SN 94(2)
Commercial Motor Vehicle or Motor Bus Purchased Within Connecticut to be Used in Interstate Commerce as an Interstate Motor Bus
BACKGROUND: In 1993 Conn. Pub. Acts 74, Sections 31 and 64, the General Assembly enacted two exemptions from sales and use taxes. The first exemption covers sales and purchases of any commercial motor vehicle, as defined in Conn. Gen. Stat. Section 14-1(11)(A) and (B), operated pursuant to the provisions of Conn. Gen. Stat. Section 13b-88 or 13b-89, provided 75 percent of such vehicle's revenue from its days in service is derived from out-of-state trips or trips crossing state lines. The second exemption is for sales and purchases of any motor bus, as defined in Conn. Gen. Stat. Section 14-1(44), operated pursuant to the provisions of Conn. Gen. Stat. Section 13b-88 or 13b-89, provided 75 percent of such vehicle's revenue from its days in service is derived from out-of-state trips or trips crossing state lines.
The exemptions provided in 1993 Conn. Pub. Acts 74, Section 31 for motor buses and commercial motor vehicles operated pursuant to Conn. Gen. Stat. Sections 13b-88 and 13b-89 are unrelated to, and must be distinguished from, the exemption provided in Conn. Gen. Stat. Section 12-412(70), which applies to commercial trucks, truck tractors, tractors and semitrailers and vehicles used in combination therewith. (The latter exemption is discussed in Ruling No. 93-14.)
PURPOSE: This Special Notice describes the application of the new exemptions from sales and use taxes provided in 1993 Conn. Pub. Acts 74, Sections 31 and 64.
STATUTORY AUTHORITY: 1993 Conn. Pub. Acts 74, Section 31 and 64, amending Conn. Gen. Stat. Sections 12-410 and 12-412.
EFFECTIVE DATE: Effective for sales occurring on and after January 1, 1994.
DEFINITIONS AND STATUTORY PROVISIONS:
1) "Commercial motor vehicle" is defined in Conn. Gen. Stat. Section 14-1(11)(A) and (B) as:
a vehicle designed or used to transport passengers or property, except a vehicle used for farming purposes, fire fighting apparatus or other authorized emergency vehicles, or a recreational vehicle, which (A) has a gross vehicle weight rating of 26,001 pounds or more; [or] (B) is designed to transport 16 or more passengers, including the driver, or is designed to transport more than 10 passengers, including the driver, and is used to transport students under the age of 21 years to and from school.
2) "Motor bus" is defined in Conn. Gen. Stat. Section 14-1(44) as including:
any motor vehicle, except a taxicab, as defined in section 13b-95, operated in whole or in part on any street or highway in a manner affording a means of transportation by indiscriminately receiving or discharging passengers, or running on a regular route or over any portion of a regular route or between fixed termini.
3) Section 13b-88 of the General Statutes provides:
Each person, association or corporation owning or operating a motor bus over highways within this state between points outside of this state or between points within this state and points outside of this state shall be subject to the jurisdiction of the department of transportation and, while so operating, to such reasonable regulations as said department may prescribe with respect to routes and terminals in this state, speed of operation, safety of passengers, equipment, public safety and convenience on the highways and conservation of the highways.
4) Section 13b-89 of the General Statutes provides:
a) No person, association or corporation shall operate a motor bus over highways within this state between points outside this state or between points within this state and points outside this state and indiscriminately receive or discharge passengers without having obtained a permit from the department of transportation to be issued upon written application to said department specifying the route or routes within this state over which said motor bus may operate and the terminals within this state . . .
b) The department of transportation may amend or, for sufficient cause shown, may suspend or revoke any such permit.
c) A holder of such permit shall not operate a motor bus in the transportation of passengers for hire between points within this state without securing from (1) the department of transportation a certificate of public convenience and necessity in accordance with the provisions of sections 13b-80 to 13b-85, inclusive, or (2) the Interstate Commerce Commission a certificate pursuant to the Bus Regulatory Reform Act of 1982, P.L. 97-261.
d) Upon the granting of a permit, the holder thereof may apply for the registration of any motor bus of which he is the owner or lessee and which is to be used as specified in such permit, and the commissioner of motor vehicles shall have jurisdiction over the registration of any such motor bus and its exterior lighting equipment and over the licensing of its operator.
5) A "trip" begins when the first passenger boards the commercial motor vehicle or motor bus and ends when the last passenger has disembarked.
6) An "out-of-state trip" is (A) one that travels between points within this state and points outside this state. Thus, a trip that either begins within Connecticut and ends outside Connecticut, or begins outside Connecticut and ends within Connecticut, is an "out-of-state trip"; or (B) an intrastate trip that begins and ends in another state.
7) A "trip crossing state lines" is an interstate trip that travels between points outside this state. Thus, a trip that begins at a point outside Connecticut, travels into or through another state, and ends at a point outside Connecticut, is a "trip crossing state lines," whether or not the trip route runs through Connecticut.
ELIGIBILITY FOR EXEMPTION: In order to claim exemption under 1993 Conn. Pub. Acts 74, Sections 31 and 64, an owner or lessee of a commercial motor vehicle, as defined in Conn. Gen. Stat. Section 14-1(11)(A) and (B), or a motor bus, as defined in Conn. Gen. Stat. Section 14-1(44), must furnish a completed CERT-114 to the seller of such commercial motor vehicle or motor bus. Such certificate will certify (i) that the vehicle is either a commercial motor vehicle as defined in Conn. Gen. Stat. Section 14-1(11)(A) and (B) or a motor bus as defined in Conn. Gen. Stat. Section 14-1(44), (ii) that the purchaser intends to operate the commercial motor vehicle or motor bus pursuant to the provisions of Conn. Gen. Stat. Section 13b-88 or 13b-89, and (iii) that at least 75 percent of the revenue from the days in service of the commercial motor vehicle or motor bus will be derived from out-of-state trips or trips crossing state lines (the "75 percent test"). The Department will base its determination of whether a commercial motor vehicle or motor bus meets the 75 percent test on a review of the revenues earned by the commercial motor vehicle or motor bus during each year, commencing on the date such commercial motor vehicle or motor bus was purchased and each anniversary of that date thereafter. Thus, if at least 75 percent of the revenues earned during each year from operating a commercial motor vehicle or motor bus was derived from out-of-state trips or trips crossing state lines (as defined herein), the commercial motor vehicle or motor bus qualifies for the exemption.
If the commercial motor vehicle or motor bus is not operated pursuant to the provisions of Conn. Gen. Stat. Section 13b-88 or 13b-89, or if at least 75 percent of the revenue from its days in service (as determined above) during the preceding year was not derived from out-of-state trips or trips crossing state lines, the purchaser of such commercial motor vehicle or motor bus must report on its business use tax return for the period in which the anniversary date occurs and pay the use tax on its purchase price. The purchaser of a commercial motor vehicle or motor bus must maintain adequate records to substantiate the eligibility of such commercial motor vehicle or motor bus for this exemption.
EFFECT ON OTHER DOCUMENTS: None
EFFECT OF THIS DOCUMENT: A Special Notice is a document that announces a new policy or practice in response to changes in state or federal laws or regulations or to judicial decisions. A Special Notice indicates the Department's informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or tax practitioners.
SN 94(2)
Sales and use taxes
Issued: 2/25/94