PS 92(2.1)

Sales and Use Taxes on Charges for Personnel Training Services

This publication has been clarified by Ruling 94-12 and superseded by PS 2000(4) and cited in Rulings 94-17 and 97-1

PURPOSE: This Policy Statement sets forth the Department's position on the taxability of personnel training services which are subject to sales and use taxes as business management consulting services pursuant to Conn. Gen. Stat. Section 12-407(2)(i)(J) and further defined in Conn. Agencies Regs. Section 12-407(2)(i)(J)-1(f) and (i)(1) as human resource management activities involving the job-related training of personnel.

EFFECTIVE DATE: Applicable to sales of personnel training services on or after April 1, 1992.

DEFINITIONS: As used in this Policy Statement, the following terms mean:

The term "personnel training services" is referred to as "training"; such training is provided primarily in the form of classes, seminars, sessions or conferences.

The term "employer" means a self-employed person, a single employer, or a group of employers.

The term "service provider" means any retailer, as defined in Conn. Gen. Stat. Section 12-407(12), providing training to personnel.

The term "personnel" means those persons employed or self-employed in a business, occupation, trade or profession.

The term "job-related training," as used in Conn. Agencies Regs. Section 12-407(2)(i)(J)-1, means training which is directly related to teaching, maintaining, upgrading or improving the specific skills required in the employee's day to day job performance.

An employer "engages" the services of a service provider when the employer hires the service provider to train its personnel and pays the service provider directly or indirectly to provide training.

WHAT SERVICES ARE TAXABLE: Personnel training services are subject to tax when a service provider is engaged and paid by an employer to provide job-related training to personnel whose primary work place is located in Connecticut.

WHAT SERVICES ARE NOT TAXABLE: Taxable training does not include training indirectly related to an employee's job skills. Such topics include, but are not limited to, motivation, self-image, time-management, public speaking, and interpersonal skills. Taxable training does not include training involving topics unrelated to the skills required of employees in the day to day performance of their jobs. Such topics include, but are not limited to, defensive driving skills, alcohol and drug awareness, eldercare, physical fitness and wellness. However, if these topics should fall within the scope of the employee's job activity, such training is job-related and, therefore, subject to tax.

Taxable training does not include courses open to the general public which are offered by accredited colleges, universities and graduate centers, except when such entities are directly engaged and paid by an employer to provide job-related training for its employees.

General education seminars, such as refresher courses, courses on current developments in a particular field and courses for continuing education credits are not subject to tax.

When taxable training services are rendered outside of Connecticut and the employees' primary work place is in Connecticut, the Connecticut employer is subject to use tax if the out-of-state service provider fails to charge sales tax.

Whenever any course materials and meals are provided in conjunction with training at no additional charge, the service provider is considered to be the consumer of such materials and meals and is subject to tax. Sales tax is also due on any additional charges for such materials and meals.

Connecticut employers who reimburse their employees for taxable training are deemed to have "engaged" the services of a service provider and must self-assess a use tax on the amount of such reimbursement.

EXAMPLES:

Example A: A banking association is engaged and paid on a fee per participant basis by its member banks to conduct classes on teller training for employees of its member banks. Such training is taxable job-related training because it is directly related to the employee's job skills and because the service provider was engaged and paid by the employer.

Example B: The Connecticut Society of Certified Public Accountants (CSCPA) provides a general seminar on continuing developments in Connecticut tax law. Accounting firms and self-employed accountants pay the CSCPA a fee for attending, and the accountants in attendance receive continuing education credits. Such training is in the nature of general education and not subject to tax.

Example C: A service provider provides job-related training on the use and application of computer software and advertises this course to employers and to the general public through direct mail and other media. Employers who send their personnel to such training sessions are deemed to have "engaged" the services of the service provider. The training is taxable because it is job-related and is paid for directly or indirectly by the employer.

Example D: A service provider runs sessions on motivation for an employer who pays the service provider. Such training is not taxable because it indirectly relates to the employee's job skills.

Example E: A service provider has designed a seminar relating to the care of the elderly and is engaged and paid by the service recipient:

• If the service provider presents the seminar to employees of an insurance company whose jobs do not relate to caring for the elderly, the training is not taxable because it is unrelated to the job skills of the employees.
• If the service provider presents the seminar to employees of a long-term health care facility whose jobs involve caring for the elderly, the training is taxable because service provider is providing job-related training to the employees which is paid for by the employer.

EFFECT ON OTHER DOCUMENTS: Ruling Nos. 89-42, 89-61, 89-70, 89-141 and subsection (e) of Bulletin 3 are superseded and may no longer be relied upon after the issue date of this policy statement. 

PS 92(2.1)
Sales and use tax
Issued: 3/30/94