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This Ruling has been obsoleted in part by PS 93(3)

Ruling 90-58

Employee Leasing


Whether employee leasing services are subject to sales and use tax and, if so, what portion of the bill to the customer is taxable?


Taxpayer's business is not the traditional employment agency or other agency providing personnel services. Rather, it is part of the employee staff leasing industry and is engaged in the business of long-term leasing of truck drivers on open-end assignment to its customers. These individuals operate motor vehicles (tractor-trailer) owned or leased by the customers. Taxpayer anticipates expanding its business to include staff leasing programs covering a customer's total employee group.

Under its agreement with the customer, the Taxpayer is responsible for the payment of all wages to the drivers, some of whom are provided by the customer and other are furnished by Taxpayer, along with any taxes and assessments required under unemployment compensation, disability, old age pension, social security or any similar laws.


Taxpayer is performing employee leasing services which are subject to sales and use tax as a personnel service pursuant to Section 12-407(2)(i)(C) of the General Statutes and Section 12-426-27(b)(3) of the Regulations of Connecticut State Agencies. Therefore, the total gross receipts, including all reimbursable employee expenses, received by taxpayer in the performance of its employee leasing services are subject to sales and use tax.

Section 12-412(36) provides for an exemption for motor vehicle driving services performed out of state so that the proportionate percentage of gross receipts based on the miles driven outside of Connecticut to the total miles driven are not subject to tax.


August 7, 1990