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CT Ruling 89-74 Sales and Use Taxes 1989-09-06

How did Connecticut Ruling 89-74 distinguish exempt engineering from taxable design or drafting services?

Short answer: A licensed engineer's development of new engineering concepts and original product designs was exempt. Design or drafting services using the engineer's concepts, designs, and specifications were taxable.

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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 applying the cited provisions to engineering and drafting services under the law then in effect. Later statutory or administrative changes may produce a different result, and another taxpayer should not assume this historical ruling controls a current engagement. 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 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

Engineering services were exempt when a licensed engineer developed new engineering concepts and original designs relating to a client's products.

Design or drafting services were taxable. The ruling distinguished the engineer who created the ideas, concepts, designs, and specifications from the draftsman or designer who used that work to perform separate services.

What this means for you

The historical ruling classified the service by who developed the original concepts and what work was actually performed, rather than treating every service connected with an engineering project alike.

Common questions

Were original product designs by a licensed engineer exempt? Yes under the cited exemption.

Were drafting services exempt merely because they used an engineer's specifications? No. The ruling treated design or drafting services as taxable.

Citations and references

  • Conn. Gen. Stat. § 12-412(11), as cited for the engineering-services exemption.
  • Conn. Gen. Stat. § 12-407(2)(c), as cited for taxable design or drafting services.

Source

Original ruling text

Ruling 89-74, Engineering

Engineering services that involve the development of new engineering concepts and original designs by a licensed engineer as they relate to a client's products are exempt from sales or use tax pursuant to section 12-412(11) of the Connecticut General Statutes.

The sales or use tax applies to design or drafting services pursuant to section 12-407(2)(c) of the Connecticut General Statutes.

In this situation, a distinction can be made between a licensed engineer and a draftsman/designer whereby the engineer develops the ideas or concepts and the draftsman/designer uses the engineer's concepts, designs, specifications, etc., to perform their services.

LEGAL DIVISION

September 6, 1989

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