Connecticut Sales Tax Guide

Have you ever wondered how some businesses seamlessly handle taxes while others struggle? The secret lies in understanding the ins and outs of state-specific tax regulations.

Connecticut’s sales tax landscape is filled with unique exemptions, specific nexus requirements, and surprising rules that even seasoned business owners might miss. 

In this guide, we’ll uncover the lesser-known aspects of Connecticut sales tax that can save you money and prevent costly mistakes. Let’s get started and transform how you handle sales tax in your business!

Section 1: Determining Sales Tax Nexus in Connecticut

This section explains how to determine if your business needs to collect sales tax in Connecticut. We outline the criteria for establishing sales tax nexus, including economic and physical presence thresholds. Additionally, we provide guidance on complying with Connecticut sales tax regulations once nexus is determined.

What is Connecticut Sales Tax Nexus?

Connecticut Sales Tax Nexus refers to the legal connection a business must have with the state of Connecticut to be required to collect and remit sales tax on sales made to Connecticut customers. This connection can be established through a physical presence in the state, such as an office or warehouse, or by meeting specific sales thresholds. This sales threshold concept is known as economic nexus.

To establish economic nexus, a business must generate at least $100,000 in sales and complete 200 or more transactions within Connecticut in a year. If a business has nexus, it must register with the Connecticut Department of Revenue Services, collect sales tax from Connecticut customers, and remit the collected tax to the state.

Do You Need a Sales Tax Permit to Sell Online in or to Connecticut?

Yes, if you have nexus (a significant economic presence) in Connecticut, you need a sales tax permit to sell online to customers in the state. This requirement applies to even businesses with no physical presence in Connecticut, that is, remote sellers who meet specific economic thresholds. Failure to secure this permit can lead to fines up to $500 and/or imprisonment for up to three months per offense​.

What Triggers or Creates a Sales Tax Nexus in Connecticut?

In Connecticut, a sales tax nexus can be created when a business has a physical presence, economic activity, or affiliates in the state. Here’s an in-depth look at each type:

1. Physical Nexus:
   • Office or Place of Business: If you have an office or any business location within the state, you establish a physical nexus.
   • Employees: Employing staff or independent contractors who work in Connecticut for more than two days a year.
   • Ownership: Owning personal or real property in the state.
   • Inventory: Storing goods in a Connecticut warehouse.
   • Delivery: Using your vehicles to deliver merchandise within Connecticut establishes a physical nexus​.
2. Economic Nexus:
   • Revenue Threshold: Your business meets the economic nexus criteria if you make more than $100,000 in gross receipts from sales in Connecticut within the previous 12 months.
   • Transaction Threshold: Conducting 200 or more separate transactions with Connecticut customers within the same period also creates economic nexus​​.

If your business surpasses either of these thresholds, you’re obligated to collect and remit sales tax to Connecticut. 

What Is Connecticut Sales Tax Economic Nexus Threshold?

Connecticut’s economic nexus threshold for sales tax is currently $100,000. To meet this threshold, a business must generate at least $100,000 in sales and complete at least 200 transactions within Connecticut in a calendar year. If these criteria are met, the business is required to register for a Connecticut sales tax permit and collect sales tax from its Connecticut customers.

Connecticut Sales Tax Nexus Requirements

Connecticut’s sales tax nexus rules primarily hinge on economic activity within the state. Similar to other states, the Supreme Court’s Wayfair decision expanded the definition of nexus beyond physical presence.

A business establishes economic nexus in Connecticut if it generates over $100,000 in annual sales or completes more than 200 separate transactions within the state. Additionally, traditional methods of creating physical nexus, such as having a physical location or employees in Connecticut, still apply. It’s important to note that Connecticut’s economic nexus thresholds have remained unchanged since 2023.

Connecticut Sales Tax Nexus Calculator

To help businesses determine their nexus status, various online tools and calculators can assist in monitoring and calculating sales thresholds. Here are the steps to use a nexus calculator effectively:

1. Input Sales Data: Enter your total sales revenue and number of transactions into the calculator. Ensure you cover all sales within the 12-month period being evaluated.
2. Analyze Results: The calculator will compare your data against Connecticut’s nexus thresholds.
3. Review Recommendations: If you meet or exceed the thresholds, the tool will recommend steps to register for a sales tax permit and start collecting and remitting sales tax.

Read: The Ultimate Guide to Managing Sales Tax Compliance for Every State in The US

Section 2: Understanding Connecticut Sales Taxability Exemptions and Resale Certificates

This section provides a detailed explanation of Connecticut exemption certificates. We clarify the distinction between resale and exemption certificates, outlining which items are taxable or exempt under state law. You’ll find information on certificate validity, required details, and how to obtain one. We also dispel common misconceptions about out-of-state sellers and outline the eligibility criteria for nonprofits to claim tax exemptions on specific purchases.

Who Is Exempt From Sales Tax in Connecticut?

In Connecticut, certain individuals and organizations qualify for sales tax exemptions based on the nature of their purchases and their status. Here’s an overview of who might be exempt:

1. Nonprofit Organizations: Charitable, religious, and educational organizations that have obtained a tax-exempt status from the IRS and have registered with the Connecticut Department of Revenue Services (DRS).
2. Government Entities: Federal, state, and local government agencies.
3. Specific Products and Services: Some items and services are automatically exempt from sales tax, including:
   • Food products for human consumption, excluding meals, carbonated beverages, candy, and alcoholic beverages.
   • Prescription medicines and nonprescription drugs like vitamins, dietary supplements, and over-the-counter medicines.
   • Certain medical equipment such as oxygen supply equipment, artificial limbs, and hearing aids.
   • Clothing and footwear under $100 during Connecticut’s annual Sales Tax-Free Week.
   • College textbooks sold to students with a valid student ID.
   • Fuel for heating purposes used in residential dwellings, agricultural production, or industrial manufacturing.
   • U.S. and Connecticut flags​​.

What Is a Sales Tax Exemption Certificate in Connecticut?

