SN 99(10)

1999 Legislative Changes Affecting Hospitals

PURPOSE: This Special Notice summarizes 1999 legislation affecting the sales and use taxes imposed on patient care services provided by hospitals, and the gross earnings tax imposed on hospitals.

EFFECTIVE DATE: The effective dates of legislative changes are noted below.

STATUTORY AUTHORITY: Conn. Gen. Stat. §§12-407(28), 12-408(1) and 12-411(1), as amended by 1999 Conn. Pub. Acts 173, §§12, 13 and 15, respectively, and Conn. Gen. Stat. §§12-263a(1) and 12-263b, as amended by 1999 Conn. Pub. Acts 173, §§31 and 32.

SALES AND USE TAXES

Effective July 1, 1999

Sales of patient care services by short-term acute care hospitals operated by the State of Connecticut exempt from sales and use taxes: On or after July 1, 1999, sales of patient care services by any short-term acute care hospital operated exclusively by the State of Connecticut are exempt from sales and use taxes. However, sales of patient care services by any short-term acute care hospital operated by the State of Connecticut as a receiver pursuant to chapter 920 of the Connecticut General Statutes are not exempt.

(1999 Conn. Pub. Acts 173, §12)

Tax rate reduced to 5.75%: The rate of the sales and use taxes imposed on the sales of patient care services by hospitals is reduced from 6% to 5.75%. On or after July 1, 1999, sales of patient care services by hospitals are subject to sales and use taxes at the rate of 5.75%.

(1999 Conn. Pub. Acts 173, §§13 and 15)

HOSPITAL GROSS EARNINGS TAX

Effective July 1, 1999

Short-term acute care hospitals operated by the State of Connecticut exempt from gross earnings tax imposed on hospitals: On or after July 1, 1999, any short-term acute care hospital operated exclusively by the State of Connecticut is exempt from the gross earnings tax imposed on hospitals. However, any short-term acute care hospital operated by the State of Connecticut as a receiver pursuant to chapter 920 of the Connecticut General Statutes is not exempt.

(1999 Conn. Pub. Acts 173, §31)

Effective October 1, 1999

Tax rate reduced to 4.5%: The rate of the gross earnings tax imposed on hospitals is reduced from 7.25% to 4.5% for each taxable quarter commencing on or after October 1, 1999. Under prior law, the rate of the gross earnings tax imposed on hospitals was scheduled to be reduced from 7.25% to 6.25% for each taxable quarter commencing on or after October 1, 1999. (1999 Conn. Pub. Acts 173, §32)

EFFECT ON OTHER DOCUMENTS: None affected.

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.

FOR FURTHER INFORMATION: Please call the Department of Revenue Services during business hours, Monday through Friday:

(toll-free within Connecticut), or (from anywhere).

• TTY, TDD and Text Telephone users only may transmit inquiries 24 hours a day by calling 860-297-4911.

FORMS AND PUBLICATIONS: Forms and publications are available all day, seven days a week:

preview and download forms and publications from the DRS web site: Call 860-297-4753 (from anywhere), or 1-800-382-9463 (toll-free within Connecticut) and select from a touch-tone phone

SN 99(10)
Sales and Use Taxes; Gross Earnings Tax
Hospitals and Health Care Centers
Issued 06/30/99