Ruling 90-16

Drop Shipments

I. Drop-Shipments

Section 12-407(3) of the Connecticut General Statutes states:

(3) "Retail sale" or "sale at retail" means and includes a sale for any purpose other than resale in the regular course of business of tangible personal property or a transfer for a consideration of the occupancy of any room or rooms in a hotel or lodging house for a period of thirty consecutive calendar days or less, or the rendering of any service described in any of the subdivisions of subsection (2) of this section. The delivery in this state of tangible personal property by an owner or former owner thereof or by a factor, if the delivery is to a consumer pursuant to a retail sale made by a retailer not engaged in business in the state, is a retail sale in this state by the person making the delivery. He shall include the retail selling price of the property in gross receipts.

Therefore, ABC Corporation is complying with the Connecticut Sales & Use Tax Statutes by either charging Connecticut sales tax to XYZ Corporation outside the State of Connecticut when the merchandise ABC Corporation is selling is being delivered to the XYZ Corporation customer located in Connecticut or, by ABC Corporation obtaining a copy of a bonafide Connecticut Resale Certificate from the XYZ Corporation issued by XYZ Corporations customer who is the third party receiving the merchandise in Connecticut.

ABC Corporation may also accept a valid Governmental Organization Exemption Certificate or Charitable Organization Exemption Certificate from XYZ Corporation issued by XYZ Corporations customer who is the third party receiving the merchandise in Connecticut.

LEGAL DIVISION

February 5, 1990