SN 91(16)

Sales and Use Taxes on Transportation Services

This publication was superseded by SN 91(16.1)

PURPOSE: This Special Notice describes changes made by 1991 Conn. Pub. Acts 3 (June Spec. Sess.) imposing the sales and use taxes on certain transportation services.

EFFECTIVE DATE: Effective upon issuance and applicable to the provision of transportation services that are described below and that involve the transportation of passengers on or after October 1, 1991.

STATUTORY AUTHORITY: Conn. Gen. Stat. §§12-407(2)(m) and 12-407(28), as added by 1991 Conn. Pub. Acts 3, §§103 and 108 (June Spec. Sess.), and 1991 Conn. Pub. Acts 3, §110 (June Spec. Sess.).

TRANSPORTATION SERVICES TO BE TAXED: Effective October 1, 1991 the provision of transportation services involving the transportation of any person over any distance by a service provider who is authorized to do business in Connecticut by the Connecticut Department of Transportation below will be treated as sales subject to the Sales and Use Taxes Act when the transportation:

1. originates and terminates in Connecticut; or
2. originates in Connecticut and terminates outside Connecticut, when the service is charged to a customer or account located in Connecticut; or
3. originates outside Connecticut and terminates in Connecticut, when the service is charged to a customer or account located in Connecticut.

EXCLUDED TRANSPORTATION SERVICES: Transportation services provided by (A) any person along a regular, scheduled route, or (B) any taxicab, as  defined in Conn. Gen. Stat. §13b-95, will not be treated as sales subject to the Sales and Use Taxes Act.   (A regular, scheduled route  means, generally, services that provides regular set stops on a route, a regular schedule of service and per passenger fares varying by stops and/or zones.  Regular, scheduled route service is usually operated in motorbus type vehicles or specially designed or modified vans or multi-door vehicles.

TRANSPORTATION SERVICE PROVIDERS: All operators of motor vehicles (including motorbus-type equipment) in livery service, offering charter-type service between all points on an unscheduled, irregular route basis, as  licensed or authorized under Chapter 244b of the Connecticut General Statutes will be treated as transportation service providers, including:

• all Connecticut intrastate operators providing such service who are required to hold permits under Chapter 244b, and
• all Connecticut-domiciled  operators who are providing such service pursuant to interstate authority from the Interstate Commerce Commission and are required to register that authority with the Connecticut Department of Transportation.

EXCLUDED TRANSPORTATION SERVICE PROVIDERS:  Transportation services provided by persons who are interstate charter operators not domiciled in Connecticut will not be treated as sales subject to the Sales and Use Taxes Act. (For purposes of this Special Notice, "domicile" means the state where the operator's headquarters or main place of business is located, and where its vehicles are garaged and required to be registered.)

REGISTRATION: Anyone described in this Special Notice as a transportation service provider must register with the Department of Revenue Services for purposes of the Sales and Use Taxes Act by completing a Form REG-1, Application for Tax Registration Number.

THE PURCHASE OF TRANSPORTATION SERVICES FOR RESALE TO OTHERS: The provision of transportation services by a transportation service provider described in this Special Notice to any person other than another such service provider is a retail sale. A person described in this Special Notice as a transportation service provider may purchase transportation services on a resale basis and issue a resale certificate, where the transportation services will be resold to others. Other persons, such as travel agents, tour brokers, restaurants, funeral homes, etc. may not purchase transportation services on a resale basis; sales of such services to them are retail sales, and they are consumers of such services even where they pass through the cost of such services to their clients or customers. Vehicles used to provide transportation services may not be purchased on a resale basis by transportation service providers.

CHARGES MADE FOR TRANSPORTATION SERVICES: Charges by transportation service providers for incidental or additional items provided during or in connection with transportation services, such as beverages, food, cellular telephone calls, videos, tolls, fuel, waiting time and mandatory tips or gratuities, whether or not separately stated, are considered to be charges for transportation services and are subject to sales and use taxes. Charges for services or items not provided during or in connection with the actual transportation of passengers, such as restaurant meals, lodging and tickets to events, are not considered to be charges for transportation services when separately stated. Transportation service providers who provide "package" tours for a single price, including items or services that are both taxable and not taxable as transportation services, will have the burden of establishing that the charges for transportation services are reasonable and have not been understated for tax avoidance purposes.

EXEMPT SALES: The provision of transportation services to United States governmental agencies, Connecticut state agencies, Connecticut municipalities or charitable or religious organizations issued a Charitable and Religious Organizations Sales Tax Exemption Permit will be treated as sales exempt from the Sales and Use Taxes Act. Transportation service providers must obtain the appropriate exemption certificates from such entities at the time of sale.

SERVICES CONTRACTED FOR BEFORE OCTOBER 1, 1991:  The provision of transportation services on or after October 1, 1991 that were contracted for prior to that date will be treated as sales subject to the Sales and Use Taxes Act, irrespective of when such services were paid for.

SERVICES TO THE HANDICAPPED OR ELDERLY: The provision of transportation by municipalities or nonprofit entities to the handicapped, elderly or other persons are not treated as sales subject to the Sales and Use Taxes Act, as long as no charges are made for such services. 

SN 91(16)
Sales and Use Taxes
Issued: 10/91
TPS/0026d/1091