A sales tax exemption certificate in Connecticut is a document that allows qualifying purchasers to buy goods or services tax-free. Here’s what you need to know:

1. Purpose: Exemption certificates are used by buyers to indicate that a purchase is exempt from sales tax. They must be presented to sellers at the time of purchase.
2. Types: Connecticut issues various exemption certificates, each catering to different needs. For instance:
   • CERT-100: For materials, tools, and fuel.
   • CERT-101: For machinery, component parts, and replacement and repair parts used directly in a manufacturing process.
   • CERT-113: For purchases by hospitals, nonprofit nursing homes, and other nonprofit organizations.
   • CERT-125: For motor vehicles purchased by nonresidents​​.
3. Validity and Renewal: These certificates often need to be renewed periodically. For example, the Commercial Fisherman Exemption Permit is valid for two years.
4. Usage: To use an exemption certificate, the purchaser must complete the appropriate form and present it to the seller. The seller must retain a copy of the certificate to substantiate the tax-exempt sale in case of an audit.

Connecticut Sales Tax Exemption Rules

In Connecticut, certain items and transactions are exempt from sales tax. Here’s a detailed look at the rules and exemptions:

1. Nonprofit Organizations: Charitable, religious, and educational organizations can qualify for exemptions if they have tax-exempt status from the IRS and are registered with the Connecticut Department of Revenue Services (DRS).
2. Government Entities: Federal, state, and local government agencies are exempt from sales tax.
3. Medical Goods and Equipment: Items such as prescription medicines, non-prescription drugs, syringes, needles, and medical devices like hearing aids, crutches, and wheelchairs are exempt. Other medical supplies, including diabetic supplies and custom-made wigs for medical conditions, are also tax-free.
4. Agricultural and Manufacturing Items: Machinery used in manufacturing, repair and replacement parts, and certain calibration services are exempt. Specific agricultural products and equipment are also exempt if used directly in agricultural production.
5. Energy and Fuel: Fuel used for residential heating, certain types of industrial manufacturing, and specific fuels like aviation and marine fuel have exemptions under specific conditions​​.

What Goods Are Taxable in Connecticut (List of Taxable Goods)?

Most tangible personal property is taxable in Connecticut at a rate of 6.35%. Here are some examples of taxable goods:

• Clothing: Generally taxed at 6.35%, with an additional luxury tax for items over $1,000.
• Prepared Food: Includes restaurant meals and take-out.
• Digital Goods: Such as e-books, digital movies, and music.
• Software as a Service (SaaS): Online software services.
• General Merchandise: Items like furniture, electronics, and household goods​​.

What Services Are Taxable in Connecticut (List of Taxable Services)?

Several services are subject to sales tax in Connecticut. These include:

• Advertising and Public Relations Services: Except for media advertising development.
• Business Consulting: Excludes environmental consulting.
• Cable and Satellite TV Services.
• Computer and Data Processing Services: Including web hosting and software maintenance.
• Contractor Services: For real property improvements.
• Health and Athletic Club Services: Including yoga classes at studios.
• Janitorial and Landscaping Services.
• Pet Grooming and Boarding Services.
• Repair Services: For motor vehicles and other tangible personal property.
• Transportation Services: Provided by livery services​

What Is Excluded From Sales Tax in Connecticut? (Non-Taxable Items)

In Connecticut, several items and services are exempt from sales tax. These exemptions help reduce the tax burden on essential goods and certain services. Here’s a list of notable non-taxable items:

1. Agricultural Products: Items used directly in farming operations.
2. Medical Goods and Equipment: This includes prescription medications, non-prescription drugs, medical devices like hearing aids, wheelchairs, and diabetic supplies.
3. Groceries: Food items intended for home consumption.
4. Clothing and Footwear: Items under $100 during the Connecticut Sales Tax-Free Week.
5. Educational Materials: College textbooks sold to students with a valid ID.
6. Safety Equipment: Bike helmets, child car seats, and firearm safety devices.
7. Energy Sources: Heating fuels used in residential dwellings and specific industrial uses​

How Does a Connecticut Sales Tax Exemption Form Look Like?

A Connecticut sales tax exemption form is used to claim exemption from paying sales tax on eligible purchases. The form includes fields for:

1. Purchaser Information: Name, address, and tax identification number.
2. Seller Information: Name and address of the seller.
3. Exemption Type: Specific reason for the exemption (e.g., resale, manufacturing, nonprofit organization).
4. Certification Statement: A declaration by the purchaser affirming the validity of the exemption claim, typically accompanied by a signature.

Commonly used forms include CERT-100 for materials, tools, and fuel, and CERT-113 for purchases by hospitals and nonprofit organizations. These forms must be presented to the seller at the time of purchase and retained for audit purposes​.

Connecticut Sales Tax Exemption Chart PDF

For a comprehensive overview of exemptions, the Connecticut Department of Revenue Services provides a detailed exemption chart in PDF format. This chart outlines all items and services that qualify for tax exemptions, categorizing them by type and specifying the relevant statutory references. The chart is an essential tool for both buyers and sellers to ensure compliance with state tax laws.

You can download the exemption chart and related forms from the Connecticut Department of Revenue Services website under their sales tax resources section​.

Does  Connecticut Accept Out-of-State Sales Tax Exemption 

In Connecticut, non-residents can claim an exemption from sales tax on certain purchases, such as motor vehicles, if these items are not registered in the state. 

For instance, if a non-resident buys a vehicle in Connecticut but registers it outside the state, they can use the CERT-125 form to claim an exemption. This exemption ensures that non-residents aren’t unfairly taxed for purchases that will primarily be used outside of Connecticut​.

Connecticut Sales Tax Exemption Certificate for Nonprofits (Are They Exempt or Subject to Sales Tax) 

Nonprofit organizations in Connecticut, such as charitable, religious, and educational institutions, can apply for a sales tax exemption. 

To qualify, these entities must be recognized by the IRS as tax-exempt and registered with the Connecticut Department of Revenue Services. They can then use the CERT-119 form to make tax-exempt purchases of tangible personal property and services necessary for their operations​​.

How to Apply and Get a Connecticut Sales Tax Exemption Certificate

To apply for a Connecticut sales tax exemption certificate, follow these steps:

1. Determine Eligibility: Ensure your organization or business qualifies for an exemption based on the type of goods or services being purchased.
2. Complete the Appropriate Form: Select and fill out the relevant exemption form from the Connecticut Department of Revenue Services. Common forms include:
   • CERT-100: For materials, tools, and fuel.
   • CERT-101: For machinery used directly in manufacturing.
   • CERT-113: For purchases by certain hospitals and nonprofit organizations.
3. Submit the Form: Provide the completed exemption certificate to the vendor at the time of purchase. Ensure the form is filled out accurately and completely.
4. Vendor Verification: The seller must verify the certificate and keep it on file to substantiate the tax-exempt sale in case of an audit​​.

