Taxation of Internet Access Provided by
Community Antenna Television Companies
Purpose: This Policy Statement explains Department of Revenue Services (DRS) policies on the application of community antenna gross earnings tax and sales and use taxes to Internet access services provided by community antenna television companies. It also reflects the acceleration of the phase-out of sales and use taxes on Internet access services in new legislation from 2000.
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)(C) and §12-411(1)(D).
Some CATV companies in Connecticut provide Internet access services 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 the Internet is a computer and data processing service, enumerated in Conn. Gen. Stat. §12-407(2)(i)(A). Charges by CATV companies for Internet access services, including installation and other related services, are charges for computer and data processing services.
The sales and use tax rate for Internet access services began a scheduled phase out on July 1, 1997. The rates are:
For sales of services occurring:
|On or After||Through||Rate|
|June 30, 1997||6%|
|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||0%|
Internet Access Charges Must Be Separately Stated From Charges for CATV Services: A CATV company that provides Internet access services should charge sales and use taxes for the 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 services 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.
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 without paying the sales tax. 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.
- 1-800-382-9463 (toll-free within Connecticut), or
- 860-297-5962 (from anywhere)
- Internet: Preview and download forms and publications from the DRS Web site: http://www.ct.gov/drs.
Telephone: Call 860-297-4753 (from anywhere), or 1-800-382-9463 (toll-free within Connecticut) and select Option 2 from a touch-tone phone.
CATV Gross Earnings Tax