Connecticut 2023 Sales Tax Guide

Connecticut Sales Tax in a Word

Connecticut Sales Tax Contacts

You may be asking, "How do I reach out to the Connecticut Department of Revenue?" Well, fret not, we've got you covered! 

The Connecticut Department of Revenue Services (DRS), much like a friendly neighbor, is always there to lend a helping hand! The DRS is your go-to for all Connecticut tax-related questions and queries. Their virtual doors are open Monday through Friday, 8:30 am to 4:30 pm Eastern Time.

For a heart-to-heart chat (well, as much as one can have about taxes), give them a ring at 860-297-5962. You can also connect with them via their official website. Just head over to portal.ct.gov/drs, your one-stop-shop for all tax services, forms, and guides. 

Just remember, reaching out to the DRS is like calling into a popular radio show - patience is key! While they're as eager to help you out as a squirrel is to find an acorn, they're also juggling a ton of calls. So keep calm, maybe make a cup of hot cocoa, and remember - every great adventure requires a bit of waiting!

There are three pieces of information that you should have on hand before you contact the Connecticut Department of Revenue. 

Be sure that you have the following handy: 

• Taxpayer Name

• EIN

• Sales & Use Tax ID Number (don’t worry, EIN will suffice if this number is misplaced)

If you are calling on behalf of someone else, or having someone else call on behalf of your business, you need to have one more piece of information: An active, signed Connecticut Power of Attorney (PDF).

Why?

If you do not have this, they will simply not be permitted to talk to you. This document authorizes the tax authorities in Connecticut to discuss a business’ taxes with someone other than the owner.

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

Do You Have Nexus in Connecticut?

Welcome back, my fellow financial adventurers! It's time to dig into the nitty-gritty: what exactly creates sales tax nexus in Connecticut?

Connecticut Sales Tax Registration

As we journey further into the dynamic world of Connecticut sales tax, our next stop is an important one: sales tax registration. Imagine you've built your nexus bridge with Connecticut - what's next? Like a backstage pass at a rock concert, registering for sales tax is your ticket to doing business in the state. This process might seem a little daunting, but fear not, fellow business trailblazers! In this section, we'll break down the steps, requirements, and finer details of the Connecticut sales tax registration process.

How to Register for Sales Tax in Connecticut

There are two ways to set up a Connecticut sales tax account:

• Online: You can register for a sales tax account online through the Connecticut Department of Revenue Services (DRS) website. To do this, you will need to create an account and provide some basic information about your business, such as your name, address, and tax identification number.

• Mail: You can also register for a sales tax account by mail by completing and submitting the Sales and Use Tax Registration Application (Form REG-1). You can download this form from the DRS website.

Once you have registered for a sales tax account, you will be assigned a sales tax registration number. You will need to use this number on all sales tax returns that you file. You will also need to display your sales tax registration number prominently in your place of business.

How Much Does it Cost to Register for a Connecticut Sales Tax License?

To register for a Connecticut sales tax license, there is a $100 fee. This fee is non-refundable.

There are a few exceptions to the $100 fee. For example, the following entities are exempt from the fee:

• Governments

• Religious organizations

• Nonprofit organizations

• Educational institutions

If you are unsure whether or not you are exempt from the $100 fee, you should contact the Connecticut Department of Revenue Services (DRS).

Do I Need a Federal Tax ID Number or EIN to Register for a Connecticut Sales Tax License?

Which Agencies in Connecticut Might I Need to Register With Additionally?

Collecting Sales Tax in Connecticut

Collecting sales tax in Connecticut involves understanding the specific tax laws and rates applicable to your business's goods or services. Once you're registered and have your sales tax license, you'll add the appropriate sales tax to every taxable transaction and collect it from your customers.

How to collect sales tax in Connecticut

To register for a Connecticut sales tax account, you can do so online or by mail.

To register online:

1. Go to the Connecticut Department of Revenue Services (DRS) website.
2. Click on "Businesses" and then "Sales and Use Tax."
3. Click on "Register for a Sales Tax Account."
4. Follow the instructions on the screen.

