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Mississippi Sales Tax Guide
Mississippi, the twentieth state in the union, is the birthplace of many classic American inventions. Blues, arguably one of America’s most important...
Connecticut is a teeny state that packs a big punch🥊! While it’s the third smallest state by area, it has the fourth highest population density. In addition to being home to many insurance companies, it is the invention place of the all-time classic American sandwich, the hamburger🍔! Connecticut is truly a beautiful and thriving state to reside and do business in.
If you are growing a small business in Connecticut, you’ll need to ensure your business complies with myriad sales tax laws and policies. No worry! We have put together this handy-dandy guide so that you can be better prepared to meet all tax requirements for a business in Connecticut.
After reading this guide, you will know the answers to some of the most common questions:
If, after reading, you still have any questions to help you determine your tax sales obligations in Connecticut and how to fulfill them, we are here for your small business bookkeeping needs!
✅ Do you need to contact the Connecticut Department of Revenue Services?
✅ Are you unsure if you should visit, call them, or contact them through their website?
✅ Do you wonder what information you should have ready before you contact them?
If you answered “Yes” to these questions, we have just the information you need! :)
You can reach the Connecticut Department of Revenue Services by phone at 860-297-5962.
Alternatively, you may also send a message through the Secure Mailbox on the Connecticut TSC Website or visit one of their field offices. If you are looking for help quickly, we highly suggest you call rather than send a message or wait in line.
When you call the Connecticut Department of Revenue Services, you want to have some information on hand. It will save time to have the following information easily accessible before you call:
If you are calling on behalf of an individual or a business, or having a third party you must have a Connecticut Power of Attorney signed before you call or else you risk wasting your time. And before you fill out the form, you actually need to contact the Department of Revenue Services to get a specific person to send it to.
If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.
Are you a new business selling tangible items in the state of Connecticut? If yes, you are going to need to register your business so that you can pay your sales (aka sales tax) on time.
Luckily, there is no reason to worry as you only need to do this once and we’re about to fully prepare you. As long as there are no major changes (such as a change in ownership or structure) to your business, you will not be required to renew or make changes to your sales tax permit.
We are going to detail the steps below so you are ready to register for your sales license.
Here we go! Don’t forget...
Preparation is key.
Let’s get started!
You can apply or register for a Connecticut sales and use tax permit by visiting the Connecticut Department of Revenue Services and following the instructions provided.
You have two options when signing a new business up for a Connecticut sales tax permit:
We highly recommend that you use the online form as it will allow your business to get up and running as quickly as possible and with less potential for errors in the form.
Before you sign up for Connecticut Connecticut sales tax permit you want to have the following information easily accessible:
Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the Connecticut Department of Revenue Services Taxpayer Service Center website.
The cost to register a new business entity in Connecticut is a one-time $100 fee. Barring any outstanding penalties or issues, it will automatically renew every two years in perpetuity.
This is required only if the business type requires it, Connecticut makes no special requirement. In most cases, you will need one, and you can easily register for a Federal EIN here.
If you don’t already have one and need to get an EIN, it’s a painless and quick process :).
You may need to apply to some of the following agencies:
This can require a bit of thinking and some investigation on your end; since every business is unique, there are different rules, regulations, and laws that may apply.
We suggest contacting to the Connecticut Department of Revenue Services to verify which government agencies you will be required to register with.
You are now prepared to register for your Connecticut sales tax permit in Connecticut.
Let’s summarize where we reviewed:
Registering for your Connecticut sales tax permit will be stress free as long as you are prepared. We recommend organizing all the essential information in a folder, preferably using a system like Box.com (we give it to you for free when you work with us!) or Dropbox.
By now, you may have already contacted the Connecticut Department of Revenue Services and applied for a Connecticut sales tax permit.
Once you have a license to collect and remit sales taxes in Connecticut, you will probably be asking yourself two questions:
We are going to go over some common questions that our clients have asked. We believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations.
Let’s start with the first question…
As a new business, you want to keep in mind that both products and services can be subject to sales tax. In Connecticut, all tangible property changing hands is taxable, except for exempt items.
Luckily Connecticut has a single state-wide tax rate (6.35% as of 6/6/2019) and no separate rates for various municipalities, which dramatically simplifies things. There are, however, a few special rates for various types of goods or services, for instance:
Let’s now review some of our clients’ frequently asked questions:
To better understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions.
Let’s discuss some questions that will help you understand the nature of your own business and the subsequent tax implications.
Connecticut is a Destination-Based sales tax state, but with no specific variance at the city or county level. As such, sellers need to charge a single sales tax rate when selling goods to someone located in Connecticut.
Protip: Charge Connecticut Sales Tax based on the location of the buyer.
Having nexus, also known as "sufficient business presence,” with Connecticut means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in Connecticut because you created a sales tax Nexus.
Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the Connecticut Department of Revenue Services even if you never step foot in Connecticut.
So, how do you create a sales tax Nexus in Connecticut?
A business establishes a nexus in Connecticut by:
Let’s talk a bit more specifically about where your goods are stored such as in the instance of an Amazon warehouse.
Yes, there are two Amazon fulfillment centers in Connecticut:
You want to know this if you sell your products on Amazon or are recognized as an Amazon FBA (Fulfillment by Amazon). When Amazon stores your products in one of its fulfillment centers in any state including Connecticut, it triggers a sales tax requirement.
Yes, Connecticut is one of thirty states that have an economic nexus threshold at which point out of state businesses must register and pay taxes. The thresholds for Connecticut are either 200 transactions or sales totaling over $250,000.
Yes, Connecticut does have Click-Through Nexus.