By following these steps, you can effectively manage your tax obligations and take advantage of available sales tax exemptions in Connecticut.

Is a Connecticut Seller’s Permit the Same as a Tax-Exempt Certificate?

No, a Connecticut seller’s permit is not the same as a tax-exempt certificate. A seller’s permit, also known as a sales tax permit, authorizes a business to sell products and collect sales tax from customers. It identifies the business as a legal collector of sales tax in the state. 

Conversely, a tax-exempt certificate, such as a resale certificate, allows businesses to purchase goods tax-free if those goods are intended for resale. To obtain a resale certificate, you must first have a seller’s permit​​.

Connecticut Sales Tax Exemption for Manufacturing

Connecticut offers specific sales tax exemptions for manufacturing to encourage economic growth. These exemptions include:

• Machinery and Equipment: Machinery used directly in manufacturing, including repair, replacement, and enhancement parts.
• Materials and Tools: Materials, tools, and fuel used directly in the manufacturing process.
• Energy Use: Utilities used in manufacturing can be exempt if a significant portion is used directly in the production process​.

Manufacturers need to complete and present the appropriate exemption forms, such as CERT-101 for machinery and CERT-100 for materials and tools, to claim these exemptions.

How to Verify a Connecticut Sales Tax Exemption Certificate

To verify a Connecticut Sales Tax Exemption Certificate, follow these steps:

1. Obtain the Certificate Number: This is usually a unique identifier found on the certificate itself.
2. Check the Certificate’s Validity: Ensure it’s filled out completely, signed, and has not expired.
3. Verify the Issuing Authority: Confirm the certificate was issued by the Connecticut Department of Revenue Services (DRS).
4. Contact the Connecticut DRS: For definitive verification, contact the DRS directly to inquire about the certificate’s validity. They can provide confirmation and additional details.

What Information is Needed to Verify a Connecticut Sales Tax Exemption Certificate

To verify a Connecticut sales tax exemption certificate, you typically need the following information:

• Certificate Number: A unique identifier assigned to the certificate.
• Business Name: The legal name of the business claiming the exemption.
• Business Address: The physical address of the business.
• Exemption Type: The specific reason for the tax exemption (e.g., resale, governmental entity, non-profit).
• Certificate Expiration Date: The date the certificate becomes invalid.
• Issuing Authority: The Connecticut state agency responsible for issuing the certificate (usually the Department of Revenue Services).

Do You Need to Renew Your Connecticut Sales Tax License?

Yes, your Connecticut sales tax permit typically needs to be renewed every two years. However, if your account is in good standing, you’ll receive an automatic renewal at no cost. To ensure this, verify that your business information is accurate on your myconneCT account. Keep in mind that if you’ve closed your business, filed a final return, or have outstanding tax debts, you may need to take additional steps to renew or obtain a new permit

How to Renew Your Connecticut Sales Tax License

To renew your Connecticut sales tax license, first verify that your business information is accurate on your myconneCT account. Then, watch for your renewal permit in the mail. If you haven’t received it, contact the Connecticut Department of Revenue Services (DRS) for assistance.

What Is the Sales Tax Exemption for Farming in Connecticut?

In Connecticut, farmers can benefit from a sales tax exemption on certain purchases directly related to agricultural production. To qualify, farmers must obtain a Farmer Tax Exemption Permit by filing Form REG-8 with the Department of Revenue Services (DRS). This permit allows farmers to purchase tangible personal property tax-free if it is used exclusively in agricultural production. 

Examples of exempt items include farm equipment, machinery, and specific supplies like seeds and fertilizer. The permit must be renewed every two years, and farmers must provide a copy of the exemption certificate to retailers at the time of purchase to claim the exemption​​.

What Is a Connecticut Resale Certificate?

A Connecticut resale certificate allows businesses to purchase goods intended for resale without paying sales tax at the point of purchase. Businesses must present this certificate to suppliers, who then do not charge sales tax on these transactions. To obtain a resale certificate, businesses must first have a valid seller’s permit. 

The resale certificate includes information such as the purchaser’s business name, address, and tax ID number, along with a description of the items being purchased for resale. It is crucial to use the resale certificate only for items that will be resold to avoid penalties for tax evasion​.

How Much Does a Connecticut Resale Permit Cost?

Obtaining a Connecticut resale permit, which is necessary to acquire a resale certificate, requires registering for a seller’s permit. The application fee for a Connecticut seller’s permit is $100. 

This permit identifies your business as authorized to collect sales tax in the state. Once you have the seller’s permit, you can issue resale certificates to vendors to make tax-free purchases of goods intended for resale​.

How Long Does It Take to Get a Connecticut Resale License?

Obtaining a Connecticut resale license, or resale certificate, can vary in processing time depending on how you apply. If you register online through the MyConnectCT portal, you can receive a temporary sales tax permit immediately, which you can use until the permanent one arrives within about 15 business days. If you apply by mail, expect the process to take around 2-3 weeks​​.

How Do I Get a Resale License Number in Connecticut? (Application)

To obtain a resale license number in Connecticut, you need to follow these steps:

1. Register for a Sales Tax Permit: Begin by registering for a sales tax permit with the Connecticut Department of Revenue Services (DRS). You can do this online via the MyConnectCT portal or by filling out and mailing Form REG-1 along with a $100 fee.
2. Download the Resale Certificate Form: Once you have your sales tax permit, download the resale certificate form from the DRS website.
3. Fill Out the Form: Provide necessary information such as the seller’s and buyer’s details, the type of business, and a description of the goods being purchased for resale.
4. Use the Certificate: Present the completed resale certificate to your vendors when making purchases. The certificate allows you to buy goods without paying sales tax, provided these items are for resale​.

How to Verify a Connecticut Sales Tax Resale Certificate?

Verifying a Connecticut sales tax resale certificate involves several steps to ensure its validity:

1. Check Completeness: Ensure the resale certificate is fully completed with all required information, including the business name, address, and tax ID number.
2. Verify the Permit: Confirm the validity of the purchaser’s sales tax permit. This can be done through the Connecticut Secretary of State’s website by entering the business ID and certificate number.
3. Evaluate Consistency: Ensure that the items being purchased are consistent with the buyer’s line of business. For example, if a car dealership is buying office supplies tax-free, it may warrant further investigation.
4. Maintain Records: Keep a copy of the resale certificate on file for at least three years in case of an audit. This documentation is crucial for proving that the sale was tax-exempt​​.

