BUILDING CONTRACTORS’ - Connecticut2… · Locksmith Services.....41 Mailboxes ... Retaining Walls (See Landscaping and Horticulture Services) ... Page 23 for more information on

IP 2004 (29)

S T A T E O F C O N N E C T I C U TDEPARTMENT OF REVENUE SERVICES

ISSUED: December 2004

BUILDINGCONTRACTORS’

GUIDE TO

SALES AND USETAXES

2 IP 2004(29), Building Contractors' Guide to Sales and Use Taxes

This document is not intended to be used as alegal ruling, but as a general guide for theproper treatment of sales and use taxes as theyrelate to the construction industry.Not every potential tax situation is covered inthis guide. If you have questions about thetaxability of goods or services you provide,contact the December of Revenue Services(DRS) Taxpayer Services Division (see insideback cover).

TO ORDER INFORMATIONAL PUBLICATION 2004(29),BUILDING CONTRACTORS’ GUIDE TO SALES AND USE TAXES,

SEND A 9" X 12" SELF-ADDRESSED ENVELOPE WITH $1.98 POSTAGE AFFIXED TO:

DEPARTMENT OF REVENUE SERVICES

MAIL UNIT, BUILDING CONTRACTORS’ GUIDE

25 SIGOURNEY STREET

HARTFORD CT 06106-5032

YOU CAN PREVIEW AND DOWNLOAD FORMS AND PUBLICATIONS

FROM THE DRS WEB SITE AT WWW.CT.GOV/DRS

IP 2004(29), Building Contractors' Guide to Sales and Use Taxes 3

TABLE OF CONTENTSThe Basics

Projects Approved for Exemption by theConnecticut Development Authority (CDA) ............. 16Federally Recognized Indian Tribes .......................... 17Low and Moderate Income Housing ........................ 17Waste Treatment Facilities ........................................ 17Air Pollution Control Facilities ..................................... 18Out-of-State Contracts .............................................. 18

EXCLUSION FOR HAZARDOUS WASTE

AND OTHER CONTAMINANT SERVICES .............. 18

TANGIBLE PERSONAL PROPERTY ...................... 19Temporary Sheds, Buildings, and Trailers ................ 19

INSTALLATION VERSUS REPAIR

OR MAINTENANCE OF

TANGIBLE PERSONAL PROPERTY ...................... 19Installation of Systems ................................................ 19Repair or Maintenance of Tangible PersonalProperty (Units) .......................................................... 19Warranty Contracts .................................................... 20

EQUIPMENT RENTAL OR

SERVICE CONTRACT ........................................ 20Service Contract ......................................................... 20Equipment Rental ........................................................ 21

CONDOMINIUMS ............................................. 21

CONSTRUCTION CONTRACTS WITH

DIRECT PAYMENT PERMIT HOLDERS ................ 22Renovation Construction Projects ............................ 22New Construction Projects ....................................... 22Construction Projects That InvolveRenovation and New Construction ........................... 22Recurring Taxable Services Providedto Real Property Purchased byDirect Payment Permit Holders ................................ 22

BOND REQUIREMENTS OF

NONRESIDENT CONTRACTORS ......................... 23

INTRODUCTION ................................................. 8

OBTAINING A SALES AND USE TAX PERMIT .......... 8

ACCOUNTING METHODS ................................... 8

BAD DEBTS ...................................................... 8

TYPES OF CONSTRUCTION CONTRACTS ............. 8Lump-Sum or Fixed Fee Contract .............................. 8Cost-Plus Contract ...................................................... 9Time and Material Contract With an Upset orGuaranteed Price That May Not Be Exceeded............... 9

REAL PROPERTY ............................................... 9Types of Real Property ............................................... 9Services Taxable to Certain Real Property ................ 10Services Taxable to All Real Property ....................... 10Site Improvements .................................................... 10

SERVICE CHARGE ............................................ 10Reimbursed Expenses ............................................... 11Contractor’s Labor Subject to Tax ........................... 11Contractor’s Labor Not Subject to Tax .................... 11Contractor’s Purchase of Subcontractor Services .. 11Temporary Employment Agency Services ................ 13

MATERIALS USED INCONSTRUCTION CONTRACTS .......................... 13

TOOLS OF THE TRADE ..................................... 14

CONTRACTOR’S BILL TO

THE FINAL CUSTOMER ..................................... 14Tax Held in Trust ...................................................... 14

NONTAXABLE CONTRACTS ............................... 14Purchasing Materials ................................................. 14Purchasing Services .................................................. 15

TYPES OF NONTAXABLE CONTRACTS ................ 15Contracts With Exempt Entities ................................ 15Contracts With Governmental Agencies ................... 16


Air Conditioning (See Central Air Conditioning and Ventilation Systems)

Alarm Systems (Burglary and Fire) ........................... 26

Antennas and Communications Towers .................. 26

Appliances (See Kitchens)

Audio-Visual Cable or Wiring(See Telephone, Audio-Visual, and ComputerCable or Wiring)

Awnings (See also Standard Units of Equipment) ...... 27

Bathrooms (See also Standard Units of Equipment) . 28

Brickwork/Stonework ................................................ 28

Cabinets (See Bathrooms, Kitchens, and StandardUnits of Equipment)

Carpentry .................................................................... 29

Carpet Cleaning (See Janitorial Services)

Carpeting (See Floor Coverings)

Central Air Conditioning ........................................... 29

Central Vacuum Systems .......................................... 30

Chimneys ..................................................................... 30

Chimney Cleaning ..................................................... 30

Clean Rooms/HVAC Systems(See also Heating Systems and Ventilation Systems) .... 31

Computer Cable or Wiring(See Telephone, Audio-Visual, and ComputerCable or Wiring)

Decks ........................................................................... 31

Demolition ................................................................... 32

Dredging ...................................................................... 32

Driveways, Parking Lots and Walkways(For asphalt, tar, macadam andpoured concrete areas, see Paving)(For brick, stone areas, or concrete pavers,see Landscaping and Horticulture Services)

Duct Work(See Interior Sheet Metal and Ventilation Systems)

Electrical ...................................................................... 32(Complete wiring or rewiring of structures or theupgrading of the electrical service of a structure)

Electrical Devices ....................................................... 33

Elevators and Escalators(See also Inclined Stairway Chairlifts) ........................ 33

Energy Audits ............................................................. 34

Excavating, Grading, and Land Clearing ................ 34

Exterior Sheet Metal Work (See also Gutters) ......... 34

Exterminating ............................................................. 34

Fencing (See also Landscaping and HorticultureServices and Silt Fencing) ............................................ 35

Fire, Water, and Wind Damage ............................... 35(Cleaning, deodorizing, and removalof water or debris)

Fireplaces .................................................................... 35

Floor Coverings .......................................................... 35

Floor Refinishing ........................................................ 36

Furnaces (See Heating Systems)

Garage Doors .............................................................. 36

Garage Door Openers ................................................ 37

Garbage Disposals ...................................................... 37

Gazebos (See Sheds and Gazebos)

Gutters (See also Exterior Sheet Metal Workand Maintenance Services to Real Property) ............... 38

Hatchways (See Standard Units of Equipment)

Heating Systems(See also Clean Rooms/HVAC Systems) ....................... 38

House Washing (See Maintenance Services to RealProperty and Painting, Staining, Varnishing, andWaterproofing)

Inclined Stairway Chairlifts ...................................... 39

Inspections (See Structural Inspections)

Interior Sheet Metal (Duct work) ............................ 39

Janitorial Services(See also Maintenance Services to Real Property) ...... 40

The Details


Kitchens ....................................................................... 40

Landscaping and Horticulture Services .................. 41

Locksmith Services .................................................... 41

Mailboxes ..................................................................... 42

Maintenance Services to Real Property .................. 42

Management ............................................................... 43

Masonry (See Brickwork/Stonework)

Moving a Structure .................................................... 43

Painting, Staining, Varnishing,and Waterproofing ..................................................... 44

Patio (See Landscaping and Horticulture Services)

Paving ........................................................................... 44

Pest Control (See Exterminating)

Plumbing ...................................................................... 45

Power Washing(See Maintenance Services to Real Property)

Precast Concrete or Cement Steps(See Standard Units of Equipment)

Protection, Patrol Work, and Watchman Services 45

Refuse Removal ......................................................... 45

Retaining Walls(See Landscaping and Horticulture Services)

Roofing ......................................................................... 46

Sandblasting ................................................................ 46

Septic Systems ............................................................ 47

Septic System Cleaning ............................................. 47

Sheds and Gazebos ..................................................... 47

Sheet Metal(See Interior Sheet Metal or Exterior Sheet Metal Work)

Siding ........................................................................... 48

Signs ............................................................................ 48

Sign Painting and Lettering Services ...................... 48

Silt Fencing ................................................................. 48

Snow Plowing/Removal(See Maintenance Services to Real Property)

Staining(See Painting, Staining, Varnishing, and Waterproofing)

Standard Units of Equipment .................................... 49

Stock Cabinets (See Standard Units of Equipment)

Structural Inspection ................................................. 49

Sump Pumps ............................................................... 50

Swimming Pools .......................................................... 50

Telephone, Audio-Visual, andComputer Cable or Wiring ....................................... 52

Testing for Contaminants ......................................... 52

Underground Cables .................................................. 52

Underground Storage Tanks ..................................... 52

Varnishing(See Painting, Staining, Varnishing, and Waterproofing)

Ventilation Systems(See also Clean Rooms/HVAC Systems) ....................... 53

Wallpapering ............................................................... 53

Walls(For exterior walls, see also Landscaping andHorticulture Services) ................................................... 54

Water Heaters ............................................................ 54

Waterproofing(See Painting, Staining, Varnishing, and Waterproofing)

Welding ........................................................................ 54

Wells and Pumps ........................................................ 55

Windows ....................................................................... 56

Window Cleaning ....................................................... 56

Wiring (See Telephone, Audio-Visual,and Computer Cable or Wiring)

APPENDIX ....................................................... 57

CONNECTICUT TAX FORMS,PUBLICATIONS, CERTIFICATES,AND SALES TAX REGULATIONS ......................... 75

WHERE TO GET HELP ..................................... 79


notes


THE BASICS


INTRODUCTION

Sales tax is imposed on certain contractor servicesperformed in Connecticut. Generally, services to existingcommercial, industrial, and income-producing property aretaxable. Some services to residential property are alsotaxable. This guide presents information on the sale andpurchase of services and materials for contractors.

Contractors are unique in that they are both the consumerof materials and retailers of their services. Therefore,building contractors must:

1. Pay sales and use tax on materials, supplies, andequipment used in their construction contracts; and

2. Charge and remit sales tax on their services, whenappropriate.

You must register with the Department of Revenue Services(DRS) if you are conducting business in Connecticut. Taxesfor which you may be liable include sales and use taxes,withholding tax, corporation business tax, and business entitytax. See Informational Publication 2003(28), GettingStarted in Business, for more information.

OBTAINING A SALES AND USE TAX PERMIT

All contractors, including subcontractors, must obtain aConnecticut Sales and Use Tax Permit from DRS.Contractors and subcontractors must register for salesand use taxes prior to providing any services.In addition to obtaining a sales and use tax permit, anonresident contractor is required to post a bond. SeePage 23 for more information on nonresident contractorbond requirements.If you are purchasing an existing business, you may notuse the Sales and Use Tax Permit issued to the previousowner. You must obtain a new Sales and Use Tax Permit.

To register a business, use Form REG-1, Tax RegistrationApplication.

You may register by mail, apply in person at the DRS mainoffice in Hartford or at any of the regional offices, oron-line using DRS Fast-File. Visit the DRS Web site at

www.ct.gov/DRS and click onElectronic Services. If youregister on-line, you must makedirect payment of the registrationfee on-line from your savings orchecking account.

ACCOUNTING METHODS

Most retailers must report the sales tax on the accrual basisof accounting, under which a retailer reports all sales duringthe filing period in which the sales are made, not when thecustomer provides payment. However, there is a limitedexception to this rule that allows a retailer to report salestax on the cash basis method, under which the retailer reportsits sales during the filing period in which the customerprovides payment regardless of when the services wererendered. To qualify to report on the cash basis, the retailermust sell only services taxable under Conn. Gen. Stat.§12-407(a)(37) and report sales on the cash basis ofaccounting for federal income tax purposes. A retailer thatsells tangible personal property cannot qualify to report salestax on the cash basis.

Statutory Authority: Conn. Gen. Stat. §12-408(1)

BAD DEBTS

A worthless accounts receivable is an account receivabledetermined to be worthless and actually written off asuncollectible for federal income tax purposes. DRS onlyaccepts claims for credit filed by retailers that havedetermined a sale is worthless for federal income taxpurposes and have remitted the tax for the sale to DRS.This does not include retailers reporting sales on the cashbasis for Connecticut sales and use tax reporting purposes.See Policy Statement 2001(1), Procedure for RetailersClaiming Credit for Sales Tax Previously Paid onWorthless Account Receivable, for more details.

Statutory Authority: Conn. Gen. Stat. §12-408(2); Conn.Agencies Regs. §12-408-1

TYPES OF CONSTRUCTION CONTRACTS

There are three major types of construction contracts.Materials cannot be purchased on resale when performingthe following three types of construction contracts:

Lump Sum or Fixed Fee ContractThis type of contract provides for a single price for thetotal work to be performed on a construction project. Suchcontracts are generally not subject to adjustment becauseof higher than anticipated costs incurred by the contractor.


Example: The contractor agrees to install a new roofon a building for $10,000. The contractor cannot chargeextra even if more material is used or more time is spentthan expected.

Cost-Plus ContractThis type of contract provides for reimbursement ofallowable or otherwise defined costs plus profit. Cost-pluscontracts usually require the contractor to use its best effortsto accomplish the work within a specific time frame and astated dollar limitation.

Example: The contractor agrees to install a new roofon a building. The contract states the property ownerwill reimburse the contractor for the cost of materialsused and labor costs, plus 15%. The work is to becompleted by a specific date within a maximum numberof labor hours.

Time and Material Contract With an Upset orGuaranteed Price That May Not Be ExceededThe contractor is paid on the basis of direct labor hours ata fixed hourly rate. The contract includes a maximumamount over which the contractor cannot charge.

A time and material contract with an upset or guaranteedprice that may not be exceeded provides for:• Direct labor hours at a specified fixed hourly rate that

includes wages, overhead, general and administrativeexpenses, and profit;

• Materials at cost, including, if appropriate, materialhandling costs as part of material costs; and

• A ceiling price the contractor exceeds at its own risk.

Example: The contractor agrees to install a new roofon a building. The contractor will be paid at the rate of$75 per hour plus the cost of materials, with the entirecost to the property owner for time and materials not toexceed $10,000.

REAL PROPERTY

Types of Real PropertyReal property is land, buildings, and materials permanentlyaffixed to the land or buildings. This guide refers to sixtypes of real property:

New Construction: Types of new construction are:• The construction of a new building;• The construction of a new addition that expands

the cubic footage of an existing building;• The replacement of the entire internal structure of

a building. This includes removing and replacingfloors, support columns, walls, mechanical systems,and electrical systems. Everything in the interiorof a building between the floor that touches theground and the rafters of the roof must be removed;

Example 1: A clothing store is a tenant of one space ina strip mall that has five other stores as tenants. Theclothing store completely gutted its space, but the otherspaces in the strip mall were left untouched. As thestrip mall is only one building and only a portion of thebuilding was gutted, the work done on the tenant’s spacedoes not qualify as new construction.

Example 2: A manufacturer contracts to have 90% ofthe square footage of its recently purchased facilitygutted, removing the internal walls, support columns,floors, and electrical and mechanical systems. Themanufacturer plans to have both manufacturing andR&D operations take place in the building. Becausethe construction work needed is different for the sectionto be used for manufacturing than the section to be usedfor R&D, the manufacturer is leaving the internal walls,floors, and columns in 10% of the building where itsR&D operations will take place. This contract does notqualify as new construction because 10% of the buildingwill not be gutted.

• Site improvements to real property that put theproperty to a new use (see Site Improvements onPage 10 for more information);

• The substantial rehabilitation of a certified historicstructure. For information about the special rulesthat apply to this type of construction, requestCERT-102, Certified Rehabilitation Certificatefor Certified Historic Structures; or

• The initial finish out work to the interior of a newbuilding, if there has been no previous use of thisspace, including storage.

New construction generally ends when the Certificate ofOccupancy (C.O.) is issued.


Owner-Occupied Residential Property:• Is used exclusively for residential purposes;• Consists of one to three dwelling units (up to a three

family house); and• The owner resides or will reside at the property

upon completion of the work.

Commercial Property: Property where the buying,selling, or leasing of goods or services usually takes place.Examples include restaurants, retail stores, office buildings,and gas stations.

Industrial Property: Property where manufacturing orfabricating activities take place. An example is a factory.The grounds surrounding the factory, warehouse, andshipping dock are all part of the industrial property.

Income-Producing Property: Property held for or usedin the production of income. Examples include land usedfor agricultural production and rental property (such as anapartment building or non-owner occupied residentialproperty).

Public Right-of-Way: Property such as a state ormunicipal street and adjacent area. This property is notconsidered commercial, industrial, or income-producingproperty. Services to mains, lines, poles, pipes, and otherfacilities located along, above, or under a publicright-of-way are generally not taxable.

Statutory Authority: Conn. Gen. Stat. §12-407(a)(37)(I)and Conn. Agencies Regs. §12-407(2)(i)(I)-1

Services Taxable to Certain Real PropertySome services are taxable to existing commercial, industrial,or income-producing property, but are not taxable whenrendered to owner-occupied residential property or newconstruction. These services include, but are not limited to:

Air conditioning PaintingCarpentry PavingCarpeting PlasteringConstruction Management PlumbingDemolition Refuse removalElectrical RoofingElevator or escalator work SandblastingExcavating SidingExterior sheet metal work StainingFlooring Structural inspectionFoundation work VentilationHeating WallpaperingProperty Management WeldingMasonry

Statutory Authority: Conn. Gen. Stat. §12-407(a)(37)(I)

Services Taxable to All Real PropertySome services are taxable in all cases, whether renderedto new construction, owner-occupied residential property,existing commercial property, existing industrial property,or existing income-producing property. These servicesinclude, but are not limited to:

Carpet cleaning MaintenanceExterminating Snow plowing and removalHouse washing Swimming pool cleaningJanitorial Swimming pool maintenanceLandscaping Window cleaningLocksmith services

The tax treatment of these and other services can be foundin the Details section of this guide.

Statutory Authority: Conn. Gen. Stat. §12-407(a)(37)(T),(V), (W), (X), (Y), (Z), and (AA)

Site ImprovementsSite improvements are improvements made to realproperty other than buildings. Certain site improvementsput the property to a new use and are considered newconstruction. The construction of roadways, walkways,driveways, parking lots, patios, in ground swimming pools,tennis courts, and decks put the property to a new use. Tobe considered new construction, walkways, driveways, andpatios must be made of poured concrete or asphalt. Theseservices are considered new construction work whether ornot these improvements are in connection with theconstruction of a new building.

Other site improvements merely enhance an existing useof the property and are not considered new construction.The installation of wells, septic systems, utility lines, stormwater drainage systems, and outdoor lighting systems donot put the property to a new use. Such services are notnew construction, unless the construction of theimprovement is directly connected with new constructionas defined above.

SERVICE CHARGE

A contractor’s service charge, sometimes referred to asthe labor charge, is determined by subtracting the cost ofmaterials (including tax paid on materials) from the totalcontract price. In other words, every cent above thecontractor’s cost of materials that are physicallyincorporated into the real property, plus the tax paid on thosematerials, is considered the service charge.


The charge for service includes:• The actual labor charge;• Any markup or profit on labor;• Any markup or profit on materials;• Overhead expenses;• Tool or equipment purchase or rental, including tax paid

on the rental; and• Reimbursed expenses incorporated into the bill

(whether or not the charges are separately stated).

Reimbursed ExpensesGenerally, reimbursed expenses associated with a taxableservice are subject to tax, even if separately stated on theinvoice. For example, if a security company is hired toprovide a taxable guard service and charges $2,000 plus$300 of out-of-pocket expenses for travel and mealexpenses, the entire $2,300 fee is subject to tax.

There is an exception to this general rule when thecontractor pays an expense that is the sole legal orcontractual obligation of their customer. An examplewould be when a building contractor pays for a buildingpermit on behalf of the building owner. The reimbursementof this expense is not subject to sales or use tax.

Otherwise, except in specific instances authorized by law,the general rule is that if a service is taxable, the reimbursedexpenses associated with it are also taxable.

Contractor’s Labor Subject to TaxA contractor’s labor is subject to tax when the service isto:• Existing commercial real property;• Existing industrial real property;• Existing income-producing real property; or• New or existing real property if it is one of the services

listed in Services Taxable to All Real Property onPage 10.

Contractor’s Labor Not Subject to TaxA contractor’s labor is not subject to tax when the serviceis rendered to:• New construction (except for services listed in Services

Taxable to All Real Property);• Owner-occupied residential property (except for

services listed in Services Taxable to All RealProperty);

• Charitable or religious organizations;• Qualifying governmental agencies or their agents;

• Real property owned by federally recognized Indiantribes when the service is performed in federallyrecognized Indian country;

• Low and moderate-income housing;• Contracts performed out-of-state;• Hospitals and certain other exempt entities;• Industrial, commercial, or income-producing real

property when the service is for the voluntary evaluation,prevention, treatment, containment, or removal ofhazardous waste or other contaminants of air, water,or soil; or

• Real property located within a public right-of-way.