To register by mail:

1. Download and complete the Sales and Use Tax Registration Application (Form REG-1).

2. Mail the completed application to:

Connecticut Department of Revenue Services Sales and Use Tax Division

P.O. Box 2960

Hartford, CT 06102-2960 

Once you have registered for a Connecticut sales tax account, you will be assigned a sales tax registration number. You will need to use this number on all sales tax returns that you file.

What Sales are Subject to Sales Tax in Connecticut?

As we navigate the winding paths of sales tax, let's delve into a crucial question: What sales are actually subject to sales tax in Connecticut?

In general, most goods and some services sold or rented in Connecticut are subject to sales tax. This can include anything from that beautifully handcrafted piece of furniture to certain landscaping services.

1. Tangible Personal Property: First on the list is tangible personal property. This means any physical item, like books, jewelry, or electronics, that can be seen, weighed, measured, felt, or touched.

2. Certain Services: Not all services in Connecticut are taxed, but some are. These can include services such as repair or renovation of tangible personal property and business analysis, management, consulting, and public relations services.

3. Sales of Food and Beverage: Food sold in grocery stores is usually exempt, but prepared meals and those sold in a restaurant are typically taxed. The rules are a bit nuanced here, so be sure to check with the Department of Revenue Services for specifics.

4. Digital Goods: E-books, online films, and other digital goods are also subject to sales tax.

Remember, this is a general guide, and exceptions do apply. Some goods and services are exempt, while others are taxed at a reduced rate. When in doubt, check with the Connecticut Department of Revenue Services or consult with a tax professional. With every nuance we unravel, we become more fluent in the language of sales tax!

Is Software as a Service (SaaS) taxed in Connecticut?

What is Exempt from Connecticut Sales Tax?

Let's illuminate the shadowy corners of our sales tax adventure by exploring what's exempt from Connecticut sales tax. Remember, exemptions are like hidden treasure troves in the tax world - opportunities to save!

1. Certain Food Products: Most groceries and food items for home consumption are exempt. However, prepared meals and those served in restaurants typically aren't part of this tax-free banquet.

2. Prescription Medication: Prescription drugs are typically exempt from sales tax in Connecticut. However, over-the-counter medication usually doesn't share this privilege.

3. Certain Clothing and Footwear: Here's a fun fact - clothing and footwear under $50 are generally exempt from sales tax in Connecticut! Certain exceptions apply, so be sure to check the specifics.

4. Newspapers and Magazines: You can stay informed tax-free! Newspapers issued at least weekly and certain magazines sold by subscription are exempt from Connecticut sales tax.

5. Textbooks: University and college students rejoice! Textbooks are usually exempt when sold by educational institutions.

Remember, fellow tax adventurers, while this list gives a general overview, it's not exhaustive. The Connecticut Department of Revenue Services maintains a comprehensive list of exemptions. Always consult with a tax professional if you're unsure about whether an item is tax-exempt. Here's to discovering more tax secrets on our journey together!

Who is Eligible for Connecticut Sales Tax Exemptions?

The State of Connecticut currently exempts charitable organizations and government agencies from sales tax. 

What Should I Do If My Customer is Exempt from Sales Tax in Connecticut?

Let's imagine that sales tax is a bit like a game of tag. Everyone playing the game is "it" and must pay the tax, but there are a few lucky ones who have an invisible shield—sales tax exemptions. What happens when one of these shield-bearing customers comes into your business?

If your customer in Connecticut claims to be exempt from sales tax, it's not a time for panic. It's just a slightly different way to play the game. These are the steps to follow:

1. Verify the Exemption: The customer should provide you with a valid certificate of exemption or a resale certificate. Picture it as their shield in the game of tax-tag.

2. Keep Records: Maintain a copy of the exemption certificate. It's a good idea to keep these records for at least three years, just like keeping score in a game, in case there's ever a question about the exemption.

3. No Sales Tax Charged: You should not collect sales tax on transactions where a valid exemption certificate has been provided. It's as if the customer is always in a safe zone where "tag" can't reach.

4. Regular Reporting: Continue to report these sales on your tax return. They are often reported as exempt sales. It's your way of communicating with the game organizers, letting them know the customer was playing but with a shield.