By following these steps, you can efficiently obtain and manage a resale certificate, ensuring compliance with Connecticut’s sales tax regulations and avoiding potential penalties.

Section 3: Understanding Connecticut Sales Tax Rates

This section provides a detailed guide to Connecticut’s sales tax. We explain the state’s base rate, how local taxes impact the total cost, and offer tools to determine specific tax rates for any location. You’ll find information on calculating taxes and identifying areas with higher tax burdens, along with a comprehensive county-by-county breakdown of sales tax rates.

What Is Connecticut Sales Tax Rate? (How Much Is Connecticut Sales Tax?)

Connecticut has a statewide sales tax rate of 6.35%. This rate applies uniformly across the state, as Connecticut does not allow counties or cities to levy additional local sales taxes. The 6.35% rate applies to most tangible personal property and certain services, making it relatively straightforward for businesses to calculate and collect sales tax. 

However, there are some variations for specific items: for instance, the tax rate for motor vehicles is 4.5%, and for computer and data processing services, it is 1%​​.

How to Find or Lookup Your Connecticut Sales Tax Rate?

Finding or looking up the Connecticut sales tax rate is straightforward due to the state’s uniform tax rate of 6.35%. Here are steps you can follow:

1. Connecticut Department of Revenue Services (DRS) Website: Visit the official DRS website for comprehensive information and tools related to sales tax.
2. Sales Tax Calculators: Use online tools such as the AtomicTax Sales Tax Calculator to calculate the exact sales tax for specific purchases.

How to Calculate Connecticut Sales Tax Rate

To calculate the Connecticut sales tax rate for a purchase, follow these steps:

1. Convert the Sales Tax Rate to a Decimal: Connecticut’s state sales tax rate is 6.35%. To use this in calculations, convert it to a decimal by dividing by 100. Thus, 6.35% becomes 0.0635.
2. Multiply by the Purchase Price: Take the purchase price of the item or service and multiply it by the decimal sales tax rate. 

For example, if you’re buying an item that costs $100, you multiply $100 by 0.0635.

$100 x

3. Add the Sales Tax to the Purchase Price: The result from the multiplication is the amount of sales tax. Add this to the original purchase price to get the total cost. 

For a $100 item, the sales tax would be $6.35, making the total $106.35​.

What City Has the Highest Sales Tax Rate in Connecticut?

Connecticut has a uniform sales tax rate of 6.35% across all cities and towns, as the state does not permit local sales tax additions. Therefore, no city in Connecticut has a higher sales tax rate than another. This uniformity simplifies the sales tax process for businesses and consumers alike. All purchases subject to sales tax in Connecticut are taxed at the same rate, regardless of the city​​.

Connecticut Sales Tax by County and Zip Codes

Connecticut has a uniform sales tax rate of 6.35% across all its counties. Here is a detailed list of counties along with some of their zip codes:

County	Sales Tax Rate	Zip Codes
Fairfield	6.35%	06601, 06801, 06824, 06840, 06850
Hartford	6.35%	06001, 06002, 06010, 06013, 06101
Litchfield	6.35%	06750, 06751, 06752, 06753, 06754
Middlesex	6.35%	06409, 06412, 06413, 06414, 06416
New Haven	6.35%	06501, 06502, 06503, 06504, 06505
New London	6.35%	06320, 06333, 06335, 06339, 06340
Tolland	6.35%	06029, 06031, 06033, 06035, 06043
Windham	6.35%	06226, 06231, 06232, 06233, 06234

Section 4: Registering for Connecticut Sales Tax Permits

This section provides a step-by-step guide to obtaining a Connecticut Sales Tax Permit. We cover who needs one, how to apply online or in person, and the necessary information. You’ll also learn about the permit process, the difference between a sales tax ID and permit, and when out-of-state businesses must collect Connecticut sales tax. While the permit itself is free, there may be associated costs.

Do You Need to Register for Sales Tax in Connecticut?

Yes, if you are engaged in business in Connecticut, you need to register for a sales tax permit. This includes selling tangible personal property or taxable services within the state. Businesses with a physical presence or meeting the economic nexus threshold—over $100,000 in sales or 200 transactions in a year—are required to register. Failure to obtain a sales tax permit can result in fines and penalties​.

How Much Does It Cost to Get a Connecticut Seller’s Permit?

The cost to obtain a Connecticut sales tax permit is $100. This fee is required when you submit your application, whether you apply online or via mail. The permit must be renewed every two years​​.

How to Register for Sales Tax in Connecticut?

You can register for a Connecticut sales tax permit through the following methods:

1. Online Registration: Use the MyConnectCT portal to complete your registration. This is the quickest method, and you will receive a temporary sales tax permit immediately upon submission. Your permanent permit will follow within 15 days.
2. Mail Registration: Complete Form REG-1 and send it with the $100 fee to the Department of Revenue Services.
3. In-Person Registration: Visit a Connecticut Department of Revenue Services field office to apply and receive your permit immediately​​.

To register, you will need the following information:

• Federal Employer Identification Number (FEIN) or Social Security Number (SSN) if you are a sole proprietor.
• Legal name and business name (DBA, if applicable).
• Business address.
• Details about the business entity type and major business activity.
• Names and Social Security Numbers of all responsible owners and officers​​.

By following these steps, you can ensure compliance with Connecticut’s sales tax regulations and avoid potential penalties.

How to Get a Sales Tax ID in Connecticut

To get a sales tax ID in Connecticut, you need to register with the Department of Revenue Services (DRS). The process involves providing detailed business information, paying a registration fee, and submitting the necessary forms either online, by mail, or in person. The comprehensive steps and requirements for registration have been discussed in detail above

Does Connecticut Sales Tax Apply to Out-of-State Purchases?

Connecticut requires sales tax to be applied to out-of-state purchases if the seller has nexus in Connecticut. This means that if an out-of-state seller meets the economic threshold of $100,000 in sales or 200 transactions to Connecticut customers, they must collect and remit Connecticut sales tax. 