For more information on nontaxable contracts, seeNontaxable Contracts beginning on Page 14.

Contractor’s Purchase of SubcontractorServicesGeneral contractors often purchase the services ofsubcontractors to complete a project. There are two possiblemethods of purchasing subcontractor services:

1. General Contractor Issues a ResaleCertificate to Subcontractor:

A general contractor can purchase a subcontracting servicefor resale as long as both the following conditions are met:• The subcontracting service is an integral, inseparable

component of the service to be sold to the endcustomer. An integral, inseparable component isessential to complete the performance of the finalservice being sold. If the job is taxable, the contractorcharges the end user tax on the entire service bill.

The general contractor may not use or consume theservice purchased for resale. For example, a generalcontractor that hires the services of a temporary helpagency to provide a secretary for the contractor’s officemust pay tax on that service and cannot purchase it ona resale basis because the service of a secretary is notan integral and inseparable part of the service to besold to the end customer; and

••••• Both the subcontracting service and the final serviceto be sold are services listed in Conn. Gen. Stat.§12-407(a)(37) as taxable services. This means theresale exclusion may not be used to purchase or sell:• Services rendered to new construction*;• Services rendered to owner-occupied residential

real property*;• Any other taxable services not enumerated in

§12-407(a)(37), such as telecommunicationsservices; and


Example 1: A contractor providing taxable renovationservices to a thrift shop owned by a church purchasesthe services of a janitorial company to clean up the jobsite. Because the janitorial service is an integral,inseparable component of the services being sold, and isenumerated in Conn. Gen. Stat. §12-407(a)(37), thecontractor may issue a resale certificate to the janitorialcompany even though the job will ultimately be exemptbecause the renovation services are provided to areligious organization.

Example 2: A contractor enters into a constructioncontract with a nonprofit hospital to construct a newaddition to a hospital building. The contractor obtainspersonnel from a personnel agency to provide carpentryservices to the new addition. Because new constructionis excluded from taxable services to existing industrial,commercial, or income-producing real property underConn. Gen. Stat. §12-407(a)(37), the personnel servicesdo not become an integral, inseparable component ofanother taxable service under Conn. Gen. Stat.§12-407(a)(37). The contractor is not allowed topurchase personnel services from a personnel agencyusing a resale certificate.


2. General Contractor Does Not Issue aResale Certificate to Subcontractor:

If the general contractor does not issue a resale certificateto the subcontractor and it is a taxable transaction, thesubcontractor must charge the general contractor tax onthe service portion of the bill.

The subcontractor is the consumer of the materials used infulfilling the construction contract. The subcontractor hastwo options to choose from when billing the generalcontractor.

Option OneThe subcontractor breaks the bill into three parts:• Materials consumed, including tax paid on the materials;• Service charges. Service charges include markup on

materials, overhead expenses, reimbursed expenses,labor charges, and profit; and

• Sales tax on the service portion of the bill.

Option TwoThe subcontractor does not break the bill down. Only atotal charge is shown on the bill. The bill includes:

• Nontaxable services such as engineering andarchitecture and design services.

* Except for services listed in Services Taxable to AllReal Property

Example 1: A property management companyproviding taxable services to industrial, commercial, orincome-producing real property incurs long-distancetelephone charges on behalf of its client in the courseof rendering its management services. Themanagement company may not purchasetelecommunications services on a resale basis becausetelecommunications services are not an integral,inseparable component of the services being sold, andare not enumerated in Conn. Gen. Stat. §12-407(a)(37).

Example 2: A contractor providing taxable renovationservices to commercial, industrial, or income-producingproperty purchases architectural services. The purchaseof architectural services by the contractor is not ataxable service and may not be purchased on resale, sothe architectural services become an expense of thecontractor and are part of the total service charge andsubject to sales tax.

Subcontractors are responsible for paying tax on thematerials used in performing a subcontract. Subcontractorsmay only resell the service portion of their bill. Asubcontractor’s bill to a general contractor should be brokenout into two parts when the general contractor issues aresale certificate:• Materials consumed, including tax paid on the materials;

and• Service charges. Service charges include the markup

on materials, overhead expenses, reimbursed expenses,labor charges, and profit.

If the sale is a taxable service, the general contractor shouldcharge tax to the property owner on the service portion ofthe bill only. See Example 1 in the Appendix.

If the subcontractor does not break out the charge formaterials from the charge for service, the general contractoris required to charge sales tax on the entire amount of thesubcontractor’s bill.

If the service is performed for an exempt entity, a resalecertificate may be issued as long as the above conditionsare met.


• Materials (including tax paid on);• Service charges; and• The words sales tax included on services.

Sales tax on the service portion of the bill is figured bymultiplying the entire service charge by .943. The resultequals gross receipts from services. Subtract the grossreceipts from services from the entire service charge. Thedifference is sales tax on the service. See Example 4 inthe Appendix.

Both methods require the subcontractor to charge salestax on the service portion of the contract.

Only the service portion of the general contractor’s bill tothe property owner is subject to tax since the subcontractorhas already charged the general contractor tax on thesubcontractor’s service. See Example 2 in the Appendix.

Temporary Personnel Agency ServicesPurchases of temporary personnel agency services aresubject to tax. A contractor may purchase temporarypersonnel services on a resale basis, if both of theseconditions are met:1. The temporary help must be an integral, inseparable

component of the contractor’s service. For example,carpenters and plumbers are an integral, inseparablecomponent of the contractor’s service, whilesecretaries and bookkeepers are not; and

2. The contractor must be performing a taxable serviceto real property. For example, temporary help cannotbe purchased on a resale basis if the contract is fornew construction because new construction is not ataxable service to real property.

As long as both of the above conditions are met, thecontractor may purchase temporary help on a resale basis.If the service is performed for an exempt entity, a resalecertificate may be issued as long as the above conditionsare met.

Example: A contractor constructing a new officebuilding obtains personnel from a temporary personnelagency to provide electrical services. Because newconstruction is excluded from taxable services toindustrial, commercial or income-producing realproperty under Conn. Gen. Stat. §12-407(a)(37)(I), thecontractor must pay tax on its purchase of the personnelservices, which are enumerated under Conn. Gen. Stat.§12-407(a)(37)(C).

MATERIALS USED INCONSTRUCTION CONTRACTS

Contractors are the consumers of materials and suppliesused in fulfilling their construction contracts. This meansthe contractor pays tax on purchases of materials. A resalecertificate cannot be used when purchasing materials unlessone of the following conditions is met. The contractor:• Has a store that sells building supplies; or• Sells particular building materials (windows, doors,

lumber, sheet metal) to the property owner and stateson the invoice all of the following:

Charge for the materials;Exact quantity of materials being sold; andAdditional price for which the contractor will installthe products being sold.

These exceptions generally apply only to contractors thatalso maintain storefront businesses, such as plumbing supplystores or lumberyards. Items taken from the inventory of astorefront business for use in a construction contract aresubject to the use tax on their cost. The contractor isresponsible for self-assessing the use tax and should notcharge its customers tax on items taken from inventory.Contractors that merely sell parts from trucks or do notmaintain storefront businesses may not purchase materialson resale, but must pay tax on them when they purchasethe items, and must not charge their customers tax on theseitems.

Contractors must self-assess use tax when they purchasetaxable goods for use in Connecticut from an out-of-statevendor not registered to collect Connecticut use tax. If thematerials were purchased outside Connecticut for use on aConnecticut job and the tax paid to the other state is lessthan 6%, the difference between the Connecticut tax andthe tax paid to the other state must be reported and paid toConnecticut.

A contractor that enters into a construction contract withan exempt entity may purchase, exempt from tax, thematerials that will be installed or placed and remain in thereal property. See Nontaxable Contracts, beginning onPage 14, for more information.

Statutory Authority: Conn. Gen. Stat. §12-430(5) andRegulation 12-426-18


TOOLS OF THE TRADE

The contractor must pay tax on the purchase, lease, or rentalof all the tools used in the contractor’s trade. This includeshand tools, power tools, sandpaper, ladders, scaffolding, andother equipment.

Generally, if a used item is traded in on the purchase of anew item of the same kind, tax is calculated on the sellingprice, after allowing for the trade-in credit, provided theretailer intends to resell the item traded.

Statutory Authority: Conn. Gen. Stat. §12-407(a)(8)(B)(v)and §12-430a.

CONTRACTOR'S BILL TOTHE FINAL CUSTOMER

The general contractor has two options to choose from whenbilling the final customer. The general contractor is theconsumer of materials used in fulfilling a constructioncontract.

Option OneThe general contractor breaks the bill to the property ownerinto three components:• Materials consumed, including tax paid on the materials;• Service charges, including markup on materials,

overhead expenses, labor charges, and profit; and• Sales tax on the service portion of the bill, if applicable.

Option TwoThe general contractor does not break the bill down. Onlya total charge is shown on the bill. The bill includes:• Materials consumed, including tax paid on the materials;• Service charges; and• The words sales tax included on services, if

applicable.

Sales tax on the service portion of the bill may be backedout by multiplying the entire service charge by .943. Theresult equals gross receipts from services. Subtract thegross receipts from services from the entire service charge.See Examples 3 and 4 in the Appendix.

Regardless of the option chosen, the general contractor mustkeep accurate records of the actual costs of materials andservice, including all subcontracting costs. The generalcontractor charges tax to the final customer only on theservice portion of the contract.

Tax Held in TrustIt has been the practice of some contractors to reimbursethemselves for tax they paid on materials out of the taxthey collect from their customers. This is not correct. Conn.Gen. Stat. §12-408(2) provides that tax collected by a retaileris held in trust for the state, and the entire amount of taxcollected must be remitted to DRS or refunded to thecustomer.

Example 1: The contractor bills its customer:Total Labor and Materials $1,000.00Sales Tax 60.00Total Due $1,060.00

Sales tax separately stated is held in trust and must beremitted by the contractor. In this example, the contractormust remit $60 in tax.

Example 2: The contractor bills its customer:Total Labor and Materials $1,060.00 (sales tax onservices included).

The contractor must remit the sales tax on the serviceportion of the bill only. If the contractor has already paid$12 in tax to its vendors on material purchases of $200,the sales tax on the service portion of the bill is $48.

The purchaser of a taxable good or taxable service isresponsible for remitting use tax unless the retailer providesthe purchaser with a receipt that shows sales tax in one ofthe manners described above. A sales invoice or andAmerican Institute of Architects (AIA) document is anacceptable receipt. A contract does not constitute a receipt.

Statutory Authority: Conn. Gen. Stat. §12-408(2);§12-411(2)

NONTAXABLE CONTRACTS

Purchasing MaterialsWhen a construction contract is with an exempt entity, thecontractor may purchase materials and supplies installedor placed in the project exempt from tax. The materialsand supplies must be installed or placed in the project andremain in the project after its completion. To purchasematerials and supplies exempt from tax, the contractor issuesa Contractor’s Exempt Purchase Certificate to its vendor.Examples of items likely to be exempt from these contractsare bathroom partitions, metal lockers, theater seats, andother items nailed, bolted, or screwed into the real property,as well as appliances and furniture not permanently affixed


to the property, but that remain on the property after thecontract is completed.

Upon completion of the project, the contractor must reportand pay use tax on any materials still in inventory that werepurchased exempt from tax. If materials or supplies areinstalled or placed in a project for an exempt entity and thecontractor has already paid tax on the materials or supplies,the purchase price of the materials or supplies may bededucted on the next return as an adjustment.

Contractors are the consumers of all the tools, suppliesconsumed, and equipment used in fulfilling a constructioncontract. Contractors must pay tax on the purchase ofthese items because they do not become incorporated orplaced in the exempt job, even if they are used up duringthe job.

Purchasing ServicesWhen a contractor purchases a service while engaged in acontract with an exempt organization, the contractor mustdetermine if the service will be consumed or resold. Donot assume a contract with an exempt entity meansall services can be bought exempt from tax. Onlythose services resold by the contractor can be purchasedexempt from tax. To purchase services for resale, youmust issue a resale certificate to the service provider.Services can only be resold if they become an integral andinseparable component of the service being resold to theexempt entity. Services consumed by the contractor cannotbe purchased for resale. If the contractor is purchasingand consuming a taxable service, the contractor must paytax to the seller of the service.

For example, a contractor engaged in a contract with anexempt organization purchases secretarial services toprocess paperwork in the contractor’s business office.These services are taxable to the contractor because it isa taxable service and the contractor is consuming them.The services cannot be purchased on resale because theyare not considered an integral and inseparable componentof the building contract with the exempt entity. However,if a general contractor hires a plumber for a renovation, aresale certificate may be issued to the plumber becausethe service is considered to be an integral and inseparablecomponent of the building contract.

Note: If the contractor is purchasing services from atemporary employment agency, refer to the section onTemporary Employment Agency Services on Page 13 todetermine if the service can be purchased on a resale basis.

TYPES OF NONTAXABLE CONTRACTS

Contracts With Exempt EntitiesThe following section defines the type of organization andthe exemption certificate issued by the organization to thecontractor. In each case, the organization should issue thecontractor the applicable certificate for the contractor toretain with its records. The contractor then issues aContractor’s Exempt Purchase Certificate to its vendorsfor purchases of materials and supplies installed or placedin the project.

• Entity: A charitable or religious organization that holdsan Internal Revenue Service Section 501(c)(3) or (13)determination letter or a valid exemption permit issuedby DRS.Certificate: CERT-119, Purchases of TangiblePersonal Property and Services by QualifyingExempt Organizations;

• Entity: Nonprofit charitable hospitals, nonprofit nursinghomes, nonprofit rest homes, and nonprofit residentialcare homes licensed by the State of Connecticut underChapter 368v of the Connecticut General Statutes.Certificate: CERT-113, Purchases of TangiblePersonal Property and Services by a NonprofitCharitable Hospital, Nonprofit Nursing Home,Nonprofit Rest Home, or Nonprofit Residential CareHome;

• Entity: University of Connecticut EducationalProperties, Incorporated, with regard to theConnecticut Technology Park.No certificate;

• Entity: Water companies, as defined in Conn. Gen. Stat.§16-1.Certificate: CERT-130, Sales and Use TaxExemption for Purchases by Water Companies;

• Entity: Tourism districts, as defined in Conn. Gen.Stat. §32-302.Certificate: CERT-134, Sales and Use TaxExemption for Purchases by QualifyingGovernmental Agencies;

• Entity: Connecticut Resource Recovery Authority(CRRA) or a lessee or operator of a CRRA project.Certificate: CERT-131, Exemption for Projects ofthe CRRA and Solid Waste-to-Energy Facilities.CERT-131 may also be issued for purchases ofservices or tangible personal property used or consumedin operating a solid waste-to-energy facility.


Contracts With Governmental AgenciesQualifying governmental agencies issue CERT-134, Salesand Use Tax Exemption for Purchases by QualifyingGovernmental Agencies, to the contractor. Qualifyinggovernmental agencies include:• United States government and its agencies;• State of Connecticut and its agencies;• Political subdivisions of Connecticut (cities and towns

and their agencies including municipal housingauthorities);

• State of Connecticut, where through a long termfinancing contract, contracts to purchase a particularproperty from a developer after it is built or renovated;

• Adriaen’s Landing and Rentschler Field; and• Tax districts.

Turn-key contracts with governmental or other exemptentities do not qualify for exemption from tax. Since turn-key contracts are not long-term financing contracts underConn. Gen. Stat. §12-412(1)(B), they do not qualify forthis exemption. A turn-key contract is one in which theexempt entity contracts for a construction project to becompleted by the contractor on land not owned by theexempt entity during the construction period. The title tothe property is turned over to the exempt entity at thecompletion of the project.

Agent of the Government: A governmental agency mayappoint a business to act as its agent to purchase goodsand services. A principal-agent relationship exists betweena business and a governmental agency when all of thefollowing conditions are met:• The business is expressly acting as an agent for the

governmental agency. The contract between thebusiness and the governmental agency must state thatthe business is acting as an agent for the governmentalagency;

• All purchases made by the business for the governmentalagency are used exclusively for the governmentalagency’s benefit; and

• The governmental agency issues CERT-134, Sales andUse Tax Exemption for Purchases by QualifyingGovernmental Agencies, to the business.

The governmental agency signs CERT-134, or in thealternative, the business signs CERT-134 as the purchaserand designates itself as agent of the governmental agency.The business attaches to the CERT-134 a copy ofdocumentation from the governmental agency expresslydesignating the business as agent.

Projects Approved for Exemption by theConnecticut Development Authority (CDA)CDA issues a Limited Agency Certificate to a purchaserwhen a project has been approved for sales and use taxexemption under Conn. Gen. Stat. §32-23h. The LimitedAgency Certificate provides that the CDA appoints thepurchaser as its agent for the limited purpose of purchasingconstruction materials, other items of tangible personalproperty, services, and equipment tax exempt. Theconstruction project may consist of new construction,renovation, or a combination of both. The project may beapproved for full or partial exemption by CDA.

The materials, other items of tangible personal property,services, and equipment CDA approves for exemption aredescribed in an attachment to the Limited AgencyCertificate. The procedures for agents, general contractors,and subcontractors to buy construction materials, other itemsof tangible personal property, equipment, and servicesexempt from tax for a project approved by CDA are:• The CDA signs CERT-134, or in the alternative, the

agent signs the certificate as purchaser and designatesitself as the agent of the CDA. The agent provides acopy of CERT-134, Sales and Use Tax Exemptionfor Purchases by Qualifying GovernmentalAgencies, to the general contractor and to vendors forpurchasing construction materials, other items oftangible personal property, services, and equipmentexempt from sales and use taxes. The agent attachesa copy of the Limited Agency Certificate and itsattachment to CERT-134. The agent must checkConnecticut Development Authority and check Agentof a Qualifying Governmental Agency Listed Aboveon the back of CERT-134. The agent must enter itsname next to Name of Agent and write ConnecticutDevelopment Authority next to Name of QualifyingGovernmental Agency.

• The general contractor must issue a Contractor’sExempt Purchase Certificate to its subcontractors andto vendors to make tax exempt purchases for theproject. The general contractor must attach a copy ofthe Limited Agency Exemption Certificate andits attachment to the Contractor’s Exempt PurchaseCertificate.

• The subcontractor must issue a Contractor’s ExemptPurchase Certificate to any of its subcontractors andto vendors from whom the subcontractor makestax-exempt purchases for the project. Thesubcontractor must attach a copy of the Limited AgencyExemption Certificate and its attachment to theContractor’s Exempt Purchase Certificate.


Statutory Authority: Conn. Gen. Stat. §32-23h, Conn.Agencies Regs. §12-426-18

Federally Recognized Indian TribesContractors performing services in Indian country of afederally recognized Indian tribe must receive a completedCERT-127, Certificate for Exempt Purchases by anEnrolled Member or by the Tribal Government of theMashantucket Pequot Tribe or Mohegan Tribe, fromthe Indian tribe.

Contractors issue CERT-128, Certificate for ExemptPurchases by Contractors in Connection WithConstruction Projects on the Mashantucket Pequot orMohegan Reservations, to their vendors when makingpurchases of tangible personal property where title passesto the contractor in Indian country of the tribe or wheredelivery of rented property is taken by the contractor in theIndian country of the tribe. The exemption only applies ifthe equipment is used exclusively and permanently in Indiancountry of the tribes and the entire cost of the purchase ispassed on to the tribe or an enrolled member of the tribe.

See also DRS Ruling 2002-3 for more information onpurchases of tangible personal property outside of Indiancountry of the tribe.

Low and Moderate Income HousingSales of tangible personal property and services used inthe construction, rehabilitation, renovation, repair,maintenance, or operation of low and moderate incomehousing facilities are exempt.

The sponsor of a low and moderate income housing facilityapplies to DRS using REG-19, Application for a FacilityApproval Letter. The letter acknowledges the facility isconstructed under the sponsorship of, and owned or operatedby, a nonprofit housing organization, as defined in Conn. Gen.Stat. §12-412(29), or a municipal housing authority as definedin Conn. Gen. Stat. §8-39. For more details, see PolicyStatement 2002(6), Sales and Use Tax Exemption forLow and Moderate Income Housing Facilities.

The sponsoring party issues to the contractor a copy of theFacility Approval Letter specifically identifying the project.

Materials and Labor: To purchase exempt materials andservices used in the construction, rehabilitation, renovation,repair, maintenance, or operation of the facility, thecontractor must issue CERT-126, Certificate for ExemptPurchases of Tangible Personal Property or Servicesfor Low and Moderate Income Housing Facilities, tothe vendor. The contractor must obtain a copy of the FacilityApproval Letter specifically identifying the project from

the sponsor, owner, or operator of the facility, and attach itto CERT-126.

The contractor may sell all labor exempt, if the contractorreceives CERT-126, with the Facility Approval Letter attached,from the sponsor, owner, operator, or another contractor.


Waste Treatment FacilitiesThere is an exemption for tangible personal propertyincorporated into or consumed in the operation of industrialwaste treatment facilities.

An industrial waste treatment facility treats industrial wasteso it may be discharged into the waters of the state or intosewerage systems emptying into those waters. The primarypurpose of the treatment is the reduction, control, orelimination of pollution of those waters.

The Department of Environmental Protection (DEP) WaterCompliance Unit approves these exempt items.

Materials: Items that appear on the “List of ApprovedWater Pollution Equipment” contained in Policy Statement99(3), Tax Exemptions for Certain Water PollutionControl Equipment, and will be incorporated into or usedand consumed in the operation of an industrial wastetreatment facility, are exempt from tax. The contractorpurchases the items exempt from tax by issuing its suppliera completed CERT-124, Certificate for Purchases ofTangible Personal Property Incorporated Into orConsumed in Water Pollution Control Facilities.