Tax rules can seem as complex as the rules of an elaborate game, but with the right information and guidance, you can navigate it successfully. Remember, when in doubt, consult with a tax professional to ensure you're playing by the rules.

What Happens If I Lose a Connecticut Sales Tax Exemption Certificate?

If you lose your Connecticut sales tax exemption certificate, you can request a replacement certificate from the Connecticut Department of Revenue Services (DRS).

To do this, you can:

• File Form CT-183, Application for Sales Tax Exemption Certificate. You can find this form on the DRS website.

• Call the DRS at 860-297-2200.

• Visit a DRS office in person.

When you request a replacement certificate, you will need to provide the following information:

• Your name and address.

• Your Social Security number or taxpayer identification number.

• The type of exemption you are claiming.

• The date your original certificate was issued.

The DRS will mail you a replacement certificate within a few weeks.

In the meantime, you can still claim a sales tax exemption if you have a valid purchase order or invoice from the seller. The purchase order or invoice must include the following information:

• The date of the purchase.

• The description of the goods or services purchased.

• The price of the goods or services purchased.

• The seller's name and address.

You should keep a copy of the purchase order or invoice for your records.

If you are a business and you lose your Connecticut sales tax exemption certificate, you may be able to claim a credit for the sales tax you paid on purchases that were exempt. To do this, you will need to file Form CT-30, Sales and Use Tax Return, and attach a copy of the purchase order or invoice.

The DRS may also impose a penalty if you lose your Connecticut sales tax exemption certificate. The penalty is $25 for the first offense and $50 for each subsequent offense.

Filing and Paying Sales Taxes in Connecticut

No matter how frequently you're required to file, remember, punctuality is key in this quest. Late filings can lead to penalties, a plot twist we'd all like to avoid! When in doubt, consulting a tax professional can ensure you're on the right path.

During these sales tax holidays, the following items are exempt from sales tax:

• Clothing and footwear items priced under $100.

• School supplies priced under $50.

There are a few exceptions to these exemptions. For example, clothing and footwear items that are not intended for personal use, such as uniforms and work boots, are not exempt from sales tax. Additionally, school supplies that are not intended for use in school, such as art supplies and craft supplies, are not exempt from sales tax.

5 Tips to Avoid Common Mistakes When Filing Connecticut Sales Tax Returns

Ah, the common pitfalls! Like hidden traps in our sales tax adventure, these mistakes can catch even the most seasoned explorers off guard. But fret not! With this trusty guide, we'll help you navigate safely. Here are five tips to avoid common mistakes when filing your Connecticut sales tax returns:

1. Keep Accurate Records: Think of this as your compass in the wild wilderness of sales tax. Detailed records of all sales, both taxable and exempt, are essential. Remember, the devil is in the details. If audited, these records will be your saving grace.

2. Understand Nexus Laws: Nexus rules can be as twisty as a forest path, but understanding them is key. Ensure you fully comprehend both physical and economic nexus laws in Connecticut. When in doubt, seek guidance from a tax professional.

3. Don't Neglect Exemptions: Exemptions can feel like hidden treasures, but forgetting them can lead to overcharging customers. Understand what goods and services are exempt in Connecticut and apply these exemptions correctly.

4. File Even If No Sales Tax Was Collected: Yes, you read that right! Connecticut requires filing even if no sales tax was collected during the period. Think of this as a courtesy call to the state, letting them know you didn't forget about them.

5. Submit On Time: In the sales tax quest, timing is everything. Late filings can result in penalties and interest. Remember, if the due date falls on a weekend or holiday, the state allows you to file on the next business day.

With these five tips in your adventurer's toolkit, you're well-equipped to avoid common mistakes. Here's to a successful and hiccup-free sales tax filing journey!

Have sales tax in more than one state?

All Sales Tax Guides

And don't forget to check out our blog about Economic Nexus, which serves as an invaluable resource for businesses who have sales that are subject to sales tax. 

This blog is for informational purposes only and the information is accurate as of 2023-06-15. If you want legal advice on sales tax law for your business, please contact a State and Local Tax (SALT) 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.