Additionally, use tax applies when Connecticut residents or businesses purchase taxable goods out of state and do not pay sales tax at the point of sale. The use tax rate is the same as the sales tax rate, which is 6.35%. If you have already paid sales tax in another state at a rate lower than Connecticut’s, you must pay the difference​.

Section 5: Setting Up Your Online Store, Recordkeeping and Calculating Connecticut Sales Tax

This section covers how to calculate sales tax, including state and local rates. We’ll also discuss sales tax for eBay sellers and how the platform handles these calculations. Finally, we’ll guide you through calculating sales tax for car purchases in Connecticut, explaining the specific tax rates and steps involved.

How Do I Calculate Sales Tax in Connecticut?

To calculate sales tax in Connecticut, follow these steps:

1. Determine the Sales Tax Rate: The statewide rate is 6.35%.
2. Convert the Rate to a Decimal: Divide 6.35% by 100 to get 0.0635.
3. Multiply by the Purchase Price: For a $100 item, multiply $100 by 0.0635 to get $6.35.
4. Add the Sales Tax to the Purchase Price: The total cost is $106.35.

You can also use online sales tax calculators like Atomic Tax Sales Tax Calculator, to quickly calculate the sales tax by entering the purchase amount and the zip code of the sale location​​.

eBay Sales Tax Connecticut Calculator

For sellers on eBay, calculating Connecticut sales tax is straightforward since eBay automatically applies the correct sales tax rate based on the buyer’s shipping address. Here’s how it works:

1. eBay’s Automatic Collection: eBay collects sales tax on behalf of sellers for items shipped to Connecticut. This means you don’t have to manually calculate or add sales tax to your listings.
2. Rate Application: eBay uses the Connecticut state sales tax rate of 6.35% for all applicable transactions​​.
3. Sales Tax Reporting: eBay provides detailed sales tax collection reports, making it easier for you to file your sales tax returns with the Connecticut Department of Revenue Services.

If you need to calculate sales tax outside of eBay, you can use the same methods mentioned earlier or online tools like the Connecticut Sales Tax Calculator to ensure accuracy​.

How to Calculate Sales Tax on a Car in Connecticut

When purchasing a car in Connecticut, the sales tax calculation depends on the purchase price and whether the price exceeds $50,000:

1. For Vehicles Under $50,000: The sales tax rate is 6.35%. To calculate the tax, multiply the vehicle’s purchase price by 0.0635. 

For example, if the purchase price is $30,000, the sales tax would be:

$30,000 x 0.0635 = $1,905​​

2. For Vehicles Over $50,000: The sales tax rate increases to 7.75%. For a car priced at $65,000, the tax would be calculated as:

$65,000 x 0.0775 = $5,037.50​

3. Trade-Ins: If you trade in a vehicle, the trade-in value is deducted from the purchase price before calculating the sales tax. 

For instance, if you purchase a car for $40,000 and trade in a vehicle worth $10,000, the taxable amount is $30,000, resulting in a tax of:

$30,000 x 0.0635 = $1,905​

4. Incentives and Rebates: These are taxable. For a car priced at $35,000 with a $2,500 rebate, you still pay tax on the full $35,000​.

Reverse Sales Tax Calculator Connecticut

A reverse sales tax calculator helps you determine the pre-tax price from a total amount that includes tax. Here’s how you can use it:

1. Determine the Total Amount and Sales Tax Rate: Identify the total amount paid and the applicable sales tax rate (6.35% for most purchases).
2. Calculate the Pre-Tax Price: Use the formula:

Pre-Tax Price = Total Amount / (1 + Sales Tax Rate). 

For example, if the total amount is $106.35, the pre-tax price would be:

$106.35 / 1.0635 = $100.

3. Online Tools: Websites like AtomicTax offers reverse sales tax calculator where you can input the total amount and the tax rate to get the pre-tax price​​.

By using these methods and tools, you can accurately calculate both the sales tax on vehicle purchases in Connecticut and reverse-engineer the pre-tax amount from a total price.

Section 6: Charging & Collecting Connecticut Sales Tax

This section provides a comprehensive overview of Connecticut sales tax, covering when and how to charge and collect it. It outlines which goods and services are taxable, explains the difference between charging and collecting tax, and details the specific conditions for taxation. Additionally, it offers step-by-step guidance on tax calculation, collection, and remittance, and addresses common taxability questions for various products and services.

What Does It Mean to Charge Sales Tax vs Collect Sales Tax?

Charging sales tax means including the applicable sales tax in the price of the goods or services you sell. This is added to the purchase price at the point of sale. 

Collecting sales tax refers to the process of gathering this tax from customers and then remitting it to the state’s tax authority. 

Essentially, when you charge sales tax, you collect it from the customer and hold it in trust until it is time to pay it to the state​​.

When to Charge Sales Tax in Connecticut?

In Connecticut, you are required to charge sales tax if you have established a nexus in the state. Nexus can be established through physical presence (like having a store, office, or employees in Connecticut) or economic presence (meeting the threshold of $100,000 in sales or 200 transactions annually). 

You must charge sales tax on all taxable goods and services sold to Connecticut residents once you have established nexus​.

How to Charge and Collect Sales Tax in Connecticut?

To charge and collect sales tax in Connecticut, first obtain a sales tax permit from the Connecticut Department of Revenue Services. Once registered, apply the 6.35% sales tax rate to all taxable sales at the point of transaction. Collect this tax from customers and keep detailed records of all transactions. File and remit the collected tax to the DRS regularly, based on your assigned filing frequency, using the myconneCT portal​.

Does Connecticut Collect Sales Tax on Out-of-State Sales?

Yes, Connecticut collects sales tax on out-of-state sales if the seller has nexus in the state. Nexus can be established either through a physical presence (like having a store, office, or employees in Connecticut) or through economic presence (meeting the threshold of $100,000 in sales or 200 transactions annually). 

If your business meets these criteria, you must register, collect, and remit Connecticut sales tax on sales to customers in the state​.

Do Contractors Charge Sales Tax on Labor in Connecticut?

In Connecticut, contractors are generally required to charge sales tax on their labor if the labor is part of a taxable service. This includes work such as building, installing, repairing, and remodeling real property if the materials are taxable. 

However, pure labor services that do not involve the sale of tangible personal property might not be taxable. It’s important for contractors to check specific tax regulations to determine if their services are taxable​​.