If the item is not listed in Policy Statement 99(3) but thepurchaser intends to use or consume it in the operation ofthose facilities, the purchaser must receive written approvalfrom DEP indicating the item is approved for use in a waterpollution control facility. The purchaser may then buy theitem exempt by issuing both the approval letter and acompleted CERT-124 to the purchaser’s supplier.

The contractor must pay tax on all materials and suppliesnot covered by this exemption.

Labor: Services rendered in the voluntary evaluation,treatment, containment, or removal of hazardous waste orother contaminants of air, water, or soil are not taxable.Contractors do not charge tax on labor in a voluntary projectwhen incorporating the exempt materials into:

• New construction;• Existing commercial property;• Existing industrial property; or• Existing income-producing property.


See the section Exclusion for Hazardous Waste and OtherContaminant Services, below, for the definition ofvoluntary.


Air Pollution Control FacilitiesThere is an exemption for tangible personal propertyincorporated into or used in an air pollution control facility.An air pollution control facility reduces, controls, oreliminates air pollution. The DEP approves these exemptitems.

Materials: Items that appear on the “List of ApprovedAir Pollution Equipment” contained in Policy Statement99(2), Tax Exemptions for Certain Air Pollution ControlEquipment, and will be incorporated into or used andconsumed in the operation of an air pollution control facilityare exempt from tax. The contractor purchases the itemexempt by issuing to its supplier a completed CERT-117,Certificate for Purchases of Tangible Personal PropertyIncorporated Into or Consumed in Air Pollution ControlFacilities.

Purchases of tangible personal property outside of Indiancountry of the Tribe by contractors or subcontractors of theTribe for use in projects for the Tribe within Indian countryof the Tribe are not subject to Connecticut sales or use taxprovided the contractors or subcontractors comply with theprovisions of Conn. Gen. Stat. §§12-407(6) or 12-408c.

If the item is not listed in Policy Statement 99(2) but thepurchaser intends to use or consume it in the operation ofthose facilities, the purchaser must receive written approvalfrom DEP that the item is approved for use in an air pollutioncontrol facility. The purchaser may then buy the itemexempt by issuing both the approval letter and a completedCERT-117 to the contractor’s supplier.

The contractor must pay tax on all materials and suppliesnot covered by this exemption.

Labor: Services rendered in the voluntary evaluation,treatment, containment, or removal of hazardous waste orother contaminants of air, water, or soil are not taxable.Contractors do not charge tax on labor in a voluntary projectwhen incorporating the exempt materials into:

• New construction;• Existing commercial property;• Existing industrial property; or• Existing income-producing property.

See the section Exclusion for Hazardous Waste and OtherContaminant Services, below, for the definition ofvoluntary.


Out-of-State ContractsLabor: There is no Connecticut tax due on the contractor’slabor for a project located outside the State of Connecticut.However, Connecticut tax may be due on materialsconsumed.

Materials: Tangible personal property shipped or broughtinto Connecticut that is subsequently transported outsideof Connecticut for use thereafter solely outside Connecticutis not subject to Connecticut tax. Tangible personal propertypurchased from a Connecticut retailer, where title to theproperty passes in Connecticut, is subject to Connecticuttax even if the property is subsequently transported outsideConnecticut for use solely outside Connecticut unless theBuy Connecticut provision applies.

Under the Buy Connecticut provision, businesses may applyto DRS for a refund of sales and use taxes paid on tangiblepersonal property purchased from a Connecticut retailerwhen those goods will be shipped outside of Connecticutby common or contract carrier within three years of thedate of purchase for exclusive use outside Connecticut orwill be incorporated into other property to be shipped outsideConnecticut for exclusive use outside Connecticut.

This provision also allows the Commissioner of RevenueServices to issue permits that enable qualified purchasersto purchase such property without payment of the taxotherwise imposed by the Sales and Use Taxes Act. Thereis no requirement to ship tangible personal property bycommon or contract carrier if the taxpayer has a BuyConnecticut permit prior to the purchase. For more details,see Special Notice 2001(5), The “Buy Connecticut”Provision.

EXCLUSION FOR HAZARDOUS WASTEAND OTHER CONTAMINANT SERVICES

Certain services to commercial, industrial, or income-producing real property are excluded from tax by statute,including any services rendered in the voluntary evaluation,prevention, treatment, containment, or removal of hazardouswaste or other contaminants of air, water, or soil.

Materials: Materials consumed in the voluntary evaluation,prevention, treatment, containment, or removal of hazardouswaste or other contaminants of air, water, or soil are taxable.This does not include materials incorporated into or usedand consumed in the operation of waste treatment facilitiesor air pollution control facilities, as discussed above.


Labor: Labor performed in the voluntary evaluation,prevention, treatment, containment, or removal of hazardouswaste or other contaminants of air, water, or soil is nottaxable.

See Special Notice 95(17), Certain EnvironmentalServices Excluded From Sales and Use Taxes, for thedefinitions of hazardous waste and other contaminants.

The term voluntary includes actions taken:• To comply with a statute or regulation; or• In accordance with a consent agreement or stipulated

judgment issued or entered in any administrative orcivil action brought by the Connecticut DEP or thefederal Environmental Protection Agency before theearlier of when:• A prehearing conference is held; or• The hearing or trial in the action begins.

Any action taken after a prehearing conference is held, orafter a hearing or trial begins, whichever is earlier, toevaluate, prevent, treat, contain, or remove hazardous wasteor other contaminants is considered involuntary and taxable.

Resale treatment for services is not allowed for servicesvoluntarily performed to evaluate, prevent, treat, contain,or remove hazardous waste or other contaminants. Forexample, a contractor that purchases personnel services ituses in a nontaxable voluntary environmental cleanup jobmust pay tax on the personnel services because thevoluntary environmental services are not enumerated astaxable services.

Statutory Authority: Conn. Gen. Stat. §12-407(a)(37)(I)

TANGIBLE PERSONAL PROPERTY

This term refers to goods that are not part of real property.Examples of tangible personal property are furniture,curtains, and certain appliances.

The sale of tangible personal property is taxable. However,separately stated charges to install tangible personal propertyare not taxable.

Temporary Sheds, Buildings, and TrailersPrefabricated temporary sheds, offices, or other buildingsplaced onto sites for use during construction projects aregenerally considered and remain tangible personal property.Prefabricated gazebos and storage sheds are generallyconsidered and remain tangible personal property.

Statutory Authority: Conn. Gen. Stat. §12-407(a)(13)

INSTALLATION VERSUS REPAIR ORMAINTENANCE OF

TANGIBLE PERSONAL PROPERTY

This section covers services rendered to the following typesof systems and units:

alarm systems central vacuuming unitspumps central air conditioning unitstanks furnaces (boilers and burners)water heaters modular lighting unitsrefrigeration units

These services may include installation of the units orsystems into the real property or may include repair ormaintenance of these units, including their electrical orelectronic devices.

Most contractors provide both types of services: they installsystems, and they repair and maintain them. Different taxrules apply depending upon which type of job is being done.

Installation of SystemsThe installation of the systems listed above is a service toreal property. Contractors are the consumer of thematerials used when installing these systems and, therefore,must pay tax on their purchases.

Contractors do not charge tax when installing theabove-mentioned systems in:

• New construction• Owner-occupied residential property

The contractor must charge tax when installing thepreviously mentioned systems in:

• Existing commercial real property• Existing industrial real property• Existing income-producing real property

Repair or Maintenance of Tangible PersonalProperty (Units)Repairing or maintaining units, or their electrical or electronicparts, is a taxable service to tangible personal property.Contractors providing repair or maintenance services mustseparately state the charge for integral parts and the chargefor maintenance or repair services on the bill to the customer.Any fees, such as service call charges, minimum charges,hourly or flat rates, mileage charges, or pickup or deliverycharges, are taxable as charges for repair or maintenanceservices to tangible personal property. The total bill is taxable.


Maintenance or repair service providers are the consumersof supplies used in rendering their services. Therefore,sales of tangible personal property, other than integral parts,to a contractor who uses the property in repairing tangiblepersonal property are taxable retail sales to the contractor.

The maintenance or repair service provider may purchaseintegral parts using a resale certificate. The term integralpart means a part, such as a circuit board, heating element,control panel, or gear that retains its separate identity evenafter being incorporated into repaired equipment. The termintegral part does not include materials such as lubricants,coolant, stain, paint, varnish, glue, solder and wire, that donot retain their separate identity after being used to repairtangible personal property, but are consumed by thecontractor.

A contractor that both installs and repairs or maintains theseunits or systems may purchase inventory items used in bothinstallation and repairs on a resale basis. For example, ifthe contractor purchases piping, the purchase may be madeusing a resale certificate because piping can be used bothin the installation of a water system and the repair of anexisting water system. If the item is used in an installation,then the contractor self-assesses use tax on the contractor’spurchase price.

If the item is used in a repair the contractor charges itscustomer sales tax on the item. However, a contractorcannot use a resale certificate to purchase items that canonly be used in an installation (for example: furnaces, centralair conditioning, or water heater units).

Statutory Authority: Conn. Gen. Stat. §12-407(a)(37)(Q)

Warranty ContractsA warranty contract is a contract that provides for repairservices to be performed on an item of tangible personalproperty only in the event of a future malfunctioning. Thesale of a warranty contract to service any item of tangiblepersonal property is taxable. The sales tax applies to awarranty contract regardless of whether the charge for thewarranty contract is separately stated from the charge forthe sale of the item or the warranty contract is purchasedseparately from the sale of the item. When repair servicesare performed under the warranty contract at no additionalcharge to the customer, the services are not taxable becausethe tax was considered to be paid on the services when thewarranty contract was purchased. However, any additional

amount that a warrantor charges a customer that is notcovered under the warranty contract, such as a charge fora deductible, is subject to tax. The warrantor may purchaseintegral parts and repair labor used to service an item oftangible personal property under a warranty contract onresale from suppliers or third party repairers.

See the definition of integral part in the left column andConn. Agencies Regs. §12-407(2)(i)(DD)-1, Repair ormaintenance services to tangible personal property andcontracts of maintenance, repair, or warranty, for moreinformation.

EQUIPMENT RENTAL OR SERVICE CONTRACT

The rental of equipment is a taxable transaction, whereasonly certain services are taxable. However, sometimes itis difficult to distinguish a contract for the rental ofequipment from a contract for services.

The terms of the contract, not the billing method, determineif the transaction is for equipment rental or for a service.

Service ContractA contract is for service if the equipment owner:• Is hired to do a specific job;• Maintains complete control over the equipment; and• Retains discretion over how and when to perform the job.

Example: Contract for a Taxable Service: Abulldozer service receives a job order to tear up anexisting parking lot at a shopping center. It dispatches abulldozer and an operator to handle the job. When thework is completed, it bills as follows:

Bulldozer 3 hrs @ $100 = $ 300.00Operator 3 hrs @ $ 40 = $ 120.00Subtotal = $ 420.00Sales Tax ($420 x 6%) = $ 25.20Total = $ 445.20

The entire charge is subject to tax because the renovationof commercial income-producing property is a taxableservice. When performing a taxable service the entirecharge is taxable (whether or not the charge for theoperator is separately stated).


Example: Contract for Nontaxable Services: Acrane service receives a job order to unload two freightcars of lumber. The crane service dispatches a craneand an operator to handle the job. When the work iscompleted, it bills as follows:

Mobile Crane 3 hrs @ $100 = $300.00Operator 3 hrs @ $ 40 = $120.00Total Due = $420.00

This again is a service contract, not the rental ofequipment. The crane service was hired to do a specificjob and it had complete control of the actual operation.Since the unloading of freight is not a taxable service,the charge is not subject to tax.

Equipment RentalWhen the owner is merely supplying equipment, with orwithout operators, to a certain site, and the customer controlshow and when to perform the contract, the contract is forthe rental of equipment.

Example: Rental Contract Without an Operator:A contractor receives a request to supply a bulldozerand a truck without an operator. When the equipment isreleased the contractor bills as follows:1 bulldozer 20 hrs @ $100 = $ 2,000.001 truck 20 hrs @ $ 50 = $ 1,000.00Subtotal = $ 3,000.00Tax ($3000 x 6%) = $ 180.00Total Due = $ 3,180.00

This is a rental of equipment and the entire charge issubject to 6% tax.

Example: Rental Contract With an Operator: Acrane service receives a job order to provide a crane tounload two freight cars of lumber. The crane servicedispatches a crane and an operator to handle the job.When the crane and the operator arrive at the job site,the freight company instructs the operator on how andwhen to unload the lumber. The freight companyoversees the crane operator’s work and makesadjustments as necessary. When the work is completed,it bills as follows:Mobile Crane 3 hrs @ $100 = $300.00Operator 3 hrs @ $ 40 = $120.00Subtotal = $420.00Tax ($300 x 6%) = $ 18.00Total = $438.00

This is a rental of equipment and the charge forequipment is subject to the 6% tax. However, the chargefor the operator is not taxable provided the lessor suppliesan operator for the leased property and the amountcharged for the compensation of the operator isreasonable and is separately stated on the invoice.

Statutory Authority: Conn. Agencies Regs. §12-426-25

CONDOMINIUMS

When a condominium unit is occupied by the owner, it isconsidered residential real property. When a unit is rented,it is considered income-producing real property. Therefore,if the contractor renders a service directly to the ownerof the condominium unit and the service is a service toreal property, the application of the tax depends on whetherthe unit is owner-occupied or rented. Rented condominiumswhere the tenant purchases the service and the unit ownerdoes not reimburse the tenant are residential property.

If, on the other hand, the contractor renders the servicedirectly to a condominium association and the serviceis a service to real property under Conn. Gen. Stat.§12-407(a)(37)(I), tax applies to the percentage of theservice charge equivalent to the percentage of the totalunits that are rental units. See Services Taxable to CertainReal Property on Page 10.

For example, a condominium complex has a total of 100units. Forty of the units are owner-occupied and 60 arerental units. The 60 units are income-producing real property.If the contractor is performing a taxable service, 60% ofthe service charge would be taxable. The contractor mustobtain from the condominium association a completedCERT-103, Residential Condominium AssociationCertificate. CERT-103 requires the association to providea breakdown of the owner-occupied units as a percent oftotal units as of the first day of the calendar year.

Often an association contracts with a property managementcompany to oversee the day-to-day operations of theassociation. The taxable portion of the management fee isequivalent to the percentage of rental units. The propertymanagement company is allowed to issue a resale certificateto a contractor providing a taxable service as long as theservice will be resold to the association. The propertymanagement company must collect tax on the taxableservices it resells.


Some services, such as landscaping and snowplowing,rendered by a contractor to a residential condominiumassociation or to the owner of a condominium unit are 100%taxable, regardless of the percentage of the owner-occupiedunits. The contractor must charge tax on the entire bill forthese services. For examples of these services, see ServicesTaxable to All Real Property on Page 10.

CONSTRUCTION CONTRACTS WITHDIRECT PAYMENT PERMIT HOLDERS

Different rules apply for contractors when entering intocontracts with direct payment permit holders.

Direct payment permits allow permit holders to pay usetax directly to DRS rather than paying the tax to theirvendors.

Renovation Construction ProjectsContractors that enter into renovation construction contractswith direct payment permit holders do not pay sales or usetax on the purchase of materials and supplies to be installedor permanently placed in the project. A contractor mustpay tax to the vendor when purchasing, leasing, or rentingtools and equipment.

The direct payment permit holder issues a copy of its FormAU-621, Direct Payment Permit, to the general contractor.The general contractor issues a copy of the direct paymentpermit and CERT-133, Contractor’s Exempt PurchaseCertificate for a Renovation Contract With a DirectPayment Permit Holder, to its suppliers when purchasingmaterials and supplies to be installed or permanently placedin a renovation project without paying sales tax.

General contractors issue a resale certificate to theirsubcontractors for renovation labor resold to a directpayment permit holder.

The general contractor provides copies of the direct paymentpermit to all renovation project subcontractors. Thesubcontractor issues CERT-133 and a copy of the directpayment permit to its suppliers when purchasing materialsand supplies to be installed or permanently placed in arenovation project without paying sales tax.

A direct payment permit holder self-assesses use tax onthe total bill from the general contractor that includes:• Materials and supplies installed or permanently placed

in a renovation project; and• Labor used in the renovation project.

New Construction ProjectsDirect payment permit holders may not issue, and thegeneral contractor may not accept, the direct paymentpermit for new construction projects. General contractorsand subcontractors must pay sales and use taxes onpurchases of materials and supplies installed or permanentlyplaced in new construction projects and on purchases,leases, or rental of tools and equipment. CERT-133 andthe direct payment permit cannot be used for newconstruction contracts.

Construction Projects That InvolveRenovation and New ConstructionThe general contractor must separately state the costs forthe new construction and renovation portions of the contracton the bill or invoice to the direct payment permit holder.This provides the direct payment permit holder with the actualcost of the renovation portion of the contract on which theuse tax is self-assessed. The direct payment permit holdermust issue a copy of the direct payment permit to the generalcontractor for the renovation portion of the contract. Thegeneral contractor must attach a copy of the taxpayer’s directpayment permit to CERT-133 and issue CERT-133 to itssuppliers when purchasing materials and supplies to beinstalled or permanently placed in the renovation portion ofthe project without paying sales tax. The general contractorprovides copies of the direct payment permit to allsubcontractors involved in the renovation portions of theproject. The general contractor must issue a resale certificateto the subcontractors for the renovation labor to be resold tothe direct payment permit holder.

Recurring Taxable Services Provided to RealProperty Purchased by Direct PaymentPermit HoldersA direct payment permit holder must issue a copy of thedirect payment permit to the service provider whenpurchasing any taxable services provided to real property(other than new construction) such as propertymanagement, landscaping, janitorial, or maintenanceservices. The service provider must attach a copy of thetaxpayer’s direct payment permit to CERT-133 and issueCERT-133 to its suppliers when purchasing materials andsupplies to be installed or permanently placed in the realproperty without paying sales tax.

The service provider provides copies of the direct paymentpermit to all subcontractors from which it is purchasingrecurring taxable services for resale to the direct paymentpermit holder. The service provider must also issue a resalecertificate to the subcontractors for these services. The


subcontractors must attach a copy of taxpayer’s directpayment permit to CERT-133 and issue CERT-133 to itssuppliers when purchasing materials and supplies to beinstalled or permanently placed in the real property withoutpaying sales tax.

See Informational Publication 2004(7), Q & A on theConnecticut Direct Payment Permit Program, for moreinformation about direct payment permit holders.

Statutory Authority: Conn. Gen. Stat. §12-409a

BOND REQUIREMENTS OFNONRESIDENT CONTRACTORS

The procedures to furnish a guarantee bond or withholdpayment in connection with a contract with nonresident realproperty contractors have been modified for contractsentered into on or after July 1, 2003. Nonresidentcontractors or persons doing business with nonresidentcontractors may use one of two options to satisfy therequirements for posting security to ensure a nonresidentcontractor pays all Connecticut taxes:1. A nonresident contractor may furnish DRS a guarantee

bond for 5% of the total contract price within 120 daysof the commencement of the contract; or

2. Persons doing business with nonresident contractorsmust withhold 5% of the total contract price and depositit with DRS no later than 30 days after the completionof the contract.

The nonresident contractor must use Form AU-766,Guarantee Bond, to post a bond. The customer of anonresident contractor must use Form AU-764, Depositby a Person Doing Business With a NonresidentContractor, to make a deposit. The requirement to eitherpost a bond or make a deposit applies to all contracts withnonresident contractors, regardless of the nature of the realproperty affected or the tax-exempt status of the propertyowner.

Nonresident contractor means a contractor who does notmaintain a regular place of business in Connecticut.

Person doing business with a nonresident contractormeans any person who enters into a contract with anonresident contractor, and includes, but is not limited to,property owners, governmental, charitable or religiousentities, and resident or nonresident general contractors orsubcontractors.

See Special Notice 2003(20), Legislation AffectingContracts With Nonresident Contractors, for moreinformation.



notes


THE DETAILS


Air Conditioning(See Central Air Conditioning

and Ventilation Systems)

Alarm SystemsPermanent InstallationPermanently installed means the wire, keypads, or controlboards and sensor devices are built into the real property.

Materials: The contractor pays tax on all purchases ofmaterials that become part of the alarm system, including:

Horn or siren Smoke or fire detectorsKeypad WireMotion detectors

Labor: Tax is not charged on labor when the alarm systemis permanently installed in:


Tax is charged when the alarm system is permanentlyinstalled in:

• Existing commercial property• Existing industrial property• Existing income-producing property

Repairs and MaintenanceTax is charged on:

• The sale or renewal of a repair, maintenance, orwarranty contract on the alarm system; and

• Repairs or maintenance of the alarm system, exceptwhen performed under a repair or maintenancecontract and no additional charge is made for therepair.

The bill to the customer should be broken down into twocomponents:

• Integral parts• Labor

The total bill is subject to tax when the service is performedon:

• New construction• Owner-occupied residential property• Existing commercial property• Existing industrial property• Existing income-producing property

Integral PartsThe contractor purchases integral parts for the alarm systemexempt by issuing a resale certificate to the contractor’svendor.

Integral parts purchased for use in performing servicesunder a maintenance, repair, or warranty contract arenot subject to tax unless a charge for the parts is made bythe contractor to the customer. For the definition of integralpart, see Repair or Maintenance of Tangible PersonalProperty (Units) on Page 19. Also see Warranty Contractson Page 20 for more information on warranty contracts.

