Ezel / Tax Rulings / CT
CT Ruling 89-38 Sales and Use Taxes 1989-08-01

How did Connecticut Ruling 89-38 treat renovation services, tax-included billing, subcontractors, and installment payments?

Short answer: New construction included services through first-tenant occupancy. A bill could say 'Tax Included' if records supported its components; the service portion equaled the total including profit minus material cost including tax. General contractors bought subcontractor services for resale, and tax applied as services were rendered, including installments. The ruling is partly obsolete.

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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 1989 Connecticut Department of Revenue Services Ruling is not fully current. The official page says it was obsoleted in part by Announcement 94(4), so it is provided only as historical reference and should not be used as current authority. It addressed new-construction timing, tax-included billing, service-charge calculation, subcontractor resale, and installment payments 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 contractor and renovation treatment.
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 ruling gave four answers about renovation and construction billing:

  • New construction included services performed up to occupancy by the first tenant.
  • A bill could show one total marked "Tax Included" if records supported the separate parts of the total.
  • The service portion equaled the total bill, including profit, minus the cost of materials, including sales tax. A general contractor should buy a subcontractor's services for resale.
  • Sales tax was payable when the services were rendered, so tax applied to installment payments in the described situation.

The official archive says this ruling was obsoleted in part by Announcement 94(4).

What this means for you

The historical ruling connected tax treatment to construction stage, recordkeeping, calculation of the service component, resale between contractor tiers, and the timing of services and installments. Its partly obsolete status means none of these rules should be assumed current without verification.

Common questions

How long did new construction continue? Through occupancy by the first tenant.

Could an invoice say "Tax Included"? Yes, if supporting records showed the components of the billed total.

How was the service portion calculated? Total bill including profit, minus material cost including sales tax.

When was tax payable? When services were rendered, including on the installments in the described situation.

Citations and references

  • No statute or regulation was cited in the ruling text.

Source

Original ruling text

Ruling 89-38, Renovations

This Ruling has been obsoleted in part by AN 94(4)

Ruling 89-38

Renovations

The answers to the questions raised in your letter are as follows:

New construction includes services up to the occupancy of the first tenant.

It is still permissible to show the total with the words, "Tax Included" as long as records are maintained to support the various parts of the total amount billed.

The service portion is the total bill (including profit) minus the cost of material (including sales tax). The general contractor should purchase the services of the subcontractor on resale.

The sales tax is payable when the services are rendered. In this instance, sales tax should be applied to the installments.

LEGAL DIVISION

August 1, 1989

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