This Policy Statement has been modified and superseded by PS 2001(8)
Taxation of Internet Access Provided by
Community Antenna Television Companies
PURPOSE: The purpose of this Policy Statement is to explain the Department Revenue Services (DRS) policies on the application of community antenna gross earnings tax and sales and use taxes to Internet access provided by community antenna television companies.
EFFECTIVE DATE: Effective upon issuance and applicable to all open tax periods.
STATUTORY AUTHORITY: Conn. Gen. Stat. §12-256; §12-407(2)(i)(A); §12-407(2)(l); §12-408(1)(E) and §12-411(1), as amended by 1997 Conn. Pub. Acts 243, §19.
INTERNET ACCESS NOT SUBJECT TO CATV GROSS EARNINGS TAX: Conn. Gen. Stat. §12-256 imposes a 5% annual tax on the gross earnings of each community antenna television (CATV) system, on earnings from its "lines, facilities, apparatus and auxiliary equipment in this state. . . ." A CATV system is a company that provides cable television service within a franchise area under the authority of the Connecticut Department of Public Utility Control.
Some CATV companies in Connecticut provide Internet access to subscribers by means of cable television lines. Gross earnings of CATV companies from Internet access services are not subject to the 5% CATV gross earnings tax.
INTERNET ACCESS CHARGES SUBJECT TO SALES AND USE TAXES AS COMPUTER AND DATA PROCESSING SERVICES: Access to any type of computerized information, including access to any portion of the Internet, is a computer and data processing service, enumerated in Conn. Gen. Stat. §12-407(2)(i)(A). See Policy Statement 98(2), Sales and Use Taxes on Access to the Internet and Other On-Line Sales of Goods and Services.
Charges by CATV companies for Internet access, including installation and other related services, are charges for computer and data processing services.
Beginning July 1, 1997, the sales and use tax rate for computer and data processing services is being reduced by one percent per year, as follows:
|Sales of services occurring:|
|on or after||through||rate|
|July 1, 1997||June 30, 1998||5%|
|July 1, 1998||June 30, 1999||4%|
|July 1, 1999||June 30, 2000||3%|
|July 1, 2000||June 30, 2001||2%|
|July 1, 2001||June 30, 2002||1%|
|July 1, 2002||0%|
INTERNET ACCESS CHARGES MUST BE SEPARATELY STATED FROM CHARGES FOR CATV SERVICES: A CATV company that provides Internet access should charge sales and use taxes for such services at the reduced rate for computer and data processing services, if the company bills separately for Internet access, or separately states such charges from charges for CATV services on its bills to its customers.
Separately-stated charges for installation and other computer services that relate solely to Internet access are also taxable at the reduced rate for computer and data processing services. Charges that relate to CATV services or to both Internet access and CATV services are subject to tax at the full 6% rate.
If a CATV company does not separately state charges for Internet access from charges for CATV services on its bills to its customers, all charges are presumed to be charges for CATV services enumerated in Conn. Gen. Stat. §12-407(2)(l), and are subject to sales and use taxes at the full 6% rate.
CHARGES FOR TANGIBLE PERSONAL PROPERTY: Any separately-stated charges to customers for the sale or rental of tangible personal property (such as computer hardware, equipment or prewritten software) in connection with Internet access provided by a CATV company are subject to sales and use taxes at the full 6% rate.
If a CATV company purchases tangible personal property and separately states charges to its customers for the sale or rental of such property, it may purchase the property on resale. However, if a CATV company provides tangible personal property to its customers in connection with services and does not make a separate charge for the property, the CATV company is the consumer of the property and must pay sales or use tax when it purchases the property.
EFFECT ON OTHER DOCUMENTS: This Policy Statement amplifies Policy Statement 98(2), Sales and Use Taxes on Access to the Internet and Other On-Line Sales of Goods and Services.
EFFECT OF THIS DOCUMENT: A Policy Statement is a document that explains in depth a current Department policy or practice affecting the liability of taxpayers. Unlike a Ruling, a Policy Statement does not apply a policy or practice to a specific set of facts but it may be referred to for general guidance by taxpayers. Unlike a Special Notice, it does not announce a new policy or practice in response to changes in state or federal laws or regulations or to judicial decisions.
FOR FURTHER INFORMATION: Please call the Department of Revenue Services during business hours, Monday through Friday:
- 1-800-382-9463 (toll-free from within Connecticut); or
- 860-297-5962 (anywhere).
- TDD/TT (Telecommunications Device for the Deaf) users only call 860-297-4911 during business hours.
FORMS AND PUBLICATIONS: Forms and publications are available all day, seven days a week:
- Internet: preview and download forms and publications from the DRS Web site: http://www.ct.gov/drs; or
- Telephone: use the phone numbers listed above and select Option 2 from a touch-tone phone.
CATV gross earnings tax
Sales and use taxes