Ezel / Tax Rulings / CT
CT Ruling 89-281 Sales and Use Taxes 1989-09-05

Could a condominium-management company continue prorating taxable gross receipts instead of taxing its full fee?

Short answer: Yes under this historical ruling. The company could prorate its condominium-association management receipts by the ratio of leased, rented, or investment units to total units. DRS marks the ruling not current and obsoleted by AN 94(4).

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 condominium-management allocation rule then in effect. DRS expressly marks it 'not current' and says Announcement (AN) 94(4) obsoleted it. Its unit-ratio method should not be assumed current or applied to different association services or property uses. 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 ruling "not current" and states that it was obsoleted by Announcement (AN) 94(4).

Plain-English summary

A company asked whether it had to collect tax on its full fee for services to condominium associations after July 1, 1989 or could continue taxing only the real-estate-management portion.

DRS allowed the company to continue prorating gross receipts. The taxable proportion equaled the number of leased, rented, or investment units divided by the association's total units.

The ruling cited Conn. Agencies Regs. § 12-426-26(g) as support for that allocation method.

What this means for you

The historical rule connected tax to the share of condominium units used for rental or investment rather than automatically taxing the entire management fee. AN 94(4) later obsoleted the method as published guidance.

Common questions

Was the whole management fee taxable? Not under the ruling's allocation method.

Which units entered the taxable numerator? Leased, rented, or investment units.

Citations and references

  • Conn. Agencies Regs. § 12-426-26(g).
  • Announcement (AN) 94(4) -- identified by DRS as obsoleting this ruling.

Source

Original ruling text

Ruling 89-281, Management

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

Ruling 89-281

Management

This Ruling has been obsoleted by   AN 94(4)

You have inquired as to whether you must collect the tax on the total amount of your fees for the specific services your company rendered to condominium associations on or after July 1, 1989 or whether you can continue collecting the tax on that portion of the gross receipts relating to real estate management.

You may continue to pro rate your gross receipts in the same proportion as the number of leased, rented or investment units bears to the total number of units within the condominium association.

Support for this method of allocation can be found in section 12-426-26(g) of the Regulations of Connecticut State Agencies.

LEGAL DIVISION

September 5, 1989

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