Ezel / Tax Rulings / CT
CT Ruling 89-246 Sales and Use Taxes 1989-11-29

Were X's broad real-estate development consulting services taxable as architectural, building-engineering, or commercial-property services?

Short answer: No under this historical ruling. The described feasibility, market, financing, site, permitting, planning, design-coordination, marketing, construction-management, and tenant work was not taxable architectural or building-engineering service or taxable service to commercial real property. DRS says AN 94(3) obsoleted the ruling in part.

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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 development-consulting classifications then in effect. DRS expressly marks it 'not current' and says Announcement (AN) 94(3) obsoleted it in part. Its treatment of the described feasibility, investigation, planning, financing, design-coordination, construction-management, and tenant work should not be assumed current or extended to actual architectural or engineering deliverables. 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 -- partially obsolete historical guidance. DRS marks this ruling "not current" and states that it was obsoleted in part by Announcement (AN) 94(3).

Plain-English summary

X provided a wide range of real-property development consulting, beginning with feasibility, market, financing, zoning, encumbrance, utility, and community-acceptance analysis. Later work could include demographics, site and permit review, budgets, financing, planning and zoning assistance, design coordination, preconstruction marketing, construction management, final financing, and tenant negotiations.

DRS ruled that the services as described were not taxable architectural or building-engineering services and were not taxable services to commercial real property.

What this means for you

The historical ruling treated X's broad development-consulting role as outside the listed taxable service categories. AN 94(3) later obsoleted the guidance in part.

Common questions

Were feasibility and market studies taxable? No under the described engagement.

Did the result cover construction management and design coordination? Yes, as part of the services described by X.

Did DRS classify the work as architectural or building engineering? No.

Citations and references

  • Announcement (AN) 94(3) -- identified by DRS as partially obsoleting this ruling.
  • The published ruling cites no specific statute or regulation.

Source

Original ruling text

Ruling 89-246, Engineering

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

This Ruling has been obsoleted in part by AN 94(3)

In your letter you state that X Group, Inc. and X Consulting Services [hereinafter jointly referred to as "X"] serve their clients as consultants in real property development, creating development opportunities and providing a wide range of development services. The services typically begin with a feasibility study of a project, with X analyzing the market conditions, determining available sources of financing, and researching and analyzing various constraints on a proposed project, such as zoning limitations, property encumbrances, availability of utilities and the likelihood of community acceptance.

If a project is deemed feasible, X then offers services entailing detailed investigatory work into the project, such as area demographics and market research, site evaluation, permit requirements, budget estimates and location of financing. Finally, upon a commitment to do a project, X's services can extend to assistance in the planning and zoning process, coordination of the project design, preconstruction marketing, construction management, final coordination of financing and the location of and negotiation with prospective tenants of the project.

The services that X provides to its clients, as set forth above, are not taxable architectural or building engineering services nor are they taxable services to commercial real property.

TIMOTHY F. BANNON

COMMISSIONER

November 29, 1989

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