Does Connecticut Charge Sales Tax on Shipping?

Yes, Connecticut charges sales tax on shipping costs if the items being shipped are taxable. If the goods sold are subject to sales tax, then the shipping and handling charges are also subject to tax. 

Conversely, if the items are exempt from sales tax, then the shipping charges are also exempt. This rule ensures that the tax treatment of shipping charges aligns with the taxability of the goods being shipped​​.

Does Connecticut Charge Sales Tax on Services?

In Connecticut, sales tax applies to a variety of services. Services that are taxable include:

• Advertising and Public Relations Services: This includes layout, art direction, and graphic design.
• Business Services: Management consulting, credit information, and reporting.
• Cleaning Services: Janitorial, carpet cleaning, and laundry services.
• Health and Fitness: Health club memberships and yoga classes.
• Home and Property Services: Landscaping, extermination, and home maintenance.
• Automotive Services: Car washing, towing, and repair services.
• Digital and IT Services: Computer and data processing services, taxed at a reduced rate of 1% ​​.

Does Connecticut Charge Sales Tax on Food?

Connecticut generally exempts most grocery items from sales tax. However, certain food and beverages are taxable:

• Prepared Food: Meals sold by restaurants and prepared foods from grocery stores are subject to a 6.35% sales tax.
• Carbonated Beverages and Alcohol: These items are also taxable at the standard rate.
• Dietary Supplements: Vitamins and dietary supplements are subject to sales tax​.

Do Photographers Charge Sales Tax in Connecticut?

Yes, photographers in Connecticut must charge sales tax on their services. This includes fees for taking photographs, developing, and selling prints. The tax also applies to any tangible personal property sold as part of their services, such as photo albums and framed prints​.

Does Amazon Charge Sales Tax in Connecticut?

Yes, Amazon charges sales tax on purchases made in Connecticut. As of November 1, 2013, Amazon began collecting Connecticut’s 6.35% sales tax on all taxable items sold to Connecticut residents. This change was part of an agreement with the state that included Amazon investing in a distribution center in Connecticut. 

The tax collection applies to both items sold directly by Amazon and items sold by third-party sellers through Amazon’s platform, ensuring that the correct sales tax is charged and remitted to the state​.

Does eBay Charge Sales Tax in Connecticut?

eBay also collects sales tax on purchases made in Connecticut. Following the Supreme Court’s decision in South Dakota v. Wayfair, Inc., which allowed states to mandate sales tax collection from remote sellers, eBay implemented automated sales tax collection. This means that for purchases shipped to Connecticut, eBay calculates and collects the 6.35% sales tax at checkout, regardless of whether the seller is located in Connecticut or another state. 

This automated system ensures compliance with Connecticut’s sales tax laws for all eBay transactions​​.

Does Wayfair Charge Sales Tax in Connecticut?

Yes, Wayfair charges sales tax on purchases shipped to Connecticut. After the Wayfair decision, which directly involved the company, Wayfair began collecting sales tax in Connecticut and other states where it meets economic nexus thresholds. 

For Connecticut, this means that any sales to Connecticut residents are subject to the state’s 6.35% sales tax, which Wayfair calculates and collects at the time of purchase. This ensures that Connecticut receives the appropriate sales tax revenue from online transactions​​.

Do You Charge Sales Tax on Rental Equipment in Connecticut?

Yes, there is a sales tax on rental equipment in Connecticut. The state imposes a sales tax of 6.35% on the gross receipts from the rental or leasing of tangible personal property. This includes equipment rentals, which means if you rent out items like construction equipment, tools, or other tangible goods, you need to collect sales tax from your customers. 

This also applies to short-term vehicle rentals, which may be subject to additional surcharges​​.

Can You Charge Sales Tax on Delivery in Connecticut?

In Connecticut, the taxability of delivery charges depends on whether the goods being shipped are taxable. If the items sold are subject to sales tax, then the shipping and handling charges are also subject to tax. 

Conversely, if the items are exempt from sales tax, then the shipping charges are also exempt. This means you should include the sales tax on delivery charges if the products shipped are taxable items​​.

Do I Charge Sales Tax to Non-Profits in Connecticut?

In Connecticut, sales tax exemptions for nonprofit organizations are available, but not all purchases made by nonprofits are exempt. 

Nonprofits with a federal Determination Letter of exemption under Section 501(c)(3) or (13) of the Internal Revenue Code can purchase goods and services tax-free if the purchases are made exclusively for their organization’s purposes and paid with organizational funds. 

To claim this exemption, the nonprofit must provide the retailer with a completed CERT-119 form along with a copy of their federal Determination Letter.

However, nonprofits must collect sales tax on sales they make unless they fall under specific exemptions, such as sales at up to five fundraising events per year without collecting sales tax​​.

Do Restaurants Charge Sales Tax in Connecticut?

Yes, restaurants in Connecticut are required to charge sales tax on the sale of prepared food and beverages. The standard sales tax rate is 6.35%, but for meals and certain drinks, the rate is higher at 7.35%. 

This includes dine-in, take-out, and delivery services provided by restaurants. Additionally, any service charges, such as for catering, are also subject to sales tax​.

Section 7: Reporting, Paying, Filing & Remitting Connecticut Sales Tax Returns

This section clarified the key distinctions between reporting, paying, filing, and remitting sales tax. We outlined who owes sales tax, how and when to pay it, and the deadlines for filing tax returns. Common misconceptions about sales tax, such as whether wholesalers or individuals buying homes are subject to it, were also addressed.

What is Sales Tax Reporting vs Payment vs Filing vs Remittance?

• Sales Tax Reporting: This involves documenting and summarizing the amount of sales tax collected from customers over a specific reporting period. The business must prepare a detailed sales tax return that includes total sales, taxable sales, and the corresponding sales tax collected. This report ensures transparency and accuracy in the amount of tax owed to the state​.
• Sales Tax Payment: After reporting the collected sales tax, businesses must transfer the funds to the state’s tax authority. This payment corresponds to the amount reported on the sales tax return and ensures that the business fulfills its tax obligations​​.
• Sales Tax Filing: Filing refers to the submission of the sales tax return to the state tax authority. This can often be done electronically through state tax portals, where businesses report their sales and the taxes collected. Proper filing is crucial to maintain compliance and avoid penalties​.
• Sales Tax Remittance: Remittance is the process of sending the collected sales tax funds to the tax authority. It involves ensuring that the payment is received by the state on or before the due date to avoid any penalties or interest charges​.