Tax is charged on the sale of a monitoring contract.

See Conn. Agencies Regs. §§12-407(2)(i)(DD)-1, Repairor maintenance services to tangible personal propertyand contracts of maintenance, repair or warranty and12-426-27(b)(5), Private investigation, protection, patrol,watchman and armored car services.

Antennas and Communications TowersCommunications towers typically are tall steel structuresmounted on concrete pads on the ground and secured tothe ground with guy wires. There may also be buildingsconstructed at the tower sites. Tower owners may grantwireless communications companies the right to attach theirequipment to the towers and install equipment in thebuildings for a monthly fee. The towers are expected toremain in place indefinitely because of the difficulty ofremoving them and because of considerations involved inFederal Communications Commission licensing, contractualarrangements with communications companies, and zoningapprovals.

The towers and buildings are real property, not tangiblepersonal property. As such, payments for the right to attachequipment to the towers are not the sale or lease of tangiblepersonal property and, therefore, are not taxable. Servicesrendered to the towers themselves or the buildings aroundthem are services to commercial, industrial, or income-producing real property. However, services rendered tothe equipment attached to the towers or placed in thebuildings are maintenance or repair services to tangiblepersonal property.

Installation of and Services to CommunicationsTowersMaterials: The contractor pays tax on all purchases ofmaterials that become part of the communications tower,including but not limited to:

girders guy wires concrete


Labor: The contractor does not charge tax whenperforming services to:

• New construction

The contractor must charge tax when performing servicesto:

• Existing communications towers

Installation of Equipment on CommunicationsTowersLabor: The contractor does not charge tax on separatelystated installation labor when installing the equipment on:


Repair or Maintenance of Equipment Installedon Communications TowersThe contractor must charge tax for:

• The sale or renewal of a repair, maintenance, orwarranty contract on the equipment;

• Repairs to or maintenance of the equipment, exceptwhen performed under a repair or maintenancecontract and no additional charge is made for therepair.



The total bill is subject to tax when (except when the serviceis rendered under a warranty contract) the service isperformed on:


Integral PartsThe contractor purchases integral parts for the equipmentexempt by issuing a resale certificate to the vendor.

Integral parts purchased for use in performing servicesunder a maintenance, repair, or warranty contract arenot subject to tax unless a charge for the parts is made bythe contractor to the customer. For the definition of integralpart, see Repair or Maintenance of Tangible Personal

Property (Units) on Page 19. Also see Warranty Contractson Page 20 for more information on warranty contracts.

See Conn. Agencies Regs. §12-407(2)(i)(DD)-1, Repairor maintenance services to tangible personal propertyand contracts of maintenance, repair or warranty.

Appliances(See Kitchens)

Audio-Visual Cable or Wiring(See Telephone, Audio-Visual, and Computer

Cable or Wiring)

Awnings(See also Standard Units of Equipment)

InstallationsA retailer of awnings is selling tangible personal property.

The retailer of awnings can purchase the awnings withoutpaying tax by using a resale certificate. The retailer ofawnings must charge tax on the sale of the awnings.

Separately stated charges for installing the awnings are notsubject to tax when the awnings are placed on:


Repair or Maintenance Services to AwningsRemoved From a Building or StructureRepair or maintenance services, such as removal, repair,cleaning, and reinstallation, whether or not separately stated,performed on an awning that has been removed from abuilding or structure are considered repair or maintenanceservices to tangible personal property. The service providermust charge tax on the total charge for repair or maintenanceservices. However, the removal or reinstallation of awningsnot related to repair or maintenance services of awningsare not taxable.

Maintenance Services to Awnings Attached to aBuilding or StructureMaintenance services performed on an awning that remainsattached to a building or structure are consideredmaintenance services to real property. The service providermust charge tax when performing maintenance services to:



The maintenance service provider pays tax on the purchaseof materials and supplies used in performing the maintenanceservice. The maintenance service provider is the consumerof these materials and supplies.

Integral PartsThe repair or maintenance service provider purchasesintegral parts without paying tax to the vendor by using aresale certificate.


Bathrooms(See also Standard Units of Equipment)

InstallationMaterials: The contractor pays tax on all purchases ofmaterials, including but not limited to:

cabinets* tileexhaust fans toiletsfaucets tubsmirrors tub or shower enclosuresshower heads vanitiessinks

* Contractors installing cabinets should review PolicyStatement 94(7), Fabrication and Installation ofStock and Custom Cabinets, to determine the propertax treatment.

Labor: The contractor does not charge tax when installingthe above items in:


The contractor must charge tax when installing the aboveitems in:


Brickwork/Stonework1. Related to the StructureInstallationMaterials: The contractor pays tax on all purchases ofmaterials for the construction of chimneys, interior, andexterior surfaces of the building and fireplaces, includingbut not limited to:

bricks stone cementstone dust mortar





Taxation of the services of waterproofing, repairing,repointing, and fixing cracks in brick structures follows therules for installation.

Brick washing is a maintenance service to real property.See Maintenance Services to Real Property.

2. Related to landscaping, such as theinstallation of walkways, walls, and patios (otherthan asphalt, tar, macadam, or poured concrete)Materials: The contractor purchases all the materials,including but not limited to brick, stone, mortar, and stonedust, which will be physically incorporated into the projectwithout payment of tax by issuing a resale certificate to thevendor.

Labor: The contractor must charge tax on the labor andmaterials to install, when the service is performed on:


See also Landscaping and Horticulture Services,Maintenance Services to Real Property, and Painting,Staining, Varnishing, and Waterproofing.


Cabinets(See Bathrooms, Kitchens, andStandard Units of Equipment)

CarpentryMaterials: The contractor pays sales or use tax on allpurchases of materials including, but not limited to lumberand building supplies.

Labor: The contractor does not charge tax whenperforming carpentry services to:


The contractor must charge tax when performingcarpentry services to:


Carpet Cleaning(See Janitorial Services)

Carpeting(See Floor Coverings)

Central Air ConditioningInstallationMaterials: The contractor pays tax on all purchases ofmaterials that become part of the central air conditioningsystem including, but not limited to:

blowers central air conditioning unitsduct work control devices

Labor: The contractor does not charge tax when installingthe central air conditioning system in:


The contractor must charge tax when installing the centralair conditioning system in:


Repairs and Maintenance (excluding duct work)The contractor must charge tax for:

• The sale or renewal of a repair, maintenance, orwarranty contract on the air conditioning unit; and

• Repairs to or maintenance of the air conditioningunit except when performed under a servicecontract and no additional charge is made for therepair.





Integral PartsThe contractor purchases integral parts for the airconditioning system exempt by issuing a resale certificateto the vendor. These parts include, but are not limited to:

blowers excess moisture drainscoils fanscompressors filterscondenser coils refrigerantcontrol devices refrigerant tubes


See the Interior Sheet Metal section of this guide for taxtreatment of the cleaning and maintenance of interior ductwork.



Central Vacuum SystemsInstallationMaterials: The contractor pays tax on all purchases ofmaterials that become part of the central vacuum systemincluding, but not limited to:

vacuum units wall outletspipe control devicestubing

Labor: The contractor does not charge tax when installingthe central vacuum system in:


The contractor must charge tax when installing the centralvacuum system in:


Repairs and MaintenanceThe contractor must charge tax on the charges for:

• The sale or renewal of a repair, maintenance, orwarranty contract on the central vacuum unit; and

• Repairs to or maintenance of the central vacuumunit (except when performed under a servicecontract and no additional charge is made for therepair).





Integral PartsThe contractor purchases integral parts for the centralvacuum system exempt by issuing a resale certificate tothe contractor’s vendor.

Integral parts purchased for use in performing servicesunder a maintenance, repair, or warranty contract maybe purchased on resale and are not subject to tax unless a

charge for the parts is made by the contractor to thecustomer. For the definition of integral part, see Repair orMaintenance of Tangible Personal Property (Units) onPage 19. Also see Warranty Contracts on Page 20 formore information on warranty contracts.

Taxation of the repair, cleaning, and maintenance of theinterior piping of the system follows the rules for installationof a system.


ChimneysInstallation and RepairsMaterials: The contractor pays tax on all purchases ofmaterials, including but not limited to:

bricks fluescaps potscement rain and draft deflectorsflashing stone

Labor: The contractor does not charge tax when installingor repairing (such as fixing cracks and repointing) the aboveitems in:


The contractor must charge tax when installing or repairingthe above items in:


See the Exterior Sheet Metal Work section of this guidefor services performed to the flashing.

Chimney CleaningChimney cleaning is a maintenance service. The contractorpays tax on the purchase of all cleaning supplies. Thecontractor must charge tax on the total charge for chimneycleaning when the service is rendered to:



Clean Rooms/HVAC Systems(See also Heating Systems and Ventilation

Systems)

This section covers the construction of clean rooms(enclosed, environmentally controlled areas) and theinstallation of systems used to regulate the temperature,humidity, and contamination of the rooms by heating,ventilation, and air conditioning (HVAC) contractors.

Materials: The taxation of the construction of clean roomsis controlled by Conn. Agencies Regs. §12-426-18.Consequently, contractors pay the tax as a consumer onthe purchase or lease of all materials, supplies, or equipmentused in fulfilling its contract.

Clean rooms are often used in manufacturing andbiotechnology applications. While contractors cannot makepurchases of tangible personal property for clean roomsexempt from sales and use taxes as manufacturers underConn. Gen. Stat. §12-412(34) or as persons involved in theapplication of biotechnology in Conn. Gen. Stat. §12-412(89),any materials qualifying under these exemptions may bepurchased exempt by the business and installed by thecontractor into the room.

Contractors may make purchases of component parts forassembly of machinery exempt from sales and use taxesunder Conn. Gen. Stat. §12-412(73) when the clean roomis part of a manufacturing process. Clean room machinerymay include heating, cooling, dehumidifying, and air filtrationsystems. Clean room machinery does not include the walls,floors, ceilings and exterior portions of the room.

Labor: The contractor does not charge tax on theconstruction of clean rooms that are part of:

• New construction

The contractor must charge tax when constructing cleanrooms that are in:

• Existing commercial real property• Existing industrial real property• Existing income producing real property

Repair or MaintenanceA contractor repairing or maintaining HVAC units isrendering taxable maintenance and repair services totangible personal property. Sales of items of tangiblepersonal property to contractors rendering the service aretaxable unless the items are integral parts. For the definitionof integral part, see Repair or Maintenance of TangiblePersonal Property (Units) on Page 19.

A contractor that both installs and repairs or maintainsHVAC systems used in clean rooms may purchase itemsof inventory that can be used in both installation and repair,such as wiring or piping, on a resale basis. If the item isused for installation, the contractor must self assess use taxon the purchase price of the item. If the item is used forrepair purposes, the contractor must collect tax from itscustomer. The contractor cannot use a resale certificate topurchase items that can only be used in an installation, suchas ventilation units, etc.


Computer Cable or Wiring(See Telephone, Audio-Visual, and Computer

Cable or Wiring)

DecksMaterials: The contractor pays tax on all purchases ofmaterials, including but not limited to lumber and buildingsupplies.

Labor: The contractor does not charge tax whenperforming carpentry services to:


The contractor must charge tax when performingcarpentry services to:


Site improvements that put the property to a new use arenew construction (see Page 10). For example, the ownerof an existing apartment complex contracts with a carpenterto build a wooden deck on the back of each unit. Prior tothis contract there were never any decks attached to thisbuilding. This contract is a new construction contract.

For the repair of decks at a condominium complex, seeCondominiums on Page 21.


DemolitionMaterials: The contractor pays tax on all materialsconsumed, such as explosives and blasting supplies, inproviding demolition services.

Labor: The contractor does not charge tax whendemolition services are rendered on:

• New construction• Owner-occupied residential property.

The contractor must charge tax when demolition servicesare performed on:


As long as the demolition is part of the contract for a newconstruction project, the demolition service is not subject totax.

DredgingDredging services are performed to create or maintain acertain depth in bodies of water. Dredging includesexcavation of earth to reach the water line and removal ofexcavated or dredged material. Dredging does not includeservices provided to piers or docks.

Dredging of Publicly Owned Navigable WatersDredging in, adjacent to, or to create access to publiclyowned navigable waterways, such as Long Island Sound,lakes, rivers, streams, or wetlands, is not taxable. Thisincludes dredging to create or maintain areas such asharbors, channels, marinas, and ports that are in, adjacentto, or that lead to navigable bodies of water, whether or notdredged areas are privately owned, and regardless of thepurpose of the dredging. Publicly owned means ownedby the federal government, a state, or a political subdivisionof a state.

Dredging of Privately Owned Ponds, Lakes,Streams, or Inland WetlandsDredging to reconstruct, remodel, or repair privately ownedponds, and dredging of existing privately owned ponds,lakes, streams, or inland wetlands are taxable services,except when performed adjacent to, or to create access topublicly owned navigable waterways as described above.

Dredging performed to construct, remodel, or repairprivately owned ponds is taxable as a landscaping service.Dredging of existing privately owned ponds, lakes, streams,or inland wetlands are taxable maintenance services evenif the body of water is navigable. These dredging servicesare taxable when performed on:


See Conn. Agencies Regs. §12-407(2)(i)(X)-1,Maintenance services, and §12-407(2)(i)(V)-1,Landscaping and horticulture services, for relatedinformation.

Driveways, Parking Lots, and Walkways(For asphalt, tar, macadam, and poured

concrete areas, see Paving)(For brick, stone areas, or concrete pavers,see Landscaping and Horticulture Services)

Duct Work(See Interior Sheet Metal and Ventilation Systems)

Electrical(Complete wiring or rewiring of structures or theupgrading of the electrical service of a structure)

Materials: The contractor pays tax on all purchases ofmaterials including, but not limited to:

circuit breakersdoor bells, buzzers, and chimesmain power boxesoutletsreceptaclesswitcheswall boxeswall fixtureswiring






Electrical DevicesRepairs and MaintenanceRepairing electrical or electronic devices and repair ormaintenance services to any item of tangible personalproperty including, but not limited to central air conditioningunits, central vacuum units, refrigeration units, modularlighting units, pumps, and alarm systems.

The contractor must charge tax for:• The sale or renewal of a repair, maintenance, or

warranty contract on any item of tangible personalproperty or electrical or electronic devices; and

• Repairs to or maintenance of tangible personalproperty or electrical or electronic devices, exceptwhen performed under a service contract and noadditional charge is made for the repair.





Integral PartsThe contractor purchases integral parts for electrical devicesexempt by issuing a resale certificate to the vendor.



Elevators and Escalators(See also Inclined Stairway Chairlifts)

InstallationMaterials: The contractor pays tax on all purchases ofmaterials including, but not limited to:

motors staircasescables elevator carscontrol panels

Labor: The contractor does not charge tax when installingan elevator or escalator in:


The contractor must charge tax when installing an elevatoror escalator in:


Repairs and MaintenanceThe contractor must charge tax for:

• The sale or renewal of a repair, maintenance, orwarranty contract on the elevator or escalator motor;and

• Repairs to or maintenance of the elevator orescalator motor except when performed under aservice contract and no additional charge is madefor the repair.



The total bill is subject to tax when the service is performedin:


Integral PartsThe contractor purchases integral parts for elevators orescalators exempt by issuing a resale certificate to thecontractor’s vendor.



Taxation of the repairs to or maintenance of the elevatorshaft or box, or the escalator stairs, follows the tax rulesfor the installation of elevators and escalators.


Energy AuditsEnergy audits, usually performed for utility companies tofoster energy conservation and reduce energy costs tocustomers, are services to real property.

Materials: The energy audit contractor must pay tax onall purchases of materials consumed in performing energyaudits. However, if the energy audit contractor separatelystates charges to the utility company or utility companycustomers for materials such as shower heads, weatherstripping, and insulation, it may purchase the items on resaleand must charge tax on the items.

Labor: The contractor does not charge tax when theaudit is conducted on:


The energy audit contractor must charge tax to the utilitycompany or utility company customer when the audit isconducted on:


Excavating, Grading, and Land Clearing1. Not Related to LandscapingThe contractor does not charge tax when performing theseservices on:


The contractor must charge tax when performing theseservices on:


2. Related to LandscapingThese services are subject to tax when rendered to:


See Landscaping and Horticulture Services, for relatedinformation.

Exterior Sheet Metal Work(See also Gutters)

Installation and RepairMaterials: The contractor pays tax on the purchase ofmaterials, including but not limited to:

flashing metal downspouts metal gutters

Labor: The contractor does not charge tax when installingor repairing exterior sheet metal work in:


The contractor must charge tax when installing or repairingexterior sheet metal work in:


See Conn. Agencies Regs. §12-407(2)(i)(I)-1, Services toreal property, for related information.

ExterminatingExterminating services mean services to kill or expelpests.

Materials: The exterminator must pay tax on all purchasesof equipment and supplies including but not limited to poisonsand traps.

Labor: The exterminator must charge tax on thecustomer’s total bill when the service is rendered to:




The service of live trapping a pest and releasing it is not ataxable service.

See Conn. Agencies Regs. §12-407(2)(i)(Z)-1,Exterminating Services, for related information.

Fencing(See also Landscaping and Horticulture Services

and Silt Fencing)

Materials: The contractor pays tax on all purchases ofmaterials that become part of the fence.

Labor: Except as discussed below, the contractor mustcharge tax when installing the fence on:


The construction, remodeling, or repair of fences ispresumed to be a taxable landscaping service until thecontrary is established. This presumption may be rebuttedif it is clearly established that the services rendered are notintended to be landscaping services, such as when an actionis mandated by statute. For example, a contractor installinga fence that encloses a swimming pool and that is installedto comply with a law requiring that swimming pools beenclosed may establish that the services rendered are notintended to be landscaping services.

The installation of any chainlink fencing and the installationof any fencing used to contain livestock on a farm are notconsidered landscaping services. The installation of anychainlink fencing and any fencing used to contain livestockon a farm are taxable under Conn. Gen. Stat.§12-407(2)(i)(l) when rendered to existing industrial,commercial, or income-producing real property.

Fire, Water, and Wind Damage(Cleaning, deodorizing, and removal of water or

debris)

The contractor must charge tax on the total bill when thiswork is rendered to:



For rehabilitation of the structure, see Carpentry, Roofing,Painting, etc. For tree trimming or removal, seeLandscaping and Horticulture Services.

See Conn. Agencies Regs. §12-407(2)(i)(Y)-1, JanitorialServices, for related information.

FireplacesInstallation or RepairMaterials: The contractor pays tax on all purchases ofmaterials including but not limited to:

bricks lintels dampersmantels fireboxes stoneflues

Labor: The contractor does not charge tax when installing,repairing, fixing cracks, or repointing the fireplace in:


The contractor must charge tax when installing, repairing,fixing cracks, or repointing in:


For the tax treatment of fireplace cleaning, see Chimneys.

Floor Coverings1. CarpetPermanent Installation(Glued or cemented to the floor)Wall-to-wall and other carpet installations are generallyservices to real property. If the carpet is glued or cementedto subflooring, it is considered permanently affixed to thestructure and is a service to real property.

Materials: The contractor must pay tax on the purchaseof the carpet when it is glued or cemented to the floor.

Labor: The flooring contractor does not charge tax whenpermanently installing carpeting in:



The contractor must charge tax when permanentlyinstalling the carpet in:


Nonpermanent Installation(Tacked or nailed to the floor)If the carpet is tacked or nailed to the floor, it isnonpermanent installation of carpet and is not a service toreal property.

Materials: The installer is considered a retailer of carpetand purchases the carpet without payment of tax by issuinga resale certificate to the carpet wholesaler and collectstax on the sale to the end customer.

Labor: The contractor does not charge tax on separatelystated nonpermanent installation labor in:


2. Floating FloorsNonpermanent InstallationThe installation of floating floors is nonpermanent installationof flooring and is not a service to real property.

Materials: The installer is considered a retailer of theflooring and purchases the flooring without payment of taxby issuing a resale certificate to the flooring wholesalerand collects tax on the sale to the end customer.

Labor: The contractor does not charge tax on separatelystated nonpermanent installation labor in:


3. Floor Coverings Other Than Carpet andFloating FloorsThese services are a service to real property and also includeall necessary surface and other preparations prior to theactual installation.

Materials: The contractor pays tax on all purchases ofmaterials including, but not limited to:

ceramic tile marble vinylconcrete terrazzo woodlinoleum

Labor: The contractor does not charge tax when installingthese types of floor coverings in:


The contractor must charge tax when installing these typesof floor coverings in:


Floor RefinishingFloor refinishing usually involves the following servicesto wood floors: sanding, removing finishes from existingfloors, replacing flooring materials as needed, and applyinga finishing coat of paint, stain, varnish, or sealant.

Materials: The contractor pays tax on purchases of allmaterials that will be used in floor refinishing.

Labor: The floor refinishing contractor does not chargetax when refinishing floors in:

• Owner-occupied residential property

The floor refinishing contractor must charge tax whenrefinishing floors in:


Furnaces(See Heating Systems)

Garage DoorsInstallation and RepairsMaterials: The contractor pays tax on all materialspurchased for installing, replacing, or repairing the garagedoor including, but not limited to:

garage doors rollers trackstrim springs

Labor: The contractor does not charge tax when installing,replacing, or repairing a garage door in:



The contractor must charge tax when installing, replacing,or repairing a garage door in:


Garage Door OpenersInstallationMaterials: The contractor must pay tax on the purchaseof the electric garage door opener and controls (as aconsumer); or

If the contractor is a retailer of electric garage door openers,the contractor may purchase the opener and controls exemptby issuing a resale certificate to the vendor and collect taxon the sale to the end customer.

