Q & A on the Connecticut Individual Use Tax
This Informational Publication has been superseded by IP 96(10.2)
PURPOSE: This Informational Publication discusses the Connecticut use tax and answers commonly-asked questions about the tax. Understanding the use tax provisions is important because failure to comply can result in payment of interest and penalties. You must pay the Connecticut use tax on taxable goods and services when a Connecticut merchant fails to collect Connecticut sales tax from you or when you purchase taxable goods or services for use in Connecticut from an out-of-state merchant that is not registered to collect Connecticut sales tax.
What is the use tax?
When you make a retail purchase in this state, you will usually pay sales tax to the seller who in turn pays the tax to the Department of Revenue Services (DRS). There are some instances where Connecticut sales tax is not paid to the retailer. In these situations, the use tax must be paid by the purchaser directly to DRS. This tax has been in effect since 1947.
On what kinds of goods or services must I pay use tax?
Personal property, whether purchased or leased, including but not limited to, items of clothing costing $50 or more, automobiles, appliances, furniture, VCRs, jewelry, cameras, computers and computer software. Services include, but are not limited to, repair services to your television, motor vehicle or computer; landscaping services for your home; reupholstering services for your household furniture; or charges for access to on-line computer services, including charges to access the Internet.
Are there exemptions from the use tax?
Generally, all goods or services that are exempt from sales tax if purchased in Connecticut are exempt from the use tax if purchased out-of-state for use in Connecticut. Some examples are items of clothing costing less than $50, or newspapers and magazines by subscription.
What is the use tax rate?
In general, the sales or use tax rate applicable to sales of taxable goods or services is 6%. However, effective July 1, 1997, computer and data processing services are taxed at 5% and repair and maintenance services to vessels are taxed at 4%.
What if a Connecticut retailer doesn't collect tax from a customer on a sale of taxable goods or services?
What if a customer buys taxable goods or services from an out-of-state mail order company, television shopping channel, or computerized shopping service and no Connecticut tax was charged by the vendor?
If the goods or services were purchased for use in Connecticut, the customer must report the use tax liability on Forms CT-1040EZ, CT-1040, CT-1040NR/PY or OP-186 for purchases made during the prior calendar year.
What if a customer buys taxable goods or services in another state and sales tax of the other state was charged by the vendor?
If the goods or services were purchased for use in Connecticut and if the tax paid to the other state is less than the Connecticut tax, then the customer must report and pay the use tax. The tax due would be the Connecticut tax less the tax paid to the other state.
EXAMPLE: You purchased a $1,000 refrigerator in another state, and paid a $50 tax to that state. If that refrigerator was purchased for use in Connecticut, a Connecticut use tax is owed. The Connecticut tax of $60 is reduced to $10, after allowance of $50 credit. If no tax was paid to the other state, however, the Connecticut use tax is $60.
Am I being misled by an out-of-state merchant who tells me that I do not need to pay Connecticut use tax?
Yes. While you may or may not have to pay tax in another state where you bought the goods or services, you must pay Connecticut use tax on taxable goods or services purchased for use in Connecticut.
Do I owe Connecticut use tax on all my out-of-state purchases of taxable goods and services?
No. Items that you purchased at one time for $25 or less and that you brought into Connecticut are not subject to Connecticut use tax. The $25 exemption does not apply, however, to items that are shipped or mailed to you.
Can an out-of-state business, for example, a mail-order house, collect Connecticut use tax on taxable goods which are mailed or delivered into Connecticut?
Yes, if the business has registered to collect Connecticut use tax it may collect the tax from you. If the business is not registered, then you must report and pay the tax yourself.
When must individuals pay the use tax?
An individual must report the individual use tax on an individual income tax return Forms CT-1040EZ, CT-1040 or CT-1040NR/PY, filed by April 15 for purchases made during the preceding calendar year, where the purchases are not made in connection with a trade or business carried on by the individual. If the taxpayer is not required to file a Connecticut income tax return, the use tax must be reported on Form OP-186, Connecticut Individual Use Tax Return. A person may file one return for the entire year or may file several returns throughout the year.
Does a person engaged in a trade or business have an obligation to pay use tax on purchases made in connection with their trade or business?
Yes, if the person makes taxable purchases of goods or services out-of-state for use in a trade or business (e.g. office furniture, computers, and supplies), that person should be registered with DRS for business use tax purposes and report purchases on the monthly or quarterly Form OS-114, Sales and Use Tax Return. For further information, you may request IP 93(3.1), Questions and Answers on the Connecticut Use Tax for Businesses and Professions.
What are the penalties and interest for not paying the use tax?
The penalty is 10% of the tax due. Interest is charged at the rate of 1% per month from the due date of the tax return. There are also criminal sanctions for willful failure to file a tax return.
What are the use tax filing requirements for airplanes, vessels and motor vehicles?
Generally, if the item is not purchased from a retailer, the Connecticut Department of Motor Vehicles will collect the use tax when an individual registers a motor vehicle or vessel. The Connecticut Department of Transportation will collect the use tax when an individual registers an aircraft. If you do not intend to register your motor vehicle, vessel or aircraft immediately after you purchase it, you must report the use tax liability on Forms CT-1040EZ, CT-1040, CT-1040NR/PY or OP-186 for purchases made during the prior calendar year, where the purchase is not made in connection with a trade or business carried on by the individual.
On what amount should the use tax be calculated?
The tax rate should be applied to the total cost of the taxable goods or services purchased, including separately stated charges (i.e., shipping and handling).
EFFECT OF THIS DOCUMENT: An Informational Publication is a document that addresses frequently-asked questions about a current Department position, policy or practice, usually in a less technical, question-and-answer format.
EFFECT ON OTHER DOCUMENTS: IP 96(10) is superseded and may not be relied upon after the issue date of this police statement.
FOR FURTHER INFORMATION: If you have questions about Connecticut taxes, please call the Department of Revenue Services during business hours, Monday through Friday:
- 860-297-5962 (Hartford calling area or from out-of- state); or
- 1-800-382-9463 (toll-free from within Connecticut)
Telecommunications Device for the Deaf (TDD/TT) users only call 860-297-4911 during business hours.
FORMS AND PUBLICATIONS:
You may obtain forms and publications at any hour, seven days a week:
- Telephone: use the phone numbers listed above and select Option 3 from a touch-tone phone;
- Internet: preview and download forms from the DRS Website: http://www.ct.gov/drs.
Individual Use Tax
Issued: draft 1/22/98