This impacts affiliate marketers, let’s look at how:
A business hires an affiliate marketer in the state of Connecticut, who may hire sales representatives in Connecticut to help promote your products. The marketer and the sales representatives do not directly sell the products. They only advertise them. Your products never actually pass through their hands. Even though they do not directly sell your products, your business creates a sales tax Nexus that is specifically known as Click-Through Nexus.
A Click-Through Nexus is established in Connecticut if:
PROTIP: It is not the location of the affiliate marketer that necessary matters, but rather the location of the sales representatives the marketer employs and the overall combined sales exceeding the predetermined threshold from their referrals. As the retailer, your business is ultimately responsible for collecting and remitting Connecticut Sales Taxes, a requirement triggered by establishing a Click-Through Nexus with the state of Connecticut.
Collecting sales taxes in the state of Connecticut needn’t be painful. Just remember to get your license set up and make sure that you pay your taxes on time to avoid penalties and interest.
Before we conclude this topic, there’s a related question our clients regularly ask…
Nope! Not yet, anyhow. Connecticut does not participate in the Streamlined sales tax (STT) program, which makes collecting and remitting sales taxes even easier for businesses.
Fingers crossed that they join forces with this organization in the future.
It’s time to wrap it up.
You and your business can be better-equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in Connecticut.
If you are a business that has established a nexus with Connecticut, you are required to collect sales tax in Connecticut. Knowing this is just half the battle. Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.
Next we are going to review some common questions our clients have asked regarding their Connecticut Sales Tax obligations.
After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in Connecticut.
Remember when we noted that Connecticut is a destination-based sales tax state? Further, we noted it’s a state where you don’t have to pay different rates for each city; a single rate applies state-wide. So unless a transaction or purchaser is exempt, you simply collect that rate (6.35% as of the time of this article’s writing) at the time of purchase.
Since sales tax rates change frequently- and vary by what is being sold, We are going to refer you to check out the Connecticut Department of Revenue Services site here.
You always want to double check the sales tax rates.
Here is a list of exemptions:
For more information, see Transactions that are not subject to sales tax for more details.
At this point, you should know what products are exempt from sales tax in Connecticut. You also want to know who may be exempt.
Under Connecticut law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.
Other common examples of an exempt buyer may include:
Altogether, sales tax exemptions apply if the buyer falls under one of these categories.
See Exemption Certificates for sales tax for more in-depth information regarding who qualifies for an exemption.
As a business owner, you will most likely have a buyer who qualifies for a sales tax exemption.
It is up to you to collect a Connecticut sales tax exemption certificate at the point of sale and to keep it on file.
Failure to produce the tax exemption certificate may result in the outstanding tax being passed on to the seller, based on the ordinary care standard which will hold the seller responsible if they failed to collect sales taxes when they knew they should have or if they knew the buyer’s exemption certificate was a fake.
Remember, you want to collect and file a copy of the certificate. Such certificates must be produced upon request in the event of an audit to justify tax-exempt sales.
Oofta! This is a situation best to be avoided. If you are audited and cannot produce an exemption certificate for a buyer, you may be held responsible to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking care with your paperwork.
Yes! 🎉🎉🎉 There is a Back to School sales tax holiday where select items are exempt from sales tax in the third week of August.
So, we have talked about who you need to collect sales taxes from, whether the goods you are selling are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and the process of collecting sales tax in Connecticut state.
Now that we’re this far into learning what goes into this process, it’s time to bring it on home!
It is time to talk about filing and paying your sales taxes in Connecticut. In this section, We are going to cover the following frequently asked questions from our clients:
By the time you finish reading this, you will feel confident enough to file and pay your Connecticut Sales Tax.
Connecticut sales tax payments are due on the last day of the month following the reporting period.
There are three thresholds you need to know.
Monthly Liability Threshold: $333.34 or higher average monthly tax liability
Quarterly Liability Threshold: $83.34 - $333.33 average monthly tax liability
Semi-annual Liability Threshold: $0 - $83.33 average monthly tax liability
Not sure how to determine your tax filing frequency?
You can review your eCommerce or Point of Sale Software to see the volume of sales you have generated.
Don't worry though! The state will let you know when your due dates change. :)
Watch your mail for a letter from the State of Connecticut so that you don't miss any deadlines.
The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. However, we always suggest filing before the holiday.
Paper: Connecticut doesn’t offer a paper filing system for sales tax [huzzah!]
Electronic: File online at the DRS Taxpayer Service Center (TSC) and submit payment via EFT.
File an amended OS-114 on the TSC website as though you hadn’t already. The site is actually programmed to recognize a completed filing exists and asks to amend once you begin. Definitely you will want to verify that the correct amount paid with the original return is credited on line 11.
If you were required to collect sales taxes (nexus in Connecticut and selling taxable goods or services to taxable residents) and failed to do so for whatever reason, you will be held responsible for the tax due. Always collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful.
Protip: You are still responsible for remitting sales taxes even if you failed to collect them.
The penalty for an electronically late filed and paid return is:
Interest is charged at 1% per month or portion of a month from the due date. If you do not include the penalty and interest with your payment of tax, you will be billed. Paying by check will result in a failure to comply penalty for not paying electronically.
Yes, Connecticut requires businesses to file a “Zero-Tax” return if they don't have any sales during a taxing period.
Yes, Connecticut requires businesses to file a “Final sales tax” return when closing a business.
Sadly, there is no discount for filing and paying your taxes on time. Bummer.
Now that we covered all our bases for filing and paying sales taxes in the state of Connecticut, you should feel more at ease about the process.
Some things to remember:
Now, you are ready to file and pay your sales tax in Connecticut. If you have any more questions, feel free to contact us.
Please note: This blog is for informational purposes only and the information is accurate as of 6/6/2019. If you want legal advice on sales tax law for your business, please contact a Sales and Use Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.
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