Labor: The contractor does not charge tax on separatelystated labor for installing the electric garage door openerin:


Repairs and MaintenanceThe contractor must charge tax on:

• The sale or renewal of a repair, maintenance orwarranty contract on an electric garage door opener;

• Repairs to or maintenance of electric garage dooropeners, except when performed under a servicecontract and no additional charge is made for therepair.



The total bill is subject to tax when the service is rendered to:• New construction• Owner-occupied residential property• Existing commercial property• Existing industrial property• Existing income-producing property

Integral PartsThe contractor purchases integral parts for the electricgarage door openers exempt by issuing a resale certificateto the vendor.



Garbage DisposalsInstallationMaterials: The contractor pays tax on purchases of allmaterials incorporated into the garbage disposal system.

Labor: The contractor does not charge tax when installingthe garbage disposal in:


The contractor must charge tax when installing the garbagedisposal in:


Repairs and MaintenanceThe contractor must collect tax on charges for:

• The sale or renewal of a repair, maintenance, orwarranty contract on a garbage disposal unit; and

• Repair or maintenance of the garbage disposal,except when performed under a service contractand no additional charge is made for the repair.



The total bill is subject to tax when the repair is renderedto:



Integral PartsThe contractor purchases integral parts for the garbagedisposal exempt by issuing a resale certificate to the vendor.



Gazebos(See Sheds and Gazebos)

Gutters(See also Exterior Sheet Metal Work andMaintenance Services to Real Property)

Materials: The contractor pays tax on purchases of allmaterials.

Labor: The contractor does not charge tax when installingthe gutters in:


The contractor must charge tax when installing the guttersin:


Hatchways(See Standard Units of Equipment)

Heating Systems(See also Clean Rooms/HVAC Systems)

InstallationHeating systems include but are not limited to:

coal burning heating systemselectric heating systems (permanently installed)gas heating systemsheat pump units

hot water heating systemshumidifiers (permanently installed)oil heating systemsradiant heating systemssolar heating systemssteam heating systemswarm air duct systemswood burning furnaces (permanently installed)

Materials: The contractor pays tax on all purchases ofmaterials that become part of the heating system including,but not limited to:

furnace fuel linesduct work oil tanksblowers thermostatscontrol devices hot water heatershumidifiers (permanently installed)

Labor: The heating contractor does not charge tax wheninstalling the heating system in:


The heating contractor must charge tax when installingthe heating system in:


Repairs and Maintenance (Excluding duct work)The contractor must collect tax on the charges for:

• The sale or renewal of a repair, maintenance, orwarranty contract on the heating system; and

• Repairs to or maintenance of furnaces, oil burnersand blowers, except when performed under aservice contract and there is no additional chargefor the repair.



The total bill for cleaning, maintenance, and repairs to theheating system is subject to tax when the service isrendered in:



A service charge to diagnose a problem with a heatingsystem is a taxable maintenance and repair service totangible personal property.

Integral PartsThe contractor purchases integral parts for the furnace, oilburner, and blower exempt by issuing a resale certificate tothe vendor.


For the tax treatment of the cleaning and maintenance ofthe interior duct work, see the Interior Sheet Metal sectionof this guide.


House Washing(See Maintenance Services to Real Property andPainting, Staining, Varnishing, and Waterproofing)

Inclined Stairway ChairliftsInstallationsA retailer of inclined stairway chairlifts sells tangible personalproperty.

The retailer of inclined stairway chairlifts can purchase theinclined stairway chairlifts without paying tax by using aresale certificate. The sale of inclined stairway chairliftsfor the use of invalids or handicapped persons is exemptfrom sales and use taxes.

The installation of these inclined stairway chairlifts is alsoexempt from sales and use taxes even if the installationcharge is not separately stated on the bill or invoice to thecustomer. The charges for installing the inclined stairwaychairlift are not taxable when installed in:


Repair or Maintenance ServicesProvided to Inclined Stairway ChairliftsRepair or maintenance services performed on inclinedstairway chairlifts for the use of invalids or handicappedpersons are exempt from sales and use taxes.

The repair or maintenance service provider purchasesintegral parts without paying tax by using a resale certificate.The sales of repair or replacement parts for inclined stairwaychairlifts are also exempt from tax. For the definition ofintegral part, see Repair or Maintenance of TangiblePersonal Property (Units) on Page 19.

Inspections(See Structural Inspection)

Interior Sheet Metal(Duct work)

InstallationMaterials: The sheet metal contractor pays tax on allpurchases of materials that will become part of the interiorduct work for the heating, air conditioning, and ventilationsystems.

Labor: The sheet metal contractor does not charge taxwhen installing the interior duct work in:


The sheet metal contractor must charge tax when installingthe interior duct work in:


Repairs, Cleaning, and MaintenanceThe contractor does not charge tax for repairing, cleaning,and maintenance of interior duct work when it is performed in:


The contractor must charge tax for the repairing, cleaning,and maintenance of interior duct work when it is performedin:



Janitorial Services(See also Maintenance Services to Real Property)

Janitorial services mean cleaning the interior or exteriorof buildings, structures, or dwellings, whether residential orindustrial, commercial, or income-producing real property,or the contents of the property. Such services are of thetype rendered by a janitor in the regular course of duty, andmay be rendered alone or in conjunction with other services.Janitorial services are rendered either on a scheduled,periodic basis or only on a single occasion, such as to a siteupon completion of construction or renovation. Janitorialservices include, but are not limited to:

carpet cleaning floor cleaning (permanently and powerwashing nonpermanently vacuuming installed) wall cleaningceiling cleaning waxing/polishingdisinfecting furnituredusting woodwork cleaningemptying waste baskets

Materials: The janitorial service provider pays tax on allpurchases of materials including but not limited to cleaningsupplies and cleaning solutions.

Labor: The janitorial service provider must charge taxwhen the service is rendered to:


See Conn. Agencies Regs. §12-407(2)(i)(Y)-1, JanitorialServices, for related information.

KitchensInstallationBuilt-in Materials and Free Standing Appliances:The contractor pays tax on all purchases of built-in materialsand free standing appliances that will be incorporated intothe kitchen including, but not limited to:Built-in Appliances

built-in dishwasher ducted hoodbuilt-in microwave oven exhaust fanbuilt-in range faucetsbuilt-in refrigerator garbage disposalcabinets* sinkscounter tops

* Contractors installing cabinets should review PolicyStatement 94(7), Fabrication and Installation ofStock and Custom Cabinets, to determine the propertax treatment.

Free Standing Appliancesclothes dryer dishwashermicrowave ovens ovenrange refrigeratorwashing machine

Labor: The contractor does not charge tax when installingthese items in:


The contractor must charge tax when installing built-initems in:


The installation of appliances that are not installed into thereal property, such as the appliances listed above as freestanding appliances, is considered installation of tangiblepersonal property. Separately stated charges for theinstallation of tangible personal property are not taxable.

Repairs and MaintenanceRepair services to any electrical or electronic device aretaxable. These items include, but are not limited to:

built-in dishwashers exhaust fansbuilt-in microwave ovens garbage disposalsbuilt-in ranges microwave ovensbuilt-in refrigerators ovensclothes dryers rangesducted hoods refrigeratorsdishwashers washing machines

The contractor must charge tax for:• The sale or renewal of a repair, maintenance, or

warranty contract on any appliance; and• Repairs or maintenance of any appliance, except

when performed under a service contract and noadditional charge is made for the repair.




The total bill for repairs and maintenance to electrical orelectronic devices is subject to tax regardless of whetherthe repair takes place in the home or in a service center.

Integral PartsThe contractor purchases integral parts for these appliancesexempt by issuing a resale certificate to the vendor.


See Conn. Agencies Regs. §§12-407(2)(i)(DD)-1, Repairor maintenance services to tangible personal propertyand contracts of maintenance, repair or warranty, and12-407(2)(i)(Q)-1, Electrical and electronic repairservices, for related information.

Landscaping and Horticulture ServicesThese services include, but are not limited to the plantingof and caring for:

flowers trees vegetablesfruits shrubs

Landscaping and horticulture services also include servicesto lawns, such as:

fertilizing mulching seedingmowing raking weeding

Also, landscaping and horticulture services includemaintenance of exterior or interior plants, such as:

pruning tree removal servicesspraying tree trimmingother lawn and garden services

The services involved in the construction of the followingwill also be treated as landscaping services:

irrigation/sprinkler systemspatios (other than poured concrete or asphalt)walkways (other than poured concrete or asphalt)driveways (other than poured concrete or asphalt)

Construction of poured concrete or asphalt patios andwalkways is treated as a paving service to real propertyand is not taxable when rendered to new construction (firsttime paving). However, repairing of pavement and repavingare taxable when rendered to existing commercial, industrial,or income-producing real property. See Paving.

The services involved in the construction of:fences* ponds retaining wallsgates walls

are treated as landscaping services unless the contrary canbe established by the contractor. For example, a serviceprovider installing a fence around a swimming pool in orderto comply with a law requiring that swimming pools beenclosed can establish that the services rendered are notlandscaping services. Likewise, building a retaining wallrequired by a city or town is not a landscaping service.Such non-landscaping services are not taxable whenrendered on new construction or owner-occupied realproperty but are taxable if rendered on existing industrial,commercial or income-producing property.

* See Fencing for exceptions.

Excavating, land clearing, and rough grading servicesrendered as an integral part of a landscaping job are alsotaxable as landscaping services. However, tree removalon new building lots is an exempt land clearing service.

Materials: The landscaper/horticulturist may purchaseon a resale basis all the materials that will be physicallyincorporated in or physically applied to the premises of theservice recipient in the delivery of landscaping andhorticulture services.

Total Bill: The contractor must charge tax on the laborto install and the materials when the service is performedon:


Landscaping and horticulture services rendered at theresidence of a person receiving total disability paymentsunder Social Security are not subject to tax.

See Conn. Agencies Regs. §12-407(2)(i)(V)-1,Landscaping and horticulture services, for relatedinformation.

Locksmith ServicesLocksmith services include repairing, servicing, or installinglocks and locking devices, whether the locks and lockingdevices are incorporated into real property (such as adeadbolt lock on a door to a building), or are incorporatedinto tangible personal property (such as a door lock on anautomobile), or are locks separate and apart from other


property (such as padlocks). Locksmith services also includeunlocking locks or locking devices when a customer is unableto do so, such as when the key to a motor vehicle is lockedinside the vehicle. Locksmith services do not include keymaking or sales of locks and locking devices, which aretaxable as sales of tangible personal property.

Locksmiths can be retailers of both goods and services.When they sell goods at retail, tax must be collected fromthe customer. The locksmith purchases these goods exemptfrom sales or use tax by issuing a resale certificate to thelocksmith’s supplier. Some examples of the products soldby a locksmith include, but are not limited to:

door knobs keys safeshinges locks

A locksmith must charge tax for both goods and serviceswhen installing, repairing, or servicing locks and lockingdevices on tangible personal property (for example, carsand safes).

A locksmith must charge tax for both goods and servicefor installing, repairing or servicing locks and locking devicesin:


See Conn. Agencies Regs. §§12-407(2)(i)(T)-1, Locksmithservices, and 12-407(2)(i)(DD)-1, Repair or maintenanceservices to tangible personal property and contracts ofmaintenance, repair or warranty.

Any fees, such as service call charges, minimum charges,hourly or flat rates, mileage charges, or pickup or deliverycharges, are taxable as charges for locksmith services.

A general contractor purchasing locksmith services maynot issue a resale certificate to the locksmith unless thegeneral contractor’s labor is also a service listed as taxablein Conn. Gen. Stat. §12-407(a)(37).



The total bill is subject to tax when the repair is renderedto:

• New construction• Owner-occupied residential property• Existing commercial property

• Existing industrial property• Existing income-producing property

Integral PartsThe locksmith purchases integral parts exempt by issuing aresale certificate to the vendor.


MailboxesPermanently InstalledAn example of a permanently installed mailbox is oneinstalled on a post with a concrete base.

Materials: The contractor pays tax on all purchases ofmaterials, including but not limited to the mailbox and post.

Labor: The contractor does not charge tax whenpermanently installing the mailbox in:


The contractor must charge tax when permanentlyinstalling the mailbox in:


Maintenance Services to Real PropertyMaintenance services means attending to the upkeep of,caring for, or cleaning the exterior or interior of buildings,dwellings, structures, and grounds located on any kind ofreal property. These services are necessary to sustain orsupport safe, efficient, continuous use or to keep the realproperty in good working order by preventing its decline,failure, lapse, or deterioration.

Maintenance services include, but are not limited to:brick washingchimney sweepingcleaning guttersdriveway sealinghouse washing (power washing)


pond dredgingresurfacing clay tennis courtssnow removalstone washing

Materials: The maintenance service provider pays tax onthe purchase of all cleaning supplies used in performing theservice. The maintenance service provider is consideredthe consumer of these supplies.

Labor: The maintenance service provider must chargetax when the repair is rendered to:


Maintenance services rendered at the residence of a personreceiving total disability payments under Social Security arenot subject to tax. The contractor should obtainCERT-121, Exemption for Landscaping andHorticulture Services, Window Cleaning Services, andMaintenance Services Provided to Recipients of TotalDisability Benefits.

See Conn. Agencies Regs. §12-407(2)(i)(X)-1,Maintenance services, for related information.

ManagementConstruction ManagementConstruction managers are usually contracted to overseethe day-to-day operations of all the contractors involved ina construction contract. They verify that all the contractorsand subcontractors are performing their services punctuallyand in accordance with building codes and constructionplans.

The construction manager does not charge tax when theservice is rendered to:


The construction manager must charge tax when theservice is rendered to:


Property ManagementA property manager is engaged to oversee the day-to-dayoperations of real property. This usually encompassescontracting for services that are an integral or inseparablepart of the property management service, such as electrical,plumbing, landscaping, snow plowing, maintenance,janitorial, and any other services needed to maintain or repairthe property. The property manager is allowed to purchasethese services on a resale basis as long as the services willbe resold to the property owner. The property managermust charge tax on any of the taxable services resold bythe manager. See the specific service in this guide for itsproper tax treatment.

The property manager must charge tax when renderingmanagement services to:


The amount charged for the separately stated compensation,fringe benefits, workers’ compensation and payroll taxes,or assessments paid to or on behalf of an employee of aproperty management company is not subject to tax if thefollowing three conditions are met. The employee:

• Is employed directly by the property managementcompany;

• Is doing the work that its employer is obligated toperform under an agreement to manage a client’sreal property; and

• Works solely for one client at one location.

See Special Notice 93(2), Sales and Use Tax on ChargesMade By Service Providers After Air Kaman, Inc. v.Groppo, and 1992 Conn. Pub. Acts 17 (May Spec. Sess.),for more detailed information on this subject.

Masonry(See Brickwork/Stonework)

Moving a StructureMaterials: The mover pays tax on all materials used inrendering its service.

Labor: The mover does not charge tax when moving:• Owner-occupied residential property

The mover must charge tax when moving:• Existing commercial property• Existing industrial property• Existing income-producing property


Painting, Staining, Varnishing,and Waterproofing

These services include the painting or repainting of allinterior and exterior surfaces of real property for decoration,protection, or preservation purposes. Also included is allline painting on paved surfaces, such as parking lots andtennis courts, but excluding line painting on paved surfacesof public rights-of-way.

These services also include all necessary surface and otherpreparations prior to the actual painting, where performedas part of the entire job, such as:

applying sealants powerwashingapplying waterproofing puttying or other protective finish sandingspackling tapingplaning

Materials: The painting contractor pays tax on allpurchases of materials, including but not limited to:

paint spackling compoundputty tapesealants

Labor: The painting contractor does not charge tax whenrendering painting services to:


The painting contractor must charge tax when renderingpainting services to:



Patio(See Landscaping and Horticulture Services)

PavingPaving involves covering the ground with a hard smoothsurface such as:

asphalt macadampoured concrete tar

Paving includes the replacement of sections or the completerepaving of:

basketball courts tennis courtsdriveways walksparking areas

Paving does not include covering driveways, parking areas,and walks with materials such as crushed stone, crushedstone with oil, or gravel. However, these services aretaxable when rendered to existing commercial, industrial,and income-producing property.

Paving services do include all preparatory work, whereperformed as part of the entire job, as well as thesubsequent sealing or dressing of the pavement.

Initial InstallationMaterials: The paving contractor pays tax on all purchasesof materials including:

asphalt macadamconcrete tar

Labor: The contractor does not charge tax when adriveway, parking lot, or walk is paved for the first time.Therefore, if the contractor is putting in a driveway, parkinglot, or walkway at a new construction site or paving for thefirst time an existing driveway, parking lot, or walkwayoriginally constructed of dirt, loose stone, or gravel, the laboris not subject to tax on:


Repair or Replacement (An existing paveddriveway, parking lot, or walkway)Materials: The paving contractor pays tax on all materialspurchased to repair or replace an existing paved driveway,parking lot, walkway, basketball court, or tennis court.

Labor: The contractor does not charge tax on the labor torepair or replace existing pavement on:


The contractor must charge tax on the labor to repair orreplace existing pavement on:



Pest Control(See Exterminating)

PlumbingPlumbing includes but is not limited to installation orreplacement of:

piping systemsshower stallssinks and necessary sink fixturestoilets and necessary toilet fixturestubs and necessary tub fixturestub enclosures

Plumbing also includes:fixing leaking pipesunclogging drainsthawing frozen pipesrepairing sinks, toilets, and tubs

Materials: The plumbing contractor pays tax on allpurchases of materials including but not limited to:

faucets sinkspipe toiletsshower stalls tubsshower heads

Labor: The plumbing contractor does not charge tax whenperforming plumbing services to:


The plumbing contractor must charge tax when performingplumbing services to:


Plumbing contractors who perform repair and maintenanceservices to heating and air conditioning units, garbagedisposals, sump pumps, and well pumps should consult theappropriate sections of this guide for the proper taxtreatment.

Power Washing(See Maintenance Services to Real Property)

Precast Concrete or Cement Steps(See Standard Units of Equipment)

Protection, Patrol Work,and Watchman Services

Protection, patrol work, and watchman services include butare not limited to guarding and patrolling construction sites anddirecting traffic at construction sites. These services aregenerally taxable. However, if they are provided directly tocustomers by off-duty police officers and fire fighters, and theservices, by their nature, can only be provided by licensedpolice officers and firefighters, the services are not taxable.

Materials: The protection, patrol work, or watchmancontractor pays tax on all purchases of materials andequipment that will be used to perform the services.

Labor: The protection, patrol work, and watchmancontractor must charge tax when performing services to:


Protection, patrol work, and watchman services may bepurchased on resale by a contractor providing services listedas taxable in Conn. Gen. Stat. §12-407(a)(37), to existingcommercial, industrial, or income-producing property, orlandscaping services to any type of property.

A public right-of-way is not considered commercial,industrial, or income-producing property. A public right-of-way is property such as a state or municipal street or roadand adjacent area. A contractor providing services to apublic right-of-way (such as repaving a state road) cannotpurchase protection, patrol work, or watchman services ona resale basis. The contractor must pay tax on thispurchase.

Refuse RemovalMaterials: The refuse removal company pays tax on allmaterials used in rendering its service. Garbage cans,containers, and dumpsters that are the property of the refuseremoval company cannot be purchased on a resale basis.The refuse removal company is the consumer of these itemsand must pay tax on them, even though the refuse removalcompany may bill the customer for rental of a container.Therefore, charges for the rental of a container is consideredrefuse removal services and are taxed accordingly.

See Policy Statement 99(5), Refuse and Sanitary WasteRemoval Companies, for more information.


Labor: The refuse removal company does not charge taxto the customer for refuse removal services rendered to:


The refuse removal company must charge tax to thecustomer for refuse removal services, including chargesfor hauling, container or dumpster rental, or dumping feesrendered to:


Refuse removal services for construction sites may bepurchased on resale by a contractor providing services listedas taxable in Conn. Gen. Stat. §12-407(a)(37)(I) to existingcommercial, industrial, or income-producing property.

Services to industrial, commercial, or income-producing realproperty, rendered in the voluntary evaluation, prevention,treatment, containment, or removal of hazardous waste, orother contaminants of air, water, or soil are not taxable.See Special Notice 95(17), Certain EnvironmentalServices Excluded from Sales & Use Taxes, for moreinformation.

Retaining Walls(See Landscaping and Horticulture Services)

RoofingInitial Installation (New construction)Materials: The roofing contractor pays tax on all materialsincorporated into the roof, including but not limited to:

asphalt slate metaltile shingles wood

Labor: The roofing contractor does not charge tax whenthe initial roof is installed on:


Installation, Repair, and Replacement(Existing real property)Roofing services include the replacement of part of a roof,the replacement of an entire roof, and the repair of a roof,and include all work performed in preparation for roofing,when performed as part of an entire job.

The services also include the replacement of roof rafters,their plywood, wood or other covering, ventilation work,expansion joints, flashings, gutters, metal or compositionvalleys, rain and draft deflectors, drip edges, snow guards,and snow slides.

Roofing does not include the initial installation of new guttersor the replacement of old gutters on existing real property,the repair or cleaning of chimneys, the cleaning of all typesof roof systems such as gutters, downspouts and drains,and the repair or replacement of items such as copings,cornices, electric heating tape, gravel stops and fascias,gutters and downspouts, heating cables, louvers and screens,metal ornaments, metal stacks, and skylights. However,some of these services, such as cleaning chimneys, gutters,downspouts, and drains, are taxable as maintenance servicesto real property. See Maintenance to Real Property.