Who Pays Sales Tax in Connecticut?

In Connecticut, the consumer is ultimately responsible for paying sales tax on taxable goods and services. However, it is the responsibility of the business selling these goods or services to collect the tax at the point of sale and remit it to the Connecticut Department of Revenue Services. This applies to both in-state sellers and out-of-state sellers with a sales tax nexus in Connecticut. Sellers must ensure accurate collection, reporting, and remittance to stay compliant with state tax laws​.

When to Pay Sales Tax in Connecticut?

The timing for paying sales tax in Connecticut depends on the amount of sales tax collected by the business. Here’s how it generally works:

1. Monthly Filing: Most businesses that collect a significant amount of sales tax are required to file and pay monthly. The due date for monthly filers is the 20th of the month following the reporting period. For instance, sales tax for sales made in January is due by February 20th.
2. Quarterly Filing: Businesses with lower sales volumes might qualify to file quarterly. The due dates for quarterly returns typically align with calendar quarters ending in March, June, September, and December. Returns and payments for a given quarter are due a month later, such as the April 20th deadline for the first quarter.
3. Annual Filing: Some small businesses with minimal sales tax collections may be allowed to file annually. The annual return is usually due by January 31st of the following year​.

It’s essential to adhere to these deadlines to avoid penalties and interest charges. Setting up reminders and ensuring timely filings and payments can help maintain compliance and avoid any legal issues with the Connecticut Department of Revenue Services.

Where Do I Pay Connecticut Sales Tax?

You pay Connecticut sales tax through the myconneCT portal, the online system provided by the Connecticut Department of Revenue Services (DRS). This portal allows you to file returns, make payments, and manage your tax accounts. For businesses, it’s crucial to register on myconneCT to handle all sales tax-related activities efficiently​.

How to Pay Sales Tax in Connecticut?

You can pay sales tax in Connecticut through the myconneCT portal using the following methods:

1. Electronic Funds Transfer (EFT): Transfer funds directly from your bank account.
2. Credit/Debit Card: Pay using a credit or debit card (note that a convenience fee may apply).
3. ACH Debit: Authorize the state to withdraw the tax amount from your bank account on the due date.

These methods provide flexibility and convenience, ensuring your sales tax payments are processed efficiently.

How to File Sales and Use Tax in Connecticut

Sales Tax is a tax imposed on the sale of tangible personal property and certain services within Connecticut. Use Tax is a tax on goods or services purchased out of state for use in Connecticut, where sales tax was not paid.

To file sales and use tax in Connecticut:

1. Register and Log In: Access the myconneCT portal and log in with your credentials.
2. Complete Form OS-114: Report total sales, taxable sales, and deductions. Follow the portal’s instructions for accuracy.
3. Submit and Pay: File the return through the portal and pay the tax owed using EFT, credit/debit card, or ACH debit. Ensure the payment date is on or before the due date.

Maintain records of all filings and payments for compliance and future reference​.

What is the Deadline to Pay Sales Taxes in Connecticut?

The deadline to pay sales taxes in Connecticut varies based on the frequency assigned to your business:

1. Monthly Filers: Payments are due on the 20th of the month following the reporting period. For example, sales tax for January is due by February 20th.
2. Quarterly Filers: Payments are due on the last day of the month following the quarter’s end. For instance, taxes for Q1 (January-March) are due by April 30th.
3. Annual Filers: Payments are due by January 31st of the following year.

It’s essential to adhere to these sales tax due dates to avoid penalties and interest charges. Timely filing and payment ensure compliance with Connecticut’s sales tax regulations​​.

Do Nonprofits Pay Sales Tax on Purchases in Connecticut?

Nonprofit organizations in Connecticut may qualify for sales tax exemptions on certain purchases if they have a federal tax-exempt status under Section 501(c)(3) or (13) and are registered with the Connecticut Department of Revenue Services. To claim this exemption, nonprofits must provide retailers with a completed CERT-119 form and a copy of their IRS Determination Letter.

Do Wholesalers Pay Sales Tax in Connecticut?

In Connecticut, wholesalers generally do not pay sales tax on goods purchased for resale. Instead, they must provide a resale certificate to the supplier, which exempts them from paying sales tax at the time of purchase. 

This certificate, known as a Sales Tax Resale Certificate (Form CERT-119), must be filled out and given to the supplier to validate the tax-exempt status. However, wholesalers must ensure they collect sales tax from customers when the goods are resold unless the customer also provides a valid resale certificate​​.

Do You Pay Sales Tax on a Leased Car in Connecticut?

Yes, you pay sales tax on a leased car in Connecticut. The state charges sales tax on the monthly lease payments rather than the total value of the car at the beginning of the lease. The sales tax rate applied to these payments is 6.35%. 

Additionally, if the vehicle’s sales price exceeds $50,000, a higher tax rate of 7.75% may apply. The sales tax is calculated and collected at the time of each monthly lease payment​​.

Do You Pay Sales Tax When You Buy a House in Connecticut?

No, you do not pay sales tax when you buy a house in Connecticut. Real estate transactions are generally exempt from sales tax. 

However, there are other costs associated with purchasing a home, such as property taxes, recording fees, and conveyance taxes, which are different from sales tax. These additional costs are typically paid at the time of closing and vary based on the property’s value and location​​.

Section 8: Understanding Connecticut Sales Tax Holidays and Refunds

This section provides information on Connecticut’s sales tax refunds and annual sales tax holiday. We cover who is eligible for sales tax refunds, including foreigners, and outline the refund process. Additionally, we explain the purpose of the sales tax holiday and detail the types of items typically exempt from tax during this event.

Does Connecticut Do Sales Tax Refunds?

Yes, Connecticut offers sales tax refunds under specific circumstances. A sales tax refund in Connecticut refers to the return of sales tax paid on purchases if the purchaser qualifies for an exemption or if the tax was collected in error. Common instances where refunds might apply include overpayment, incorrect tax application, or exempt purchases. 

To claim a refund, you must submit the CERT-106 form to the Connecticut Department of Revenue Services (DRS) detailing the reason for the refund and providing supporting documentation​.

Does Connecticut Refund Sales Tax to Foreigners?

