Did Connecticut Ruling 89-100 preserve a municipality's exemption when architectural services and building materials were purchased through a private intermediary?

Plain-English summary

When an architect and the project's subcontractors contracted directly with a municipality or other tax-exempt entity, architectural services and materials physically incorporated into the building were exempt. The architect was instructed to obtain either a Governmental Agency Exemption Certificate or a Charitable and Religious Organizations Exemption Certificate.

The exemption was lost when a private intermediary purchased the services and materials, as in a turn-key project. In that structure, the private contractor—not the municipality—was the purchaser.

The official page says this information is not current and AN 94(3) obsoleted the ruling. The page's 'Agricultural Services' label does not match the architectural-services text published beneath it.

What this means for you

The historical ruling made direct contracting and the purchaser's identity central to the exemption. Routing an exempt entity's project through a private turn-key contractor changed who bought the services and materials and defeated the exemption described in the ruling.

Common questions

Were directly purchased architectural services exempt? Yes, when the architect contracted directly with the qualifying municipality or exempt entity and obtained the appropriate certificate.

Were incorporated building materials exempt in the direct-contract structure? Yes under the ruling.

What happened in a turn-key project? The private intermediary was the purchaser, so the exemption was lost for services and materials.

Citations and references

• AN 94(3), identified by the official page as obsoleting this ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-100

Original ruling text

Ruling 89-100, Agricultural Services

This information is not current and is being provided for reference purposes only

This Ruling has been obsoleted by   AN 94(3)

You have inquired as to the taxability of architectural services that are rendered to municipalities or other tax-exempt entities through intermediary parties.

In situations where both the architect and the subcontractors on the job contract directly with a municipality or tax-exempt entity, the sales tax would not apply to architectural services or to the purchase of materials physically incorporated in the building. The architect should obtain a "Governmental Agency Exemption Certificate" or a "Charitable and Religious Organizations Exemption Certificate."

However, in situations where an intermediary party is involved, such as in a "turn-key" project, the tax exemption is lost both for the provider of services and on the purchase of materials because a private contractor is the purchaser of the services and materials, not the municipality.

Any exemption from tax must be granted by the General Assembly. If the you decide to pursue a legislative remedy, I suggest that you contact our Legal Division which stands ready to assist you in drafting suggested language.

TIMOTHY F. BANNON

COMMISSIONER

September 20, 1989