Materials: The roofing contractor pays tax on all purchasesof materials that will be incorporated into the job.

Labor: The roofing contractor does not charge tax wheninstalling the roofing on:


The roofing contractor must charge tax when installingthe roofing on:


See Conn. Agencies Regs. §§12-407(2)(i)(I)-1, Servicesto real property, and 12-407(2)(i)(X)-1, Maintenanceservices, for related information.

SandblastingMaterials: The contractor pays tax on all purchases ofmaterials consumed in rendering sandblasting services.

Labor: The contractor does not charge tax whensandblasting on:


The contractor must charge tax when sandblasting on:• Existing commercial property• Existing industrial property• Existing income-producing property


Septic SystemsInstallationInstallation of septic systems includes, but is not limited toinstallation of:

distribution boxes lines and pipesdry wells seepage pitsgrease traps septic tanksleach fields

Materials: The contractor pays sales or use tax on allpurchases of materials that become part of the septicsystem.

Labor: The contractor does not charge tax on theinstallation of a septic system in:


The contractor must charge tax on the installation of aseptic system in:


Taxation of the services of repairing or replacing the septicsystem follows the rules for installation.

Septic System CleaningSeptic system cleaning includes, but is not limited to:

clearing septic linespumping cesspoolspumping dry wellspumping septic tanks

The contractor does not charge tax on septic systemcleaning when it is rendered to:


The contractor must charge tax on septic system cleaningwhen it is rendered to:


Sheds and GazebosPrefabricatedA retailer of prefabricated sheds or gazebos is consideredto be selling tangible personal property.

See Temporary Sheds, Buildings, and Trailers on Page 19.

The manufacturer can purchase lumber and materials forthe sheds or gazebos exempt by using a resale certificate.The retailer of prefabricated sheds or gazebos must chargetax on the completed units.

Separately stated charges for installing prefabricated shedsor gazebos are not subject to tax when the sheds or gazebosare placed on:


Repair and maintenance services to prefabricated shedsand gazebos that remain tangible personal property aresubject to tax as repairs to tangible personal property.

Constructed on SiteA contractor that builds a shed or gazebo on the customer’ssite is performing a service to real property.

Materials: The contractor pays tax on all purchases ofmaterials, including but not limited to lumber and buildingsupplies, concrete, or wiring.

Labor: The contractor does not charge tax whenconstructing a new shed or gazebo on:


Repairs and MaintenanceIn general, a contractor does not charge tax when repairingor renovating a shed or gazebo that is real property on:


The contractor must charge tax when repairing orrenovating a shed or gazebo that is real property on:



Sheet Metal(See Interior Sheet Metal orExterior Sheet Metal Work)

SidingSiding services include the replacement or repair of anoutside wall or wall covering, such as insulated board orplywood sheathing, done in connection with siding. Sidingservices also include all the work performed in preparationfor siding when performed as part of the entire job.

Materials: The contractor pays tax on all purchases ofsiding materials, including but not limited to:

aluminum siding shinglesbrickface stuccoclapboards vinylshakes and other wood coverings

Labor: The siding contractor does not charge tax wheninstalling siding on:


The siding contractor must charge tax when installing thesiding on:


See Conn. Agencies Regs. §12-407(2)(i)(I)-1, Services toReal Property, for related information.

SignsPermanently InstalledPermanently installed signs are signs that become affixedto real property, including but not limited to electricallylighted signs bolted to the fronts of buildings, signs installedon concrete bases and poles, and construction of billboards(not including the advertising placed on them).

Materials: The contractor pays tax on all purchases ofmaterials, including but not limited to the sign, concrete,wiring, lumber, and building supplies.

Labor: The contractor does not charge tax whenpermanently installing the sign on:


The contractor must charge tax when permanentlyinstalling the sign on:


Not Permanently InstalledExamples of signs not permanently installed include, butare not limited to real estate for-sale signs placed temporarilyin the ground, easily movable free standing signs, andbusiness signs placed in store windows. Signs notpermanently installed are tangible personal property. Thesale of signs that are not permanently installed is taxable.Charges for the installation of signs that are not permanentlyinstalled are not taxable if separately stated.

Sign Painting and Lettering ServicesSign painting and lettering services include painting andlettering of indoor or outdoor signs, painting and lettering ofnames, trademarks, or logos on store fronts, buildings,billboards, motor vehicles, concrete, and marble. Theseservices are generally performed on real property, tangiblepersonal property owned by the customer or on signsprovided by the customer.

Materials: The sign painter pays tax on all purchases ofmaterials.

The total bill is subject to tax when the service is renderedto:


The manufacture and sale of a separate sign by a companythat does not install the sign is not a painting and letteringservice or service to real property, but the sale of tangiblepersonal property. See Tangible Personal Property onPage 19.

Silt FencingSilt fencing is installed around a construction site as anerosion control measure. When the construction iscomplete, the silt fencing is removed.

Materials: The silt fencing contractor pays tax on allpurchases of materials.


Labor: The contractor does not charge tax when installingthe silt fence on:


The contractor must charge tax when installing the siltfence on:


Snow Plowing/Removal(See Maintenance Services to Real Property)

Staining(See Painting, Staining, Varnishing, and

Waterproofing)

Standard Units of EquipmentInstallationMaterials: The sale of complete units of standardequipment is generally a sale of tangible personal property.Examples of standard units of equipment are:

Awnings Precast Concrete or Cement StepsHatchways Stock CabinetsSeptic Tanks

The contractor purchases the standard units of equipmenton resale. The contractor charges tax on the sale of thestandard units of equipment. The contractor does not applytax to a separately stated charge to install the standardunits of equipment.

Labor: The contractor does not charge tax on the installationof complete standard units of equipment when the serviceis rendered to:


However, if the installation of complete units of standardequipment is part of an overall construction contract to realproperty, the installation charges are considered a serviceto real property.

Example: A contractor installs stock cabinets in the courseof performing renovations to an employee cafeteria in an

office building. Use tax is due on the cost of materials tothe contractor.

The contractor does not charge tax when performing theseservices on:




Repairs and MaintenanceService to repair or maintain an installed unit of standardequipment is a service to real property. The contractordoes not charge tax when performing these services on:




See Awnings for taxability of repair or maintenance servicesfor awnings that have been removed from a building orstructure.

Contractors installing cabinets should review PolicyStatement 94(7), Fabrication and Installation of Stockand Custom Cabinets, to determine the proper tax treatment.

See also Septic Systems on Page 47.

Stock Cabinets(See Standard Units of Equipment)

Structural InspectionThe contractor does not charge tax when renderingstructural inspection services to:


The contractor must charge tax when rendering structuralinspection services to:



Sump PumpsPermanent InstallationMaterials: The contractor pays tax on all purchases ofmaterials including but not limited to the pipe, the pumpunit, and shutoff switches.

Labor: The contractor does not charge tax whenpermanently installing a sump pump in:


The contractor must charge tax when permanentlyinstalling a sump pump in:


Repairs and MaintenanceThe contractor must charge tax on:

• The sale or renewal of a repair, maintenance, orwarranty contract on the sump pump system; and

• Repairs to or maintenance of the sump pump,except when performed under a service contractand no additional charge is made for the repair.

These parts include, but are not limited to:connectors motorselectrical cords pump suction headsfloats and shutoff switches




The total bill is subject to tax when services to the sumppump are performed on:


Integral PartsThe repair contractor purchases integral parts for the sumppump system exempt by issuing a resale certificate to thevendor.


Taxation of the service of repairing the piping part of thesump pump system follows the rules for permanentinstallation.

Swimming PoolsInstallation of Above Ground PoolsThe installation of an above ground pool is not a service toreal property. The installer is considered a retailer ofswimming pool kits and purchases all materials exempt byissuing a resale certificate to the contractor’s supplier. Theinstaller collects tax on the sale to the end customer.

Labor: The contractor does not charge tax on separatelystated installation labor when installing the above groundpool on:


Repairs to Above Ground PoolsRepairs include, but are not limited to replacing a rippedlining or repairing the vinyl, aluminum, or wood frame ofthe pool.

The pool contractor purchases integral parts for the aboveground pool exempt by issuing a resale certificate to thecontractor’s supplier.



The total bill is subject to tax when the above ground poolrepair is performed on:



Installation of In Ground PoolsMaterials: The contractor pays tax on all purchases ofmaterials incorporated into the swimming pool, includingbut not limited to:

built-in lights lumbercement pipesfilters swimming pool kitsgravel tileliners

Labor: The contractor does not charge tax whenconstructing the original pool in:


The installation of an in ground pool is considered a siteimprovement which puts the property affected to a newuse. Therefore, the original construction of a pool, wherea pool never existed before, is considered a new constructioncontract.

Repairs to and Replacement of In Ground PoolsThe replacement of an existing in ground pool is notconsidered a site improvement and, therefore, follows therules for repairing an in ground pool.

Repairs to in ground pools include, but are not limited tofilling in cracks in the cement, replacing broken tiles,replacing or patching ripped linings and replacing built-inlighting fixtures.

Materials: The contractor pays tax on all purchases ofmaterials used in repairing the in ground pool, including butnot limited to:

cement tile vinyl lining

Labor: The contractor does not charge tax when repairingor renovating an in ground pool built on:


The contractor must charge tax when repairing orrenovating an in ground pool built on:


Cleaning and Maintenance to Both AboveGround and In Ground PoolsSwimming pool cleaning and maintenance services includebut are not limited to:

chemically treating the poolchlorinating the poolopening the pool for the seasonshock treatmentskimming the poolvacuuming the poolwinterizing the pool

Materials: The swimming pool cleaning and maintenancecontractor pays tax on all purchases of materials used incleaning or maintaining pools.

Labor: The contractor must charge tax when performingswimming pool cleaning and maintenance services to:


See Conn. Agencies Regs. §12-407(2)(i)(AA)-1, Swimmingpool cleaning and maintenance services, for relatedinformation.

Repairs to Pool FiltersThe contractor must charge tax on the charges for:

• The sale or renewal of a repair, maintenance orwarranty contract on the filter; and

• Repairs to or maintenance of the filter, except whenperformed under a service contract and noadditional charge is made for this repair.




The total bill for maintenance and repairs to the filter issubject to tax when these services are rendered on:



Integral PartsThe contractor purchases integral parts for the filter exemptby issuing a resale certificate to the vendor.


Telephone, Audio-Visual, and ComputerCable or Wiring

Permanent InstallationPermanently installed means the cable or wire is builtinto the real property. Where wiring or cabling is run behinda wall, above a ceiling, or under a floor, so that its locationis not obvious and it is not readily accessible, its installationis a service to real property, and not the installation oftangible personal property. In addition, for the same reason,the removal of permanently installed wiring or cabling isalso a service to real property.

Materials: The contractor pays tax on all purchases ofmaterial including, but not limited to the cable or wire andwall outlets.

Labor: The contractor does not charge tax whenpermanently installing cable or wiring in:


The contractor must charge tax when permanentlyinstalling cable or wiring in:


However, separately-stated charges to install telephone,audio-visual, and computer cable or wiring from the wall tothe equipment is not taxable as a service to real propertybecause it is not permanently installed into real property.

Testing for ContaminantsTesting for the presence of contaminants such as radon,asbestos, and lead is not subject to tax when performedon:


Underground CablesThe installation or repair of underground cable is a serviceto real property.

Materials: The contractor pays tax on all purchases ofmaterials used to install or repair underground cable.

Labor: The contractor does not charge tax when repairingor installing underground cable in:

• New construction• Owner-occupied residential property• Real property located within a public right-of-way

The contractor must charge tax when repairing or installingunderground cable in:


For services rendered on public rights-of-way, seePage 10.

Underground Storage TanksUnderground storage tanks include, but are not limited to:

Gasoline storage tanksHeating oil storage tanks

InstallationA retailer of underground storage tanks is considered to beselling tangible personal property.

The retailer of underground storage tanks can purchasethe tanks without paying tax by using a resale certificate.The retailer of underground storage tanks must charge taxon the sale of the tanks.

Separately stated charges for installing the undergroundstorage tanks are not subject to tax. The removal ofunderground storage tanks is not subject to tax.

A septic tank is not an underground storage tank. Theinstallation of a septic tank is a service to real property.See Septic Systems on Page 47 for more information.


Varnishing(See Painting, Staining, Varnishing, and

Waterproofing)

Ventilation Systems(See also Clean Room/HVAC Systems)

InstallationVentilation systems include, but are not limited to:

attic fans roof vents exhaust fans

Materials: The contractor pays tax on all purchases ofmaterials including but not limited to:

duct work shutterselectrical switches fan units

Labor: The contractor does not charge tax for permanentlyinstalling a ventilation system in:


The contractor must charge tax for permanently installinga ventilation system in:


Repairs and Maintenance of Fan UnitsThe contractor must charge tax for:

• The sale or renewal of a repair, maintenance, orwarranty contract on the ventilation system; and

• Repairs or maintenance of the fan units, exceptwhen performed under a service contract and noadditional charge is made for the repair.



The total bill for maintenance and repairs to ventilationsystem fan units is subject to tax when the services arerendered to:


The taxation of repairing the duct work follows the rulesfor installation.

Integral PartsThe contractor purchases integral parts for the fan unitsexempt by issuing a resale certificate to the vendor.



WallpaperingWallpapering means the application of wallpaper or wallfabric to interior walls and ceilings. Such services alsoinclude all necessary preparations prior to the wallpapering,such as removing old wallpaper, steaming, puttying, taping,spackling, and sizing.

Materials: The wallpapering contractor pays tax on allpurchases of materials including but not limited to:

paste tapespackling compound wallpaper

Labor: The contractor does not charge tax when renderingwallpapering services to:


The contractor must charge tax when renderingwallpapering services to:




Walls(For exterior walls, see Landscaping and

Horticulture Services)

Installation of Interior WallsMaterials: The contractor pays tax on all purchases ofmaterials used to install interior walls into the structureincluding but not limited to:

baseboard molding groutceramic tile wallboardinsulation wood paneling

Labor: The contractor does not charge tax when installing,insulating, or repairing walls in:


The contractor must charge tax when installing, insulatingor repairing walls in:


Also see Painting, Staining, Varnishing, andWaterproofing on Page 44.

Water HeatersInstallationMaterials: The contractor pays tax on the hot water heater,piping, and on all materials used in the installation.

Labor: The contractor does not charge tax when installingthe hot water heater in:


The contractor must charge tax when installing the waterheating system in:


Repairs and MaintenanceThe contractor must charge tax for:

• The sale or renewal of a repair, maintenance, orwarranty contract on the hot water heater; and

• Repairs to or maintenance of the hot water heater,except when performed under a service contractand no additional charge is made for the repair.



The total bill for cleaning, maintenance and repairs to thehot water heater is subject to tax when the repair is renderedin:


Integral PartsThe contractor purchases integral parts for the hot waterheater exempt by issuing a resale certificate to the vendor.



Waterproofing(See Painting, Staining, Varnishing, and

Waterproofing)

WeldingA welder may operate as a contractor, repairer of tangiblepersonal property or a retailer of fabrication labor. A welderperforming services to real property is operating as acontractor.

Welder as ContractorMaterials: The welder pays tax on all purchases ofmaterials including but not limited to welding rods and solder.

Labor: The welder does not charge tax when weldingservices are performed on:



The welder must charge tax when welding services areperformed on:


Welder as Repairer ofTangible Personal PropertyThe bill to the customer should be broken down into twocomponents:


The total bill for welding repairs to tangible personal propertyis subject to tax.

Integral PartsThe welder purchases integral parts exempt by issuing aresale certificate to the contractor’s supplier.


Welder as Retailer of Fabrication LaborMaterials: The welder purchases materials that will beincorporated into the finished product exempt by issuing aresale certificate to the contractor’s supplier.

Fabrication Labor: Fabrication labor is the labor requiredto modify or assemble materials to produce a finishedproduct.

The total bill for fabricating a finished product is subject totax.

There are special rules for welding as part of themanufacturing process. For more information, see SpecialNotice 93(1.1), The Manufacturing Recovery Act of1992 Exemption for Purchases of Property Used InManufacturing, Processing and Fabricating.

Wells and PumpsInstallationMaterials: The contractor pays tax on all purchases ofmaterials including, but not limited to:

filters pipe well pumps

Labor: The contractor does not charge tax when installingthe well in:


The contractor must charge tax when installing the wellin:


Repairs and Maintenance of PumpsThe contractor must charge tax for:

• The sale or renewal of a repair, maintenance orwarranty contract on the well pump; and

• Repairs to or maintenance of the well pump, exceptwhen performed under a service contract and noadditional charge is made for the repair.



The total bill for cleaning, maintenance, and repairs to thewell pump is subject to tax when the repair is rendered in:


Integral PartsThe contractor purchases integral parts for the well pumpexempt from sales or use tax by issuing a resale certificateto the vendor.




WindowsInstallation and ReplacementMaterials: The contractor pays tax on all purchases ofmaterials, including but not limited to the window, the frame,putty, caulking, and all the accompanying hardware.

Labor: The contractor does not charge tax when installingor replacing windows in:


The contractor must charge tax when installing or replacingwindows in:


For painting windows, see Painting, Staining, Varnishing,and Waterproofing.

Window CleaningWindow cleaning services means cleaning windows andexterior and interior glass when rendered to any realproperty.

The window cleaner pays tax on the purchase of all cleaningsupplies. The window cleaner must charge tax on thetotal charge for window cleaning when the service isperformed on:


Window cleaning services rendered at the residence of aperson receiving total disability payments under SocialSecurity are not subject to tax.

See Conn. Agencies Regs. §12-407(2)(i)(W)-1, Windowcleaning services, for related information.

Wiring(See Telephone, Audio-Visual, Computer

Cable or Wiring)


Appendix


notes


Subc

ontr

acto

r:Th

e ca

rpen

ter b

ills

the

gene

ral $

70,0

00.0

0M

ater

ials

pur

chas

ed$4

7,16

9.81

Tax

paid

by

sub

$ 2

,830

.19

Tota

l mat

eria

ls c

ost

$50,

000.

00Su

b's

char

ge fo

r ser

vice

$20,

000.

00To

tal

$70,

000.

00

Sub

cont

ract

or:

The

plum

ber b

ills

the

gene

ral $

10,0

00.0

0M

ater

ials

pur

chas

ed$

4,7

16.9

8Ta

x pa

id b

y su

b$

28

3.02

Tota

l mat

eria

ls c

ost

$ 5

,000

.00

Sub'

s ch

arge

for s

ervi

ce$

5,0

00.0

0To

tal

$10,

000.

00

Fact

s fo

r Exa

mpl

e 1:

This

is a

taxa

ble

reno

vatio

n to

com

mer

cial

pro

perty

.

Tax

is p

aid

by th

e su

bcon

tract

ors

on m

ater

ials

at t

he ti

me

ofpu

rcha

se. (

All

mat

eria

ls fo

r th

is jo

bar

e pu

rcha

sed

by th

esu

bcon

tract

ors.

)

Sub

cont

ract

ors

acce

pt r

esal

ece

rtific

ates

for

the

serv

ice

porti

onof

the

bill

from

the

gene

ral

cont

ract

or.

The

gene

ral c

ontra

ctor

cha

rges

the

prop

erty

ow

ner 6

% ta

x on

the

serv

ice

porti

on o

f the

con

tract

.

Ex

am

ple

1G

ener

al c

ontra

ctor

bill

s ow

ner b

yse

para

tely

sta

ting

the

char

ges

for t

axab

lese

rvic

e an

d th

e ta

x on

the

serv

ice.

Res

ale

certi

ficat

es is

sued

by

gene

ral c

ontra

ctor

tosu

bcon

tract

ors

for t

axab

le s

ervi

ces.

Sub

cont

ract

or:

The

elec

tric

ian

bills

the

gene

ral $

10,0

00.0

0M

ater

ials

pur

chas

ed$

4,71

6.98

Tax

paid

by

sub

$

283.

02To

tal m

ater

ials

cos

t$

5,00

0.00

Sub'

s ch

arge

for s

ervi

ce$

5,00

0.00

Tota

l$1

0,00

0.00

Issues resale certificatefor service portion of bill

Issues resale certificate for service portion of bill

Issues resale certifi

cate for

service portion of bill

Gen

eral

Con

trac

tor

Bill

s P

rope

rty

Ow

ner

$100

,000

.00

plus

sal

es ta

x

$ 60

,000

.00

Mat

eria

ls (t

ax p

aid

by s

ubco

ntra

ctor

s)$

40,0

00.0

0S

ervi

ce (i

nclu

des

gene

ral c

ontra

ctor

's c

harg

e)$

2,4

00.0

0Ta

x on

ser

vice

$102

,400

.00

Tota

l bill

ed to

pro

perty

ow

ner

Bre

akdo

wn

of G

ener

alC

ontr

acto

r's B

ooks

:

MAT

ERIA

LS:

Plum

ber

$ 5

,000

.00*

Car

pent

er$5

0,00

0.00

*El

ectri

cian

$ 5

,000

.00*

Tota

l$6

0,00

0.00

SE

RV

ICE**

:Pl

umbe

r$

5,0

00.0

0C

arpe

nter

$20,

000.

00El

ectri

cian

$ 5

,000

.00

Gen

eral

Con

tract

or$1

0,00

0.00

Tota

l Ser

vice

$40,

000.

