How did Connecticut Ruling 89-110 tax forestry management, timber-sale brokerage, soil testing, and land-planning services?

Plain-English summary

Total receipts for forestry management were taxable as landscaping services. The described work included inventorying trees, preparing recommendations for tree care, harvesting, and planting, selecting and removing trees after the landowner approved the plan, and receiving a percentage commission from timber proceeds.

Broker fees for arranging timber sales were taxable. Soil-testing services were exempt, while land-planning services were not subject to sales and use tax.

The official page says AN 2000(8) obsoleted the ruling in part.

What this means for you

The historical ruling assigned different treatment to four related services rather than treating all land and forestry work alike. Because DRS marks it partly obsolete, current forestry engagements require current guidance.

Common questions

Were forestry-management receipts taxable? Yes, as landscaping services under the cited provision.

Were timber-sale broker fees taxable? Yes.

Was soil testing taxable? No; the ruling called it exempt.

Was land planning taxable? No; the ruling said it was not subject to sales and use tax.

Citations and references

• Conn. Gen. Stat. § 12-407(2)(i)(X), as amended by Public Act No. 89-251, as cited for forestry management.
• Conn. Gen. Stat. § 12-407(2)(i)(U), as amended by Public Act No. 89-251, as cited for broker fees.
• AN 2000(8), identified by the official page as partly obsoleting this ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-110

Original ruling text

Ruling 89-110, Forestry Management Services

This Ruling has been obsoleted in part by AN 2000(8)

According to the information presented in your letter, forestry management services involve an inventory of all trees by type on the land. A plan is prepared and submitted to the land owner containing recommendations for tree care, harvesting and planting. When the plan is approved by the land owner, an implementation phase is performed whereby trees are selected for harvest and removed from the land. The forestry manager makes an arrangement for the sale of the timber and receives a commission based on a percentage of the proceeds for his forestry management services.

Land planning services involve studying the most efficient use of the land and providing recommendations to assist in the subdivision of land. Soil testing services are also rendered by your client.

The total gross receipts for forestry management services are taxable as landscaping services pursuant to §12-407(2)(i)(X) of the Connecticut General Statutes, as amended by Public Act No. 89-251. Broker fees for arranging the sale of the timber are taxable pursuant to §12-407(2)(i)(U) of the Connecticut General Statutes, as amended by Public Act No. 89-251. Soil testing services are exempt from sales and use tax. Land planning services are not subject to sales and use tax.

LEGAL DIVISION

September 26, 1989