Ezel / Tax Rulings / CT
CT Ruling 89-20 Sales and Use Taxes 1989-07-05

Could a contractor and subcontractor buy materials tax-free for a Connecticut construction agreement under Ruling 89-20?

Short answer: Yes, for materials and supplies physically incorporated into and becoming a permanent part of the structure. The agreement was a construction contract, so Company X and subcontractor Company Y could give vendors Contractor's Exempt Purchase Certificates. The ruling is obsolete.

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 1989 Connecticut Department of Revenue Services Ruling is not current. The official page says it was obsoleted by Announcement 2000(8), so it is provided only as historical reference and should not be used as current authority. It addressed one state lease and operating agreement, a contractor, a subcontractor, and permanently incorporated construction materials under the law then in effect. 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 current governmental construction exemptions and certificates.
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)

Plain-English summary

The lease and operating agreement between Connecticut and Company X was a construction contract because it required Company X to construct real property.

Company X and subcontractor Company Y were contractors. Their purchases of materials and supplies physically incorporated into and becoming a permanent part of the structure were not subject to sales and use taxes.

They therefore could issue Contractor's Exempt Purchase Certificates to vendors supplying those incorporated materials and supplies.

The official archive says this ruling was obsoleted by Announcement 2000(8).

What this means for you

The historical exemption depended on both contractor status and permanent physical incorporation of the purchased materials into the constructed real property. It did not broadly exempt all purchases made under the state agreement.

Common questions

Was the agreement a construction contract? Yes.

Which purchases were exempt? Materials and supplies physically incorporated into and becoming a permanent part of the structure.

What documentation could the contractors give vendors? Contractor's Exempt Purchase Certificates.

Citations and references

  • Conn. Agencies Regs. § 12-426-18(a) and (b), as cited in the ruling.

Source

Original ruling text

Ruling 89-20, Exemption - Governmental

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

Ruling 89-20

Exemption - Governmental

This Ruling has been obsoleted by   AN 2000(8)

The Lease and Operating Agreement between the State of Connecticut and Company X [hereinafter, "the Agreement"] has been reviewed by the Legal Division of this Department. I have been advised that the Agreement was a construction contract, as the term is defined in Conn. Agencies Regs. §12-426-18(a), in that it obligated Company X to construct real property.

I have been further advised that Company X and its subcontractor Company Y were contractors, as the term is used in Conn. Agencies Regs. §12-426-18. As such, their purchases of "materials and supplies as are to be physically incorporated in and become a permanent part"; Conn. Agencies Regs. §12-426-18(b); of the hanger being constructed under the Agreement would not have been subject to sales and use taxes. Accordingly, Company X and its subcontractor could have issued Contractor's Exempt Purchase Certificates to vendors of materials and supplies to be physically incorporated in and become a permanent part of the hanger. It is so ruled.

TIMOTHY F. BANNON

COMMISSIONER

July 5, 1989

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