00S

ales

Tax

on

Ser

vice

$ 2

,400

.00

Gra

nd T

otal

$102

,400

.00

**N

ote:

See

Ser

vice

Cha

rges

on

Pag

e 10

.

*In

clud

es ta

x pa

id b

yth

e su

bcon

tract

ors

toth

eir

vend

ors

SAMPLE

Check any boxes that apply and provide the information requested:

If you are permanently out of business, If this is your first return,enter last business date: enter business start date:

New mailing address or trade name: New physical location:Enter new physical location:

Enter new mailing address: (PO box is not acceptable.)

New ownership:Enter name of new owner:

Enter new trade name: Address of new owner:

Date sold:

Declaration: I declare under penalty of law that I have examined this return (including any accompanying schedules and statements) and, to the bestof my knowledge and belief, it is true, complete, and correct. I understand the penalty for willfully delivering a false return to DRS is a fine of not morethan $5,000, or imprisonment for not more than five years, or both. The declaration of a paid preparer other than the taxpayer is based on all informationof which the preparer has any knowledge.Taxpayer’s Signature Title Date

Paid Preparer’s Signature Paid Preparer’s Address Date

(Rev. 07/04)

1 Gross receipts from sales of goods 1

2 Gross receipts from leases and rentals 2

3 Gross receipts from labor and services 3 100,000 004 Purchases of goods by your business subject to use tax 4

5 Leases and rentals by your business subject to use tax 5

6 Purchase of services by your business subject to use tax 6

7 Total: Add Lines 1 through 6 7 100,000 00

8 Total deductions: from Total Deductions here. 8 60,000 00

9 Balance subject to tax: Subtract Line 8 from Line 7, but not less than zero. 9 40,000 00

10 Gross amount of tax due: Multiply Line 9 by 6% (.06) 10 2,400 00

11 For an amended return only, enter the tax paid on prior return 11

12 Net amount of tax due: Subtract Line 11 from Line 10 12 2,400 00For late payment of tax: See General Instructions above

13 Interest + Penalty = 13

14 Total amount due: Add Line 12 and Line 13. 14 2,400 00

Complete reverse side and enter the amount

Form OS-114Sales and Use Tax Return

Department of Revenue ServicesState of ConnecticutPO Box 5030Hartford CT 06102-5030

General Instructions1. You must file a return even if no tax is due or no sales were made.2. Return must be postmarked on or before the due date.3. Deductions: Fill out reverse side of this form if you claim deductions.4. Interest: For late payment - 1% of tax due per month from due date.5. Penalty: For failure to pay tax when due - 15% of tax due or $50, whichever is greater.6. New owners: Do not use previous owner’s form to file your return. Any change in ownership requires a new permit.7. You must round off cents to the nearest whole dollar on your returns and schedules.8. Make check payable to: Commissioner of Revenue Services. (Include the Tax Registration Number on your check.)

For complete instructions, see Form O-88.

For Period Ending

Connecticut Tax Registration Number

Federal Employer Identification Number

Due Date

For Department Use Only

Check here if this is an amended return.

Rounding: You must round off cents to thenearest whole dollars on your return. If youdo not round, DRS will round for you.

Example 1(General Contractor’s Return)

SAMPLE

Did you know that you can file this form by Internet or Telephone?

Deductible Items at 6% Tax Rate15 Sales for resale - sales of goods 1516 Sales for resale - leases and rentals 1617 Sales for resale - labor and services 1718 All newspapers and subscription sales of magazines and puzzle magazines 1819 Trucks with gross vehicle weight rating over 26,000 lbs. or used exclusively for carriage of interstate freight 1921 Food for human consumption, food sold in vending machines, and any items purchased with food stamps 2123 Fuel for motor vehicles 2324 Sales of electricity, gas, and heating fuel for residential dwellings For Utility and 2425 Sales of electricity - $150 monthly charge per business Heating Fuel Companies 2526 Sales of electricity, gas, and heating fuel for manufacturing or agricultural production Only 2627 Aviation fuel 2729 Tangible personal property to persons issued a Farmer Tax Exemption Permit 2930 Machinery, its replacement, repair, component and enhancement parts, materials, tools, and fuel for manufacturing 3031 Machinery, materials, tools, and equipment used in commercial printing process or publishing 3132 Vessels, machinery, materials, tools, and fuel for commercial fishing 3233 Out-of-state - sales of goods 3334 Out-of-state - leases and rentals 3435 Out-of-state - labor and services 3536 Motor vehicles or vessels purchased by nonresidents 3637 Prescription medicines - sales of goods 3738 Nonprescription medicines and diabetic equipment - sales of goods 3839 Charitable or religious organizations - sales of goods 3940 Charitable or religious organizations - leases and rentals 4041 Charitable or religious organizations - labor and services 4142 Federal, Connecticut, or municipal agencies - sales of goods 4243 Federal, Connecticut, or municipal agencies - leases and rentals 4344 Federal, Connecticut, or municipal agencies - labor and services 4445 Items certified for air or water pollution abatement - sales, leases, and rentals of goods 4547 Nontaxable labor and services 4748 Services between wholly owned business entities (See instructions, Form O-88) 4850 Trade-ins of all like-kind tangible personal property (See instructions, Form O-88) 5052 Taxed goods returned within 90 days at 6% (.06) rate 5256 Oxygen, blood plasma, prostheses, etc. - sales, leases, rentals, or repair services of goods 5658 Printed material for future delivery out of state 5859 Articles of clothing or footwear under $50 5960 Material and components for noncommercial production of clothing 6063 Funeral expenses (See instructions, Form O-88) 6369 Repair services, repair and replacement parts for aircraft, and certain aircraft (See instructions, Form 0-88) 6971 Certain machinery under the Manufacturing Recovery Act of 1992 (See instructions, Form 0-88) 7172 Machinery, equipment, tools, supplies, and fuel used in the biotechnology industry 7273 Repair and maintenance services and fabrication labor to vessels (See instructions, Form 0-88) 7374 Computer and data processing services (See instructions, Form 0-88) 7475 Renovation and repair services to residential real property (See instructions, Form O-88) 7577 Sales of qualifying items to direct payment permit holders 7778 Sales of college textbooks 7879 Clothing or footwear under $300 nontaxable for one week per year beginning 3rd Sunday in August 79A Other Adjustments - sales of goods (Describe: Materials consumed, including tax paid ) A 60,000 00B Other Adjustments - leases and rentals (Describe: ) BC Other Adjustments - labor and services (Describe: ) C

Total Deductions (Enter here and on Line 8 on the front of this return) 60,000 00

OS-114 (Back) Rev. 07/04


notes


Subc

ontr

acto

r:Th

e pl

umbe

r bi

lls th

e ge

nera

l $

10,0

00.0

0 Pl

us T

axB

reak

dow

n of

sub

cont

ract

or's

boo

ks:

Mat

eria

ls p

urch

ased

$ 4

,716

.98

Tax

paid

by

sub

$

283

.02

Tota

l mat

eria

ls c

ost

$ 5

,000

.00

Sub'

s ch

arge

for s

ervi

ce$

5,0

00.0

06%

tax

on s

ervi

ce$

3

00.0

0To

tal

$10,

300.

00

Sub

cont

ract

or:

The

elec

tric

ian

bills

the

gen

eral

$10

,000

.00

Plus

Tax

Bre

akdo

wn

of s

ubco

ntra

ctor

's b

ooks

:M

ater

ials

pur

chas

ed$

4,7

16.9

8Ta

x pa

id b

y su

b$

2

83.0

2To

tal m

ater

ials

cos

t$

5,0

00.0

0Su

b's

char

ge fo

r ser

vice

$ 5

,000

.00

6% ta

x on

ser

vice

$

300

.00

Tota

l$1

0,30

0.00

Subc

ontr

acto

r:Th

e ca

rpen

ter

bills

the

gen

eral

$70,

000.

00 p

lus

sale

s ta

xBr

eakd

own

of s

ubco

ntra

ctor

's b

ooks

:M

ater

ials

pur

chas

ed$4

7,16

9.81

Tax

paid

by

sub

$ 2

,830

.19

Tota

l mat

eria

ls c

ost

$50,

000.

00Su

b's

char

ge fo

r ser

vice

$20,

000.

006%

tax

on s

ervi

ce$

1,2

00.0

0To

tal

$71,

200.

00

Fact

s fo

r Exa

mpl

e 2:

This

is a

taxa

ble

reno

vatio

n to

com

mer

cial

pro

perty

.Ta

x is

pai

d by

the

subc

ontra

ctor

s on

mat

eria

ls a

t the

time

of p

urch

ase.

(A

ll m

ater

ials

for

this

job

are

purc

hase

d by

the

sub

cont

ract

ors.

)N

o re

sale

cer

tific

ates

are

issu

ed to

or

acce

pted

by

the

subc

ontra

ctor

s.Th

e ge

nera

l con

tract

or w

ill ch

arge

6%

tax

on o

nly

his

char

ge fo

r ser

vice

bec

ause

he

alre

ady

paid

tax

on th

esu

bcon

tract

ors'

ser

vice

s.

Ex

am

ple

2G

ener

al c

ontra

ctor

bill

s ow

ner b

y se

para

tely

stat

ing

the

char

ges

for t

axab

le s

ervi

ce a

ndth

e ta

x th

ereo

n. N

o re

sale

cer

tific

ates

issu

ed b

y ge

nera

l con

tract

or to

subc

ontra

ctor

s fo

r tax

able

ser

vice

s.

Subco

ntrac

tor co

llects

tax f

rom

gene

ral co

ntrac

tor on

the s

ervice

portio

n of th

e bill

$ 60

,000

.00

Sub

cont

ract

ors'

mat

eria

ls (t

ax p

aid)

$ 31

,800

.00

Sub

cont

ract

ors'

ser

vice

s (ta

x pa

id)

$ 10

,000

.00

Gen

eral

con

tract

or's

ser

vice

$600

.00

Tax

on g

ener

al c

ontra

ctor

's s

ervi

ce$1

02,4

00.0

0To

tal b

ill to

pro

perty

ow

ner

Gen

eral

Con

trac

tor B

ills

Pro

pert

y O

wne

r $10

0,00

0.00

plu

s ta

x

Subcontractor collects tax fromgeneral contractor on the serviceportion of the bill

Subco

ntrac

tor co

llects

tax f

rom

gene

ral c

ontra

ctor o

n the

servi

ce

portio

n of th

e bill

Bre

akdo

wn

of G

ener

alC

ontr

acto

r's B

ooks

:C

ON

TRA

CT P

RIC

E:$1

00,0

00.0

0S

UB

CO

NTR

AC

TS:

Plum

ber

$ 10

,300

.00

Car

pent

er$

71,2

00.0

0E

lect

ricia

n$

10,3

00.0

0

Tota

l sub

cos

t$

91,8

00.0

0

Gen

eral

Con

trac

tor's

Serv

ice*

:$

10,

000.

00Sa

les

Tax

:$

6

00.0

0G

rand

Tot

al:

$102

,400

.00

*N

ote:

See

Ser

vice

Cha

rges

on

Pag

e 10

.

Rep

orte

d on

Lin

e 3

of F

orm

OS

-114

Tota

l sub

cos

t91

, 800

.00

Gen

eral

con

tract

or's

ser

vice

s(w

ithou

t tax

)10

,000

.00

Tota

l Lin

e 3

101,

800.

00

SAMPLE







Date sold:



(Rev. 07/04)









10 Gross amount of tax due: Multiply Line 9 by 6% (.06) 10 600 00


12 Net amount of tax due: Subtract Line 11 from Line 10 12 600 00For late payment of tax: See General Instructions above


14 Total amount due: Add Line 12 and Line 13. 14 600 00






For Period Ending



Due Date






Deductible Items at 6% Tax Rate15 Sales for resale - sales of goods 1516 Sales for resale - leases and rentals 1617 Sales for resale - labor and services 1718 All newspapers and subscription sales of magazines and puzzle magazines 1819 Trucks with gross vehicle weight rating over 26,000 lbs. or used exclusively for carriage of interstate freight 1921 Food for human consumption, food sold in vending machines, and any items purchased with food stamps 2123 Fuel for motor vehicles 2324 Sales of electricity, gas, and heating fuel for residential dwellings For Utility and 2425 Sales of electricity - $150 monthly charge per business Heating Fuel Companies 2526 Sales of electricity, gas, and heating fuel for manufacturing or agricultural production Only 2627 Aviation fuel 2729 Tangible personal property to persons issued a Farmer Tax Exemption Permit 2930 Machinery, its replacement, repair, component and enhancement parts, materials, tools, and fuel for manufacturing 3031 Machinery, materials, tools, and equipment used in commercial printing process or publishing 3132 Vessels, machinery, materials, tools, and fuel for commercial fishing 3233 Out-of-state - sales of goods 3334 Out-of-state - leases and rentals 3435 Out-of-state - labor and services 3536 Motor vehicles or vessels purchased by nonresidents 3637 Prescription medicines - sales of goods 3738 Nonprescription medicines and diabetic equipment - sales of goods 3839 Charitable or religious organizations - sales of goods 3940 Charitable or religious organizations - leases and rentals 4041 Charitable or religious organizations - labor and services 4142 Federal, Connecticut, or municipal agencies - sales of goods 4243 Federal, Connecticut, or municipal agencies - leases and rentals 4344 Federal, Connecticut, or municipal agencies - labor and services 4445 Items certified for air or water pollution abatement - sales, leases, and rentals of goods 4547 Nontaxable labor and services 4748 Services between wholly owned business entities (See instructions, Form O-88) 4850 Trade-ins of all like-kind tangible personal property (See instructions, Form O-88) 5052 Taxed goods returned within 90 days at 6% (.06) rate 5256 Oxygen, blood plasma, prostheses, etc. - sales, leases, rentals, or repair services of goods 5658 Printed material for future delivery out of state 5859 Articles of clothing or footwear under $50 5960 Material and components for noncommercial production of clothing 6063 Funeral expenses (See instructions, Form O-88) 6369 Repair services, repair and replacement parts for aircraft, and certain aircraft (See instructions, Form 0-88) 6971 Certain machinery under the Manufacturing Recovery Act of 1992 (See instructions, Form 0-88) 7172 Machinery, equipment, tools, supplies, and fuel used in the biotechnology industry 7273 Repair and maintenance services and fabrication labor to vessels (See instructions, Form 0-88) 7374 Computer and data processing services (See instructions, Form 0-88) 7475 Renovation and repair services to residential real property (See instructions, Form O-88) 7577 Sales of qualifying items to direct payment permit holders 7778 Sales of college textbooks 7879 Clothing or footwear under $300 nontaxable for one week per year beginning 3rd Sunday in August 79A Other Adjustments - sales of goods (Describe: Materials consumed, including tax paid ) A 60,000 00B Other Adjustments - leases and rentals (Describe: ) BC Other Adjustments - labor and services (Describe: Subcontractor's service, including tax ) C 31,800 00


OS-114 (Back) Rev. 07/04

SAMPLE


notes


Bre

akdo

wn

of G

ener

al C

ontr

acto

r's B

ooks

:

MAT

ERIA

LS:

Plum

ber

$ 5

,000

.00*

Car

pent

er$5

0,00

0.00

*E

lect

ricia

n$

5,0

00.0

0*To

tal

$60,

000.

00*

S ER

VIC

E:**

Plum

ber

$ 5

,000

.00

Car

pent

er$2

0,00

0.00

Ele

ctric

ian

$ 5

,000

.00

Gen

eral

Con

tract

or$3

0,00

0.00

Tota

l Cha

rges

for S

ervi

ce$6

0,00

0.00

tax

incl

uded

The

Alte

rnat

ive

Fact

orx

.943

Tota

l Cha

rge

for S

ervi

ce$5

6,58

0.00

with

out t

axS

ales

Tax

$ 3

,420

.00

Gra

nd T

otal

: $

120,

000.

00

Gen

eral

Con

trac

tor B

ills

Pro

pert

y O

wne

r$1

20,0

00.0

0 sa

les

tax

incl

uded

Sub

cont

ract

or:

The

plum

ber

bills

the

gen

eral

$10

,000

.00

Mat

eria

ls p

urch

ased

$ 4,

716.

98Ta

x pa

id b

y su

b$

28

3.02

Tota

l mat

eria

ls c

ost

$ 5

,000

.00

Sub'

s ch

arge

for s

ervi

ce$

5,0

00.0

0To

tal

$10,

000.

00

Issues resale certifi

cate for

service portion of bill

Issues resale certificatefor service portion of bill

Subc

ontr

acto

r:Th

e ca

rpen

ter

bills

the

gen

eral

$70

,000

.00

Mat

eria

ls p

urch

ased

$47,

169.

81Ta

x pa

id b

y su

b$

2,8

30.1

9To

tal m

ater

ials

cos

t$5

0,00

0.00

Sub'

s ch

arge

for s

ervi

ce$2

0,00

0.00

Tota

l$7

0,00

0.00

Ex

am

ple

3G

ener

al c

ontra

ctor

bill

s th

e ow

ner o

n a

sale

s ta

x in

clud

ed b

asis

. R

esal

ece

rtific

ates

issu

ed b

y ge

nera

l con

tract

orto

sub

cont

ract

ors

for t

axab

le s

ervi

ces.

Fact

s fo

r Exa

mpl

e 3:

This

is a

taxa

ble

reno

vatio

n to

com

mer

cial

pro

perty

.Ta

x is

pai

d by

the

subc

ontra

ctor

s on

mat

eria

ls a

t the

tim

e of

pur

chas

e. (

All

mat

eria

ls fo

r th

is jo

b ar

e pu

rcha

sed

byth

e su

bcon

tract

ors.

)S

ubco

ntra

ctor

s ac

cept

res

ale

certi

ficat

esfo

r the

ser

vice

por

tion

of th

e bi

ll fro

m th

ege

nera

l con

tract

or.

The

gene

ral c

ontra

ctor

bills

the

owne

r on

a sa

les

tax

incl

uded

bas

is fo

r th

e se

rvic

epo

rtion

of t

he b

ill.Th

e ge

nera

l con

tract

or d

eter

min

es t

hegr

oss

rece

ipts

from

taxa

ble

serv

ice

bym

ultip

lyin

g th

e to

tal c

harg

es fo

r ta

xabl

ese

rvic

e by

.943

. Th

e ta

x is

det

erm

ined

by

subt

ract

ing

the

gros

s re

ceip

ts f

rom

the

tota

l cha

rges

for t

axab

le s

ervi

ce.

Sub

cont

ract

or:

The

elec

tric

ian

bills

the

gen

eral

$10

,000

.00

Mat

eria

ls p

urch

ased

$ 4,

716.

98Ta

x pa

id b

y su

b$

28

3.02

Tota

l mat

eria

ls c

ost

$ 5,

000.

00Su

b's

char

ge fo

r ser

vice

$ 5,

000.

00To

tal

$10,

000.

00

**N

ote:

See

Ser

vice

Cha

rges

on

Pag

e 10

.

*In

clud

es s

ales

tax

pai

dby

the

subc

ontra

ctor

s to

thei

r ve

ndor

s

Issues resale certificate for service portion of bill

Rep

orte

d on

Lin

e 3

of F

orm

OS

-114

Tota

l mat

eria

ls60

,000

.00

Tota

l cha

rge

for l

abor

(with

out t

ax)

56,5

80.0

0To

tal L

ine

311

6,58

0.00

SAMPLE







Date sold:



(Rev. 07/04)



















For Period Ending



Due Date






Deductible Items at 6% Tax Rate15 Sales for resale - sales of goods 1516 Sales for resale - leases and rentals 1617 Sales for resale - labor and services 1718 All newspapers and subscription sales of magazines and puzzle magazines 1819 Trucks with gross vehicle weight rating over 26,000 lbs. or used exclusively for carriage of interstate freight 1921 Food for human consumption, food sold in vending machines, and any items purchased with food stamps 2123 Fuel for motor vehicles 2324 Sales of electricity, gas, and heating fuel for residential dwellings For Utility and 2425 Sales of electricity - $150 monthly charge per business Heating Fuel Companies 2526 Sales of electricity, gas, and heating fuel for manufacturing or agricultural production Only 2627 Aviation fuel 2729 Tangible personal property to persons issued a Farmer Tax Exemption Permit 2930 Machinery, its replacement, repair, component and enhancement parts, materials, tools, and fuel for manufacturing 3031 Machinery, materials, tools, and equipment used in commercial printing process or publishing 3132 Vessels, machinery, materials, tools, and fuel for commercial fishing 3233 Out-of-state - sales of goods 3334 Out-of-state - leases and rentals 3435 Out-of-state - labor and services 3536 Motor vehicles or vessels purchased by nonresidents 3637 Prescription medicines - sales of goods 3738 Nonprescription medicines and diabetic equipment - sales of goods 3839 Charitable or religious organizations - sales of goods 3940 Charitable or religious organizations - leases and rentals 4041 Charitable or religious organizations - labor and services 4142 Federal, Connecticut, or municipal agencies - sales of goods 4243 Federal, Connecticut, or municipal agencies - leases and rentals 4344 Federal, Connecticut, or municipal agencies - labor and services 4445 Items certified for air or water pollution abatement - sales, leases, and rentals of goods 4547 Nontaxable labor and services 4748 Services between wholly owned business entities (See instructions, Form O-88) 4850 Trade-ins of all like-kind tangible personal property (See instructions, Form O-88) 5052 Taxed goods returned within 90 days at 6% (.06) rate 5256 Oxygen, blood plasma, prostheses, etc. - sales, leases, rentals, or repair services of goods 5658 Printed material for future delivery out of state 5859 Articles of clothing or footwear under $50 5960 Material and components for noncommercial production of clothing 6063 Funeral expenses (See instructions, Form O-88) 6369 Repair services, repair and replacement parts for aircraft, and certain aircraft (See instructions, Form 0-88) 6971 Certain machinery under the Manufacturing Recovery Act of 1992 (See instructions, Form 0-88) 7172 Machinery, equipment, tools, supplies, and fuel used in the biotechnology industry 7273 Repair and maintenance services and fabrication labor to vessels (See instructions, Form 0-88) 7374 Computer and data processing services (See instructions, Form 0-88) 7475 Renovation and repair services to residential real property (See instructions, Form O-88) 7577 Sales of qualifying items to direct payment permit holders 7778 Sales of college textbooks 7879 Clothing or footwear under $300 nontaxable for one week per year beginning 3rd Sunday in August 79A Other Adjustments - sales of goods (Describe: Materials consumed, including tax paid ) A 60,000 00B Other Adjustments - leases and rentals (Describe: ) BC Other Adjustments - labor and services (Describe: ) C


OS-114 (Back) Rev. 07/04

SAMPLE


notes


Subcontractor collects tax from

general contractor in sales tax

included contract

Gen

eral

Con

tract

or B

ills

Prop

erty

Ow

ner

$120

,000

.00

sale

s ta

x in

clud

ed

Sub

cont

ract

or:

The

plum

ber

bills

the

gene

ral

$10

,000

.00

sale

s ta

x in

clud

edB

reak

dow

n of

sub

cont

ract

or's

boo

ks:

Mat

eria

ls p

urch

ased

$4,7

16.9

8Ta

x pa

id b

y su

b$

283

.02

Tota

l mat

eria

ls c

ost

$5,0

00.0

0Su

b's

char

ge fo

r ser

vice

$5,0

00.0

0ta

x in

clud

edTh

e al

tern

ativ

e fa

ctor

x

.943

Sub'

s ch

arge

for s

ervi

ce$4

,715

.00

with

out t

axTa

x on

ser

vice

2

85.0

0

Fact

s fo

r Exa

mpl

e 4:

This

is a

taxa

ble

reno

vatio

n to

com

mer

cial

pro

perty

.Ta

x is

pai

d by

the

subc

ontra

ctor

s on

mat

eria

ls a

t the

tim

e of

purc

hase

. (A

ll m

ater

ials

for

this

job

are

purc

hase

d by

the

subc

ontra

ctor

s.)