Connecticut does not typically refund sales tax to foreign visitors. Unlike some states, Connecticut does not have a provision for sales tax refunds to tourists or foreign nationals. 

Purchases made within the state by foreign visitors are subject to the same sales tax rules as those made by residents. Therefore, foreigners should expect to pay sales tax on all taxable goods and services bought in Connecticut​​.

Is It Illegal Not to Refund Sales Tax in Connecticut?

Not refunding sales tax in situations where it is warranted (such as overpayments or tax collected in error) can be considered improper. Businesses are required to comply with Connecticut tax laws, which include issuing refunds where appropriate. 

If a business fails to provide a refund when mandated, it could face penalties or sanctions from the Connecticut DRS. Ensuring compliance with these regulations is crucial to avoid legal issues​.

How to Claim Sales Tax Refund in Connecticut

To claim a sales tax refund in Connecticut, follow these steps:

1. Determine Eligibility: Ensure that the overpayment or incorrect tax collection qualifies for a refund.
2. Complete the Appropriate Form: Use Form CERT-106 (Claim for Refund of Use Tax Paid on Motor Vehicle Purchased from Other than a Motor Vehicle Dealer) or the applicable refund claim form based on the type of transaction.
3. Provide Supporting Documentation: Include receipts, invoices, and proof of the tax paid.
4. Submit the Form: Mail the completed form and supporting documents to the Connecticut Department of Revenue Services (DRS) at the address provided on the form.

Refunds are processed after verification, and any discrepancies or missing information can delay the refund​​.

Does Connecticut Give Sales Tax Holiday?

Yes, Connecticut recognizes a Sales Tax-Free Week. This event usually takes place in August, starting on the third Sunday and continuing through the following Saturday. During this week, most clothing and footwear items priced under $100 are exempt from sales tax. 

The tax-free week aims to provide financial relief to consumers, especially in preparation for the new school year. However, certain items like sports equipment and specialty clothing remain taxable even during the holiday​.

Section 9: Understanding Connecticut Sales Tax Audits and Penalties

This section explores the potential consequences of delaying sales tax payments and the risks associated with sales tax audits. We discussed penalties for late payments, factors that trigger audits, and options for potential relief. By understanding these risks, you can take steps to ensure your business remains compliant and protected.

What is the Penalty for Paying Sales Tax Late in Connecticut?

In Connecticut, if you pay your sales tax late, the penalty is 15% of the tax due or $50, whichever is greater. Additionally, interest accrues at a rate of 1% per month or part of a month that the payment is late. 

For example, if your tax bill is $10,000, a late payment would incur a penalty of $1,500, and interest would be added each month until the balance is paid. There is also a penalty for failing to pay electronically, which is 10% of the amount due, capped at $2,500 for the first offense and higher for subsequent offenses​.

Does Connecticut Do Sales Tax Audits?

Yes, Connecticut conducts sales tax audits. The Department of Revenue Services (DRS) initiates audits to ensure compliance with sales tax laws. During an audit, the auditor will review sales records, financial statements, invoices, and bank statements to verify that the correct amount of sales tax has been collected and remitted. 

If discrepancies are found, the business can contest the findings with the auditor, and if unresolved, file an appeal with the DRS Appellate Division. Further appeals can be made to the Connecticut Superior Court​.

What Triggers a Sales Tax Audit in Connecticut?

Several factors can trigger a sales tax audit in Connecticut, including:

• Inconsistencies or significant changes in reported sales.
• Frequent late payments or filing errors.
• Discrepancies found in tax returns compared to industry standards.
• Complaints or tips from customers or competitors.
• High volume of exempt sales or significant out-of-state sales.

Businesses with these red flags should ensure meticulous record-keeping and compliance to avoid issues during an audit​​.

What is the Penalty for an Audit After the Due Date in Connecticut?

If an audit reveals unpaid sales tax after the due date, the Connecticut Department of Revenue Services (DRS) imposes penalties and interest on the unpaid amount. The general penalty for late payment or underpayment is 10% of the tax due or $50, whichever is greater. 

Additionally, interest accrues at a rate of 1% per month or part of a month from the original due date until the tax is fully paid. If you fail to remit payments electronically when required, additional penalties apply: 10% for the first offense (capped at $2,500), increasing for subsequent offenses​​.

What is Connecticut Sales Tax Penalty Waiver?

Connecticut offers a penalty waiver under specific circumstances where taxpayers can demonstrate reasonable cause for the failure to file or pay on time. To request a waiver, you must file Form DRS-PW, which requires detailed explanations and supporting documentation showing why the delay occurred and why it was beyond your control. 

Circumstances like natural disasters, severe illness, or other significant hardships can qualify for a waiver. However, interest on unpaid taxes is generally not waivable and will continue to accrue until the full amount is paid​​.

Section 10: Connecticut Sales Tax Software – AtomicTax

Managing sales tax can be complex, but AtomicTax offers a seamless solution designed to simplify the process for e-commerce businesses. Here’s how AtomicTax sales tax software can benefit you:

• Automated Tax Calculation: AtomicTax automatically calculates the correct sales tax for every transaction, ensuring accuracy and compliance across all your sales channels.
• Real-Time Updates: Stay compliant with the latest tax rates and regulations, as AtomicTax continuously updates to reflect changes in tax laws.
• Comprehensive Reporting: Generate detailed reports that provide a clear overview of your sales tax liabilities, helping you prepare for filing and audits.
• Easy Integration: AtomicTax integrates effortlessly with your existing e-commerce platforms, reducing manual input and saving time.
• User-Friendly Dashboard: The intuitive interface allows you to manage and monitor your sales tax obligations with ease.

By using AtomicTax, you can reduce errors, save time, and ensure compliance with Connecticut sales tax regulations. Simplify your sales tax management today by exploring AtomicTax’s eCommerce Sales Tax Software.

Wrap Up!

With this guide, you’re now equipped to outshine the competition by mastering Connecticut’s sales tax requirements. By understanding nexus, exemptions, and the filing process, you can ensure your business stays compliant and avoids penalties. But beyond compliance, use this knowledge to streamline your operations and enhance efficiency.

Implement these practices to not only protect your business but also to gain a competitive edge. Accurate tax management builds trust with customers and partners, showcasing your professionalism and reliability. Stay proactive, stay informed, and let your expertise of sales tax be a cornerstone of your business’s success.