Upcoming CT DRS webinar: Select to register for the upcoming Withholding Forms W-2 and 1099 Annual Filing Webinar on Wednesday, January 15, 2025, at 10:00 a.m.

Ruling 94-7, Sales and Use Taxes / Credit Information and Reporting Services / Private Investigation Services

This Ruling is cited in Ruling 94-10

FACTS:

A company (hereinafter "the Company") is a business offering asset location information. The Company conducts telephone and computer data base searches for the purpose of locating attachable assets owned by certain judgment debtors (individuals or corporations) for judgment creditors. The company furnishes a written report to the judgment creditor describing the attachable assets that it finds. The Company does not attach assets or attempt to collect judgment debts on behalf of judgment creditors. The Company offers no evaluation or rating of any individual or entity to any client.


ISSUES:

Whether the service of locating judgment debtors' attachable assets for clients who have judgments against such persons is subject to sales and use taxes as a credit information and reporting service under Conn. Gen. Stat. §12-407(2)(i)(B); or

Whether the service of locating judgment debtors' attachable assets for clients who have judgments against such persons is subject to sales and use taxes as a private investigation service under Conn. Gen. Stat. §12-407(2)(i)(D).


DISCUSSION:

Conn. Gen. Stat. §12-407(2)(i)(B) makes credit information and reporting services taxable for sales and use tax purposes. Conn. Agencies Regs. §12-426-27(b)(2) defines such services in the following manner:

Such services include but are not limited to the assembling and evaluating of information regarding the credit standing, creditworthiness, or credit capacity of any individual, corporation, partnership or other type of entity, for the purpose of furnishing and disseminating written or oral credit reports.

The services provided by the Company do not fall within the Conn. Agencies Regs. §12-426-27(b)(2) definition of "credit information and reporting services" since the Company does not assemble or evaluate information relating to creditworthiness.

At the time the Company provides its services, credit standing or creditworthiness are no longer at issue. The Company merely assists judgment creditors in locating assets with which to satisfy judgments.

Conn. Gen. Stat. §12-407(2)(i)(D) makes private investigation, protection, patrol work, watchman and armored car services taxable for sales and use tax purposes. Conn. Agencies Regs. §12-426-27(b)(5) defines these services to

mean and include providing personnel or canines to patrol or guard property; engaging in detective or investigative duties; safeguarding or maintaining a surveillance of an individual; maintaining and monitoring mechanical protective devices, such as burglar and fire alarm systems; providing armored cars for the transportation of valuables; wrapping coins; setting up a payroll; and the rendering of police services by an off-duty policeman.

Although Conn. Agencies Reg. §12-426-27(b)(5) was intended to define the scope of taxable services enumerated in Conn. Gen. Stat. §12-407(2)(i)(D), the General Assembly did not take the opportunity to further define what is meant by "private investigation services" nor does the regulation define what is meant by "engaging in detective or investigative duties."

When Conn. Gen. Stat. §12-407(2)(i)(D) was enacted in 1975, Conn. Gen. Stat. §§ 29-153 through 29-161, inclusive, already required persons who were engaged in the business of furnishing private detective or investigative services to be licensed by the Commissioner of Public Safety. Presumably, therefore, it is the services for which the General Assembly required a license under Conn. Gen. Stat. § § 29-153 through 29-161, inclusive, that the General Assembly intended to be taxable as "private investigation services" under Conn. Gen. Stat. § 12-407(2)(i)(D). Assuming that the Company is not providing the types of services for which a license is required under Conn. Gen. Stat. §§ 29-153 through 29-161, inclusive, the Company is not selling services that are described in Conn. Gen. Stat. §12-407(2)(i)(D).

Furthermore, as a matter of statutory construction, when an imposition statute such as Conn. Gen. Stat. §12-407 is involved, any ambiguity must be resolved by construing the statute against the taxing authority and in favor of the taxpayer. See, e.g., Plasticrete Corporation v. Commissioner, 216 Conn. 17, 25, 579 A. 2d 20 (1990).


RULING:

The Company's service of locating judgment debtors' attachable assets for clients who have judgments against such persons is not a credit reporting service under Conn. Gen. Stat. §12-407(2)(i)(B).

The Company's service of locating judgment debtors' attachable assets for clients who have judgments against such persons is not a taxable private investigation service under Conn. Gen. Stat. §12-407(2)(i)(D).


LEGAL DIVISION

March 7, 1994