No

resa

le c

ertif

icat

es a

re is

sued

to o

r ac

cept

ed b

y th

esu

bcon

tract

ors.

The

gene

ral c

ontra

ctor

det

erm

ines

the

gro

ss r

ecei

pts

from

taxa

ble

serv

ice

by m

ultip

lyin

g th

e ge

nera

l con

tract

or's

cha

rge

for s

ervi

ce (s

ales

tax

incl

uded

) by

.943

. Th

e ta

x is

dete

rmin

ed b

y su

btra

ctin

g th

e ge

nera

l con

tract

or's

gro

ssre

ceip

ts fo

r ta

xabl

e se

rvic

e fro

m th

e ge

nera

l con

tract

or's

char

ge fo

r se

rvic

e.

Ex

am

ple

4G

ener

al c

ontra

ctor

bill

s ow

ner

on a

sal

es ta

xin

clud

ed b

asis

. N

o re

sale

cer

tific

ates

issu

ed b

yge

nera

l con

tract

or to

sub

cont

ract

ors

for

taxa

ble

serv

ices

.

Subc

ontr

acto

r:Th

e el

ectr

icia

n bi

lls th

e ge

nera

l$1

0,00

0.00

sal

es ta

x in

clud

edB

reak

dow

n of

sub

cont

ract

or's

boo

ks:

Mat

eria

ls p

urch

ased

$4,7

16.9

8Ta

x pa

id b

y su

b$

283

.02

Tota

l mat

eria

ls c

ost

$5,0

00.0

0Su

b's

char

ge fo

r ser

vice

$5,0

00.0

0 ta

x in

clud

edTh

e al

tern

ativ

e fa

ctor

x

.94

3Su

b's

char

ge fo

r ser

vice

$4,7

15.0

0 w

ithou

t tax

Tax

on s

ervi

ce$

285

.00

Subc

ontr

acto

r:Th

e ca

rpen

ter

bills

the

gene

ral

$70

,000

.00

sale

s ta

x in

clud

edB

reak

dow

n of

sub

cont

ract

or's

boo

ks:

Mat

eria

ls p

urch

ased

$47,

169.

81Ta

x pa

id b

y su

b$

2,8

30.1

9To

tal m

ater

ials

cos

t$5

0,00

0.00

Sub'

s ch

arge

for s

ervi

ce$2

0,00

0.00

tax

incl

uded

The

alte

rnat

ive

fact

or

x

.943

Sub'

s ch

arge

for s

ervi

ce$1

8,86

0.00

with

out t

axTa

x on

ser

vice

$ 1

,140

.00

** N

ote:

See

Ser

vice

Cha

rges

on

Pag

e 10

.

Bre

akdo

wn

of G

ener

al C

ontr

acto

r's B

ooks

:SU

BC

ON

TRA

CTS

:Pl

umbe

r$1

0,00

0.00

*C

arpe

nter

$70,

000.

00*

Ele

ctric

ian

$10,

000.

00*

Tota

l sub

cos

t$9

0,00

0.00

*G

ener

al C

ontr

acto

r'sC

harg

e fo

r Ser

vice

:**

$30,

000.

00*

The

alte

rnat

ive

fact

or

x

.943

Gen

eral

Con

trac

tor's

Cha

rge

for

Serv

ice

$ 28

,290

.00

with

out t

axSa

les

Tax

$

1,7

10.0

0G

rand

Tot

al:

$120

,000

.00

*In

clud

es s

ales

tax

paid

by

the

subc

ontr

acto

rsto

thei

r ven

dorsSubcontra

ctor co

llects tax fr

om

general contra

ctor in

sales ta

x

included co

ntract

Subco

ntrac

tor co

llects

tax f

rom

gene

ral co

ntrac

tor in

sales

tax

includ

ed co

ntrac

t

Rep

orte

d on

Lin

e 3

of F

orm

OS

-114

Tota

l sub

cos

t90

,000

.00

Gen

eral

con

tract

or's

char

ge fo

r lab

or(w

ithou

t tax

)28

,290

.00

Tota

l Lin

e 3

118,

290.

00

SAMPLE







Date sold:



(Rev. 07/04)



















For Period Ending



Due Date






Deductible Items at 6% Tax Rate15 Sales for resale - sales of goods 1516 Sales for resale - leases and rentals 1617 Sales for resale - labor and services 1718 All newspapers and subscription sales of magazines and puzzle magazines 1819 Trucks with gross vehicle weight rating over 26,000 lbs. or used exclusively for carriage of interstate freight 1921 Food for human consumption, food sold in vending machines, and any items purchased with food stamps 2123 Fuel for motor vehicles 2324 Sales of electricity, gas, and heating fuel for residential dwellings For Utility and 2425 Sales of electricity - $150 monthly charge per business Heating Fuel Companies 2526 Sales of electricity, gas, and heating fuel for manufacturing or agricultural production Only 2627 Aviation fuel 2729 Tangible personal property to persons issued a Farmer Tax Exemption Permit 2930 Machinery, its replacement, repair, component and enhancement parts, materials, tools, and fuel for manufacturing 3031 Machinery, materials, tools, and equipment used in commercial printing process or publishing 3132 Vessels, machinery, materials, tools, and fuel for commercial fishing 3233 Out-of-state - sales of goods 3334 Out-of-state - leases and rentals 3435 Out-of-state - labor and services 3536 Motor vehicles or vessels purchased by nonresidents 3637 Prescription medicines - sales of goods 3738 Nonprescription medicines and diabetic equipment - sales of goods 3839 Charitable or religious organizations - sales of goods 3940 Charitable or religious organizations - leases and rentals 4041 Charitable or religious organizations - labor and services 4142 Federal, Connecticut, or municipal agencies - sales of goods 4243 Federal, Connecticut, or municipal agencies - leases and rentals 4344 Federal, Connecticut, or municipal agencies - labor and services 4445 Items certified for air or water pollution abatement - sales, leases, and rentals of goods 4547 Nontaxable labor and services 4748 Services between wholly owned business entities (See instructions, Form O-88) 4850 Trade-ins of all like-kind tangible personal property (See instructions, Form O-88) 5052 Taxed goods returned within 90 days at 6% (.06) rate 5256 Oxygen, blood plasma, prostheses, etc. - sales, leases, rentals, or repair services of goods 5658 Printed material for future delivery out of state 5859 Articles of clothing or footwear under $50 5960 Material and components for noncommercial production of clothing 6063 Funeral expenses (See instructions, Form O-88) 6369 Repair services, repair and replacement parts for aircraft, and certain aircraft (See instructions, Form 0-88) 6971 Certain machinery under the Manufacturing Recovery Act of 1992 (See instructions, Form 0-88) 7172 Machinery, equipment, tools, supplies, and fuel used in the biotechnology industry 7273 Repair and maintenance services and fabrication labor to vessels (See instructions, Form 0-88) 7374 Computer and data processing services (See instructions, Form 0-88) 7475 Renovation and repair services to residential real property (See instructions, Form O-88) 7577 Sales of qualifying items to direct payment permit holders 7778 Sales of college textbooks 7879 Clothing or footwear under $300 nontaxable for one week per year beginning 3rd Sunday in August 79A Other Adjustments - sales of goods (Describe: Materials consumed, including tax paid ) A 60,000 00B Other Adjustments - leases and rentals (Describe: ) BC Other Adjustments - labor and services (Describe: Subcontractor's service ) C 30,000 00


OS-114 (Back) Rev. 07/04

SAMPLE


notes


Connecticut Tax Forms, Publications,Certificates, and Sales Tax Regulations

The following forms, publications, certificates, and regulations will be of interest to most business people. The publicationnumbers referenced are updated at the time of printing, but because the information may change, request the most currentversion when you order.

SALES AND USE TAX PUBLICATIONS

OS-114 Sales and Use Tax ReturnOP-186 Connecticut Individual Use Tax ReturnIP 2004(5.3) Topical Index to Rulings and Administrative

Pronouncements Covering Sales and UseTaxes

IP 2004(7) Q & A on the Connecticut Direct PaymentPermit Program

IP 2004(14) Farmer’s Guide to Sales and Use Taxes, MotorVehicle Fuels Tax, Estimated Income Taxes,and Withholding Tax

IP 2003(26) Q & A on Sales and Use Taxes For a NewBusiness

IP 2003(31) Q & A on the Connecticut Use Tax forBusinesses and Professions

IP 2002(16) Successor Liability for Sales and Use Tax andAdmissions and Dues Tax

IP 2000(14) Notice to Retailers on Sales and Use TaxResale Certificate

IP 99(18) Sales and Use Taxes Guide for Manufacturers,Fabricators and Processors

PS 2002(6) Sales and Use Tax Exemption for Low andModerate Income Housing Facilities

PS 99(2) Tax Exemptions for Certain Air PollutionControl Equipment

PS 99(3) Tax Exemptions for Certain Water PollutionControl Equipment

PS 98(5) Sales and Use Tax Refund PolicyPS 94(7) Fabrication and Installation of Stock and

Custom CabinetsSN 2003(20) Legislation Affecting Contracts With

Nonresident ContractorsSN 2001(5) The "Buy Connecticut" ProvisionSN 98(6) Exemption From Sales and Use Taxes for

Projects of the Connecticut ResourcesRecovery Authority and Solid Waste-to-EnergyFacilities

SN 97(10) Exemption From Sales and Use Taxes forTangible Personal Property and ServicesPurchased by Water Companies

SN 95(17) Certain Environmental Services ExcludedFrom Sales and Use Taxes

SN 93(1.1) The Manufacturing Recovery Act of 1992 -Exemption for Purchases of Property Used inManufacturing, Processing and Fabricating

SN 93(2) Sales and Use Taxes on Charges Made byService Providers After Air Kaman Inc. v.Groppo and 1992 Conn. Pub. Acts 17 (MaySpec. Sess.)

§12-407(2)(i)(M)-1 Repair services to motor vehicles§12-407(2)(i)(Q)-1 Electrical and electronic repair

services§12-407(2)(i)(T)-1 Locksmith services§12-407(2(i)(V)-1 Landscaping and horticulture

services§12-407(2)(i)(W)-1 Window cleaning services§12-407(2)(i)(X)-1 Maintenance services§12-407(2)(i)(Y)-1 Janitorial services§12-407(2)(i)(Z)-1 Exterminating services

§12-407(2)(i)(AA)-1 Swimming pool cleaning andmaintenance services

§12-407(2)(i)(DD)-1 Repair or maintenance services totangible personal property andcontracts of maintenance, repair orwarranty

§12-407(2)(i)(I)-1 Services to industrial, commercial orincome-producing real property

§12-410(5)-1 Resale of services§12-411(14)-1 Resale of services excluded from

use tax§12-426-18 Contractors and subcontractors

SALES AND USE TAX REGULATIONS


MISCELLANEOUS

REG-1 Application for Tax Registration Number

LGL-001 Power of Attorney

LGL-002 Request for Disclosure of Tax Return or TaxReturn Information

LGL-003 Limited Power of Attorney

CT-8822 Change of Address

IP 2004(4.3) Numerical Index to Rulings andAdministrative Pronouncements AsAffected, If At All, By Later-Issued Rulingsand Pronouncements

IP 2004(6.3) Topical Index to Rulings and AdministrativePronouncements Covering MiscellaneousTaxes and Administrative Topics

IP 2003(15) Q & A on the Business Entity Tax

IP 2003(25) Paying Connecticut Taxes by ElectronicFunds Transfer

IP 2003(28) Getting Started in Business: UnderstandingConnecticut Taxes

IP 2003(34) Business Taxes

IP 2001(20) Q & A Concerning Freedom of InformationAct Requests

IP 2000(27) Procedures to Request Disclosure of TaxReturns and Tax Return Information

PS 2001(3) Your Rights as a Connecticut Taxpayer

PS 2000(7) Procedures in Handling Requests forIssuance of Rulings

PS 2000(8) Procedures in Handling Requests forIssuance of Technical Advice Memoranda

PS 92(12.1) Limited Liability Companies

SN 2002(11) Business Entity Tax

Ruling 2002-3

SALES AND USE TAXES EXEMPTION CERTIFICATES

• Sales & Use Tax Resale Certificate (Regulations 1 & 23)

CERT-100 Materials, Tools, and Fuel Certificate

CERT-101 Machinery, Component Parts, and Replacementand Repair Parts of Machinery Used Directlyin a Manufacturing Process

CERT-102 Certified Rehabilitation Certificate for CertifiedHistoric Structures

CERT-103 Residential Condominium AssociationCertificate

CERT-104 Services Certificate for New Construction

CERT-105 Commercial Motor Vehicle Purchased WithinConnecticut for Use Exclusively in the Carriageof Freight in Interstate Commerce

CERT-106 Claim for Refund of Use Tax Paid on MotorVehicle Purchased From Other Than a MotorVehicle Dealer

CERT-108 Certificate for Partial Exemption of Materials,Tools, and Fuels

CERT-109 Certificate of Partial Exemption for Machinery,Equipment, or Repair and Replacement Parts

CERT-110 Aircraft Repair Services Certificate, AircraftRepair and Replacement Parts Certificate

CERT-111 Certificate for Machinery, Equipment, Materials,Tools, and Fuel Used by an AircraftManufacturer Operating an AircraftManufacturing Facility

CERT-112 Exempt Purchase of Meals or Lodging byExempt Entities

CERT-113 Purchases of Tangible Personal Property andServices by a Nonprofit Charitable Hospital,Nonprofit Nursing Home, Nonprofit Rest Home,or Nonprofit Residential Care Home

CERT-114 Commercial Motor Vehicle or Motor BusPurchased Within Connecticut for Use inInterstate Commerce as an Interstate MotorBus

CERT-115 Certificate for Exempt Purchases of Gas,Electricity, and Heating Fuel

CERT-116 Exempt Petroleum Products Certificate

CERT-117 Certificate for Purchases of Tangible PersonalProperty Incorporated Into or Consumed in AirPollution Control Facilities

CERT-119 Purchases of Tangible Personal Property andServices by Qualifying Exempt Organizations


CERT-120 Certificate for Machinery, Equipment, Tools,Materials, and Supplies Used in the Productionof Printed Material or in Prepress Production

CERT-121 Exemption for Landscaping and HorticultureServices, Window Cleaning Services, andMaintenance Services Provided to Recipientsof Total Disability Benefits

CERT-122 Refund of Tax Paid on Purchases of Meals orLodging by Exempt Entities

CERT-123 Blanket Certificate For Exempt QualifyingPurchases of Meals or Lodging by an ExemptEntity

CERT-124 Certificate for Purchases of Tangible PersonalProperty Incorporated Into or Consumed inWater Pollution Control Facilities

CERT-125 Sales and Use Tax Exemption for a MotorVehicle or Vessel Purchased by a Nonresidentof Connecticut

CERT-126 Certificate for Exempt Purchases of TangiblePersonal Property or Services for Low andModerate Income Housing Facilities

CERT-127 Exempt Purchases by an Enrolled Member orby the Tribal Government of the MashantucketPequot Tribe or Mohegan Tribe

CERT-128 Exempt Purchases by Contractors in ConnectionWith Construction Projects in Indian Countryof the Mashantucket Pequot or Mohegan Tribes

CERT-129 Exemption for Items Used Directly in theBiotechnology Industry

CERT-130 Sales and Use Tax Exemption for Purchasesby Water Companies

CERT-131 Exemption for Projects of the ConnecticutResources Recovery Authority and Solid Waste-to-Energy Facilities

CERT-132 Sales and Use Tax Exemption for PurchasesMade Under the "Buy Connecticut" Provision

CERT-133 Contractor's Exempt Purchase Certificate fora Renovation Contract With a Direct PaymentPermit Holder

CERT-134 Exempt Purchases by Qualifying GovernmentalAgencies

CERT-135 Reduced Sales and Use Tax Rate for MotorVehicles Purchased by Nonresident MilitaryPersonnel and Their Spouses

CERT-136 Purchases of Item by EleemosynaryOrganizations and Schools That Will Be ResoldTax-Exempt for $20 or Less

CERT-137 Sales and Use Tax Certificate for Sales andLeaseback Arrangements

• Contractor’s Exempt Purchase Certificate• Printed Material Certificate

WITHHOLDING TAX

CT-WH Connecticut Withholding Tax Payment Form

CT-941 Connecticut Quarterly Reconciliation ofWithholding

CT-941X Amended Connecticut Reconciliation ofWithholding

CT-W3 Connecticut Annual Reconciliation ofWithholding

CT-W4 Employee’s Withholding Certificate

CT-W4P Withholding Certificate for Pension or AnnuityPayments

CT-W4NA Employee’s Withholding Certificate -Nonresident Apportionment

notes

For Tax Forms, Publications or Personal Assistance

HARTFORD HAMDEN WATERBURY25 Sigourney Street 3074 Whitney Avenue 55 West Main Street, Suite 100Hartford CT 06106-5032 Hamden CT 06517 Waterbury CT 06702860-297-5962 203-287-8243 203-805-6752

BRIDGEPORT NORWICH10 Middle Street 2 Cliff StreetBridgeport CT 06610 Norwich CT 06360203-336-7890 860-425-4123

Visit the DRS Web site at www.ct.gov/DRSGeneral E-mail: [email protected] and Publications by E-mail: [email protected]

Conn-Tax: If you have a touch-tone phone, you can obtainimportant tax information anytime from Conn-Tax, DRS’stelephone information line.

Call 1-800-382-9463 (in-state) or 860-297-5962 (from anywhere).

For prerecorded tax information, select a topic from the menuoptions provided.

For forms or publications, press 2.

To speak to a Taxpayer Services representative, call during business hours,Monday through Friday, and press 0.

TTY, TDD, and Text Telephone users only may transmit inquiriesanytime by calling 860-297-4911.

DRS TaxFax: Get forms anytime by calling 860-297-5698 fromthe handset attached to your fax machine.

Write to:DRS Taxpayer Services Division25 Sigourney StreetHartford CT 06106-5032

DRS Offices: Visit our main office in Hartford or our field offices in Bridgeport,Hamden, Norwich, or Waterbury weekdays, 8 a.m. to 5 p.m. Call Conn-Tax or thelocations listed below for directions.


MISSION STATEMENTThe Mission of the

Connecticut Department of Revenue Servicesis to administer the tax laws of the State of Connecticut

and collect the tax revenuesin the most cost effective manner;

achieve the highest level of voluntary compliancethrough accurate, efficient and courteous customer services;

and perform in a mannerwhich instills public confidence in the integrity

and fairness of the state's tax programs.

IP 2004(29), Building Contractors' Guide to Sales and Use Taxes

Department of Revenue ServicesState of Connecticut25 Sigourney StreetHartford CT 06106

Issued: December 15, 2004Replaces: IP 99(19), Issued September 20, 1999

DEPA

RTMENT

OF REVENUE SERVI CES

STATE OF CONNECTICUT

BUILDING CONTRACTORS’ - Connecticut2… · Locksmith Services.....41 Mailboxes ... Retaining Walls (See Landscaping and Horticulture Services) ... Page 23 for more information on

Documents