How did Connecticut tax accident-reconstruction engineering inputs, government reimbursable expenses, and multistate shopping-center management?

Plain-English summary

Motor-vehicle accident reconstruction by a licensed professional civil engineer was exempt. The engineer was the final consumer of reimbursable expenses, photographs, and other materials used in the service, owed tax on taxable inputs, and could not issue resale certificates for them.

Gross receipts for reimbursable expenses purchased by civil engineers or business consultants were taxable when the providers served governmental agencies.

A Connecticut or out-of-state real-estate manager had to tax receipts from managing a Connecticut shopping center. A Connecticut manager did not tax management of an out-of-state shopping center when sole benefit and use occurred outside Connecticut. Connecticut services for an out-of-state client were likewise nontaxable under that sole-benefit-and-use condition.

What this means for you

The historical ruling separated exempt professional service receipts from taxable inputs and sourced management services by the shopping center's location and benefit and use.

Common questions

Was licensed accident reconstruction taxable? No under the ruling.

Could the engineer buy materials for resale? No.

Were government-agency reimbursable expenses taxable? Yes as described.

Was management of a Connecticut shopping center taxable? Yes.

Could out-of-state management be nontaxable? Yes when sole benefit and use occurred outside Connecticut.

Citations and references

• Conn. Gen. Stat. § 12-412(11), as cited in the ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-154

Original ruling text

Ruling 89-154, Engineering

Ruling 89-154

Engineering

The reconstruction of motor vehicle accidents by a licensed professional civil engineer is exempt from sales and use tax pursuant to section 12-412(11) of the Connecticut General Statutes. The civil engineer is the final consumer of all materials, e.g., reimbursable expenses and photographs used in providing his services. The civil engineer must pay the sales and use tax for purchases of taxable materials and supplies used in rendering his services and he is not permitted to issue resale certificates to suppliers for said materials and sup- plies. The total gross receipts for purchases of reimbursable expenses by civil engineers or business consultants are subject to sales and use tax when the service providers are performing services for governmental agencies.

A real estate management company located in Connecticut or out of state must apply the sales and use tax to the gross receipts for managing a shopping center in Connecticut. A Connecticut real estate management company would not apply Connecticut sales and use tax for management services rendered to a shopping center located outside Connecticut provided the sole benefit and use of the services inure outside this state.

Services rendered by a Connecticut service provider to an out-of-state client are not subject to Connecticut sales and use tax provided the sole benefit and use of the services inure outside Connecticut.

LEGAL DIVISION

October 23, 1989