6%, and the telecommunications services the company buys to provide it CAN be purchased for re…
Are food-service management services at a for-profit assisted living facility taxable, and do the elderly-center or meals exemptions apply?
The management services are taxable, but direct meal sales to residents are exempt. A company that manages the food-service operation at a for-profit assisted living facility is providing taxable BUSI…
How do Connecticut's sales, use, admissions, and motor vehicle fuels taxes apply to a federally recognized Indian tribe's purchases and sales, both inside and outside its Indian country?
It depends on who legally bears the tax and where value is generated. Under U.S. Supreme Court doctrine, if a tax's legal incidence falls on the Tribe for a sale made inside Indian country, Connecticu…
Does a water company's discounted (bargain) sale of open space land and conservation easements to the State and a nonprofit qualify for the open space land donation tax credit, and how is 'use value' measured given the land's restrictions?
Yes -- the discounted (bargain) sale qualifies for the credit, and 'use value' is measured net of the land's restrictions. A water company that sells Class II/III land and Class I conservation easemen…
For an interstate ferry crew and onshore staff, whose wages are subject to Connecticut income tax withholding and Connecticut income tax, given the federal law that preempts state taxation of vessel crew?
Federal maritime law (46 U.S.C. section 11108) controls the ferry crew. For masters and seamen who work on the interstate ferries (including those with de minimis onshore duties), Connecticut CANNOT w…
When a power plant buys electricity, can it buy it tax-free — for resale, or as electricity used to generate its own electricity?
Partly yes. A Connecticut power producer may buy electricity tax-free for RESALE when it resells that power to wholesalers and distributors (Conn. Gen. Stat. § 12-410). It may also buy electricity exe…
Is the work of a consultant hired as an interim VP of sales and marketing -- recruiting reps, negotiating contracts, briefing the board, polishing sales materials -- taxable in Connecticut as a business consulting or advertising service?
Mostly taxable. A consultant hired as an interim VP of sales and marketing performed work that DRS treated as taxable business analysis, business management, business management consulting and busines…
If a Connecticut individual owns a mutual fund that invests in other funds holding Connecticut municipal bonds, are the exempt-interest dividends that flow through both funds still exempt from Connecticut income tax?
Yes -- the exemption flows through. A Connecticut individual who owns an upper-tier fund that in turn owns lower-tier funds holding Connecticut (and U.S.-territory) municipal bonds does NOT have to ad…
When gas service is unbundled -- one company sells the gas and the local utility only transports it -- are the utility's transportation charges subject to Connecticut sales tax?
It depends on who is the retailer of the gas. Taxable 'delivery' charges (Conn. Gen. Stat. § 12-407(8)/(9)) are only those charged BY the retailer of the property. So when a gas marketer sells the gas…
When natural-gas service is unbundled, how much of the gas-marketer's and the local utility's charges count as taxable gross earnings under Connecticut's utility company gross earnings tax?
Each company is taxed on its own slice, with no overlap. Under Conn. Gen. Stat. § 12-264(a), a local distribution company (LDC) counts its transportation revenue (income classified as operating revenu…
When a company builds a power plant, can it buy the fuel and equipment tax-free -- fully as a utility 'furnishing electricity,' and partially as machinery used in 'processing'?
Both exemptions apply, at different levels. Generating electricity for sale counts as 'furnishing electricity' under Conn. Gen. Stat. § 12-412(18), so materials, tools and fuel used directly in genera…
Is a corporate 'in-house bank' that mainly lends to its own affiliates a 'financial service company' for Connecticut corporation business tax -- even though the loans are to related parties?
Yes. A corporate 'in-house bank' subsidiary that derives more than 50% of its gross income from loans is a 'financial service company' under Conn. Gen. Stat. § 12-218b(a)(6)(J) -- and it does NOT lose…
Can I move real estate into an LLC, partnership, or corporation without paying Connecticut real estate conveyance tax, if my beneficial ownership doesn't change -- even though I might transfer interests later?
Yes. A transfer that merely changes the form or identity of ownership -- with no change in beneficial ownership -- is exempt from Connecticut real estate conveyance tax under Conn. Gen. Stat. § 12-498…
Is professional 'proficiency testing' of Connecticut labs a taxable service, and does the out-of-state provider owe Connecticut use tax on the test materials it ships into the state?
Two answers. The proficiency-testing service itself is NOT taxable: though it looks like taxable 'business analysis,' it's excluded because it is performed by a profession (pathologists) under the pro…
Are rented uniforms and 'lab coats' costing less than $50 exempt from Connecticut sales tax, or are they taxable 'protective' clothing?
Exempt. Rented uniforms and 'lab coats' that cost less than $50 each and simply identify employees or protect against soil and stain are exempt articles of clothing under Conn. Gen. Stat. § 12-412(47)…
When partners split one real-estate partnership into several, do the deeds moving property to the new partnerships trigger Connecticut real estate conveyance tax?
No tax. When one real-estate partnership is divided into several partnerships and the same partners keep the same ownership shares, the resulting partnerships are 'continuing partnerships' under 26 U.…
Is Connecticut's controlling interest transfer tax due when a parent merges a subsidiary into its own subsidiary that owns real estate, if the parent controls the property both before and after?
No tax. Connecticut's controlling interest transfer tax applies only when there is a transfer of ultimate control of an entity owning Connecticut real property. When a parent merges its first-tier sub…
Can a mutual fund (regulated investment company) subject to Connecticut corporation business tax deduct the tax-exempt bond dividends it passes through to shareholders, plus the related expenses federal law disallows?
Yes. Connecticut's corporation business tax (unlike the federal income tax) normally includes municipal-bond interest in a company's gross income. But there's a special exception for a regulated inves…
When Connecticut municipal-bond interest flows through a partnership 'Portfolio' and then a mutual fund to an individual, does it stay exempt from Connecticut income tax?
Yes -- the exemption survives the pass-through. Interest on Connecticut (and U.S.-territory) municipal bonds held by a partnership-classified 'Portfolio' keeps its character as Connecticut-bond intere…
Does a gas company get the lower 4% residential gross-earnings-tax rate on gas sold to multi-family apartment and condo buildings, even when it bills the landlord or property manager on a single meter?
Yes -- it's residential service. A local gas distribution company's gross earnings from selling and distributing gas to multi-family dwellings (apartments, duplexes, condominiums) are 'allocable to re…
Is the first Connecticut sale of No. 2 heating oil exempt from the petroleum products gross earnings tax when the buyer burns the oil to make steam that it pipes to customers to heat their buildings?
Exempt. When a petroleum distributor makes the first Connecticut sale of No. 2 heating oil to a business that burns it to heat water into steam and pipes that steam to customers to heat their building…
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These are official tax letter rulings and advisory opinions issued by Connecticut's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.