Ezel / Tax Rulings / CT
CT Ruling 89-181 Sales and Use Taxes 1989-10-30

When did Connecticut sales and use tax become due on an architect's retainer fee?

Short answer: Tax became due when the architectural services were rendered or made available and the client became entitled to them, even if the architect received payment in an earlier or later filing period. DRS says AN 94(3) obsoleted the ruling.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1989 Connecticut Department of Revenue Services Ruling reflecting the architectural-retainer timing rule then in effect. DRS expressly marks the information 'not current' and says Announcement (AN) 94(3) obsoleted it. Its result depended on when services were rendered or made available and the client became entitled to them, not merely when payment occurred. Connecticut imposes sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Note -- obsolete historical guidance. DRS marks this information "not current" and states that Announcement (AN) 94(3) obsoleted the ruling.

Plain-English summary

DRS said sales and use tax liability arose when architectural services were rendered, even if the architect received payment in a later filing period.

A retainer for availability of architectural services became taxable when the client was entitled to those services. If payment was received before a retainer took effect, tax was due when the services became available to the client.

What this means for you

The historical timing rule focused on service entitlement and availability rather than cash receipt. AN 94(3) later obsoleted the guidance.

Common questions

Did payment timing control taxability? No.

When was a retainer taxable? When the client became entitled to the architectural services.

What if payment arrived before the retainer period? Tax was due when the services became available.

Citations and references

  • Announcement (AN) 94(3) -- identified by DRS as obsoleting this ruling.

Source

Original ruling text

Ruling 89-181, Architectural

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

Ruling 89-181

Architectural Services

This Ruling has been obsoleted by   AN 94(3)

You have inquired whether the sales and use tax applies to retainers.

The sales and use tax liability occurs at the time the architectural services are rendered even if payment is received by the architect during a subsequent filing period. Therefore, retainer fees for the availability of architectural services are subject to sales and use tax at the time that the clients are entitled to the architectural services under the retainers.

Certainly, if a situation arises whereby an architect receives payment for a retainer that will not take effect until the following filing period, then the tax will be due to the State when the architectural services are made available to the client.

TIMOTHY F. BANNON

COMMISSIONER

October 30, 1989

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