Connecticut State Department of Revenue Services

PS 92(6)

Sales and Use Taxes on Business Analysis,
Management & Management Consulting Services
Rendered by a General Partner to a
Limited Partnership

PURPOSE: This Policy Statement describes the circumstances under which business analysis, management and management consulting services, as described in Conn. Gen. Stat. §12-407(2)(i)(J) that are rendered by a general partner to a limited partnership are subject to sales and use taxes.

EFFECTIVE DATE: Because this statement is intended to clarify (rather than to change) the Department's position on this issue, this statement is applicable to all periods.

STATUTORY REQUIREMENTS: The terms "sale" and "selling" defined in the Sales and Use Taxes Act include the rendering of business analysis, management and management consulting services. Conn. Gen. Stat. §12-407(2)(i)(J). For the privilege of making any sales in this state for a consideration, sales tax is imposed on the gross receipts of a retailer derived therefrom. Conn. Gen. Stat. §12-408(l). "Gross receipts" means the total amount received for services rendered. Conn. Gen. Stat. §12-407(9). "Retailer" is a person engaged in the business of making sales at retail. Conn. Gen. Stat. §12-407(12).

THE DEPARTMENT'S APPLICATION OF THOSE STATUTORY REQUIREMENTS: A general partner who renders business analysis, management or management consulting services to a limited partnership is rendering services subject to sales and use taken if all of the following conditions are met:

  • The services are business analysis, management or management consulting services, as defined in Conn. Gen. Stat. §12-407(2)(i)(J) and Conn. Agencies Regs. §12-407(2)(i)(J)-l.
  • The general partner is compensated for the rendition of such services other than through a distributive share of partnership profits, i.e., compensation is pursuant to 26 U.S.C. §707(a) or (c), and
  • The services of the general partner are offered to others, including any other partnership. Where the general partner offers these services only to one partnership, the services will be regarded as a casual sale of services by a person who is not engaged in the business of making sales of such services at retail.

However, the services of the general partner will be taxable if the general partner renders those services to any other person or entity, including other entities in which the general partner is a partner. In such case, the general partner is considered to be in the business of making retail sales of such services and the gross receipts from all such sales are subject to sales and use taxes.

EFFECT ON OTHER DOCUMENTS: None affected. 

PS 92(6)
Sales and Use Taxes
Issued 4/22/92