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Sales Tax Obligations of Sellers in Connecticut

April 13, 2006

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The following items should help to answer the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. The burden of proving that a sale is for resale is on the seller, unless the seller takes from the purchaser a resale certificate. The resale certificate relieves the seller of the burden of proof only if it is taken in good faith from a person engaged in selling or leasing tangible personal property or taxable services who, at the time of purchase,

• intends to sell the property or services in the regular course of business
• intends to use the personal property in the delivery of landscaping or horticultural services (provided the total sale price of all such services are taxable) or
• cannot then ascertain whether it will be sold or not

Procedure for accepting blanket certificates. In Connecticut a seller may accept a "blanket" resale certificate covering all purchases within a period not to exceed three years. A blanket certificate will relieve the burden of executing a separate certificate for each individual tax-exempt purchase as long as there is no significant change in the operations. A blanket certificate describes the general nature of the property purchased for resale and remains in force for three years or until revoked in writing.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Connecticut has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Connecticut. To determine if you have physical presence, ask yourself the following:

• Do I have retail facilities, a warehouse or any office space in Connecticut? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
• Do my employees or I enter Connecticut for purposes of taking and transmitting orders from Connecticut? If your employee or independent contractor goes into Connecticut to take or transmit orders your business may have physical presence in Connecticut. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
• Do my delivery vehicles frequently enter Connecticut for purposes of delivering property? Frequent deliveries in Connecticut by your trucks will give you physical presence in Connecticut.

Sales tax "bracket system." The state of Connecticut has issued the following brackets by state statute:

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Connecticut retailers may not advertise or hold out that any part of the tax will be assumed or absorbed, will not be added to the taxable price, or will be refunded.

Claiming refund for excess tax payments. In Connecticut before a refund or credit of sales and use tax can be allowed, a written claim must be filed with the Commissioner of Revenue Services stating the specific grounds for the claim. The claim must be filed within the three-year period.

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