TSSN-08

Questions and Answers on the Connecticut Use Tax

This TSSN is superseded by IP 91(3)

This pamphlet discusses the Connecticut Use Tax and answers commonly asked questions about the tax. Understanding the use tax provisions is important because failure to comply can result in payment of interest and penalties. To assist you in complying with use tax provisions, a use tax return is provided with this pamphlet. You must pay a Connecticut use tax on taxable goods and services when a Connecticut merchant fails to collect Connecticut sales tax from you or when you purchase the goods or services from an out-of-state merchant.

Q. What is the use tax?
A. The use tax is the tax that a customer pays when making a purchase from a retailer.

Q. Isn't that the sales tax?
A. No. The sales tax is the tax that the retailer pays when filing a sales tax return. The retailer is required by law to collect the tax from retail customers and then to pay that amount over to the State.

Q. What if a Connecticut retailer doesn't collect tax from a customer on a sale of taxable goods or services?
A. The customer must file a use tax return and pay the tax.

Q. What if a customer buys taxable goods or services out-of-state or from a mail order company or shopping channel?
A. The customer must file a use tax return and pay the tax if the goods or services were purchased for use in Connecticut and if any tax paid to another State is less than the Connecticut tax.

For example: Suppose that you purchased a $1,000 refrigerator in Massachusetts where the tax rate is 5% and you paid a $50 Massachusetts tax. If that refrigerator was purchased for use in Connecticut, then a Connecticut use tax is owed. The Connecticut tax of $80 is reduced to $30, after allowance of a $50 credit. If no Massachusetts tax is paid, the Connecticut tax is $80.

Q. What if I purchased a portable typewriter in New York that I intended to use in Connecticut as well as elsewhere? Do I still owe Connecticut use tax on the typewriter?
A. Yes. You owe Connecticut use tax if the typewriter is used in Connecticut, even if you intend to use the typewriter primarily in another State.

Q. Do I owe Connecticut use tax on all my out-of-state purchases of taxable goods and services?
A. No. Items bought at one time for $25 or less and brought into Connecticut by you are not subject to Connecticut use tax. The $25 exemption does not apply, however, to items that are shipped or mailed to you.

Q. Am I being misled by an out-of-state merchant who tells me that I do not need to pay Connecticut use tax?
A. Yes. While you may or may not have to pay tax in another state where you bought the goods or services, you must pay Connecticut use tax on taxable goods or services purchased for use in Connecticut.

Q. Is this a new tax?
A. No. This tax has been in effect since 1947.

Q. Can an out-of-state business, for example, a mail-order house, collect Connecticut use tax on taxable goods which are mailed or delivered into Connecticut?
A. Yes, if the business has been registered to collect Connecticut use tax. If the business has not been registered, than you must file a use tax return and pay the tax yourself.

Q. On what kind of goods or services must I pay use tax?
A. Personal property, whether purchased or leased, including but not limited to, automobiles, appliances, furniture, clothing costing $75 or more, VCR's, jewelry, cameras, computers and computer software. Services include, but are not limited to, repair services to your television or computer, landscaping services to your home or reupholstering services to your household furniture.

Q. Are there exemptions from the use tax?
A. Generally, all goods or services that are not taxable if purchased in Connecticut, such as, clothing costing less than $75, non-prescription drugs and medicine, seeds and fertilizer, are exempt from tax if purchased out-of-state for use in Connecticut.

Q. When must I pay the use tax?
A. A tax return must be filed by January 31 for the preceding year's purchases. If the purchases were made in connection with carrying on a trade, occupation, business or profession, taxpayers should be registered for Business Use Tax and note these purchases on the Sales and Use Tax Return.

Q. What are the penalties for not paying the use tax?
A. The penalty is 15% of the tax or $50, whichever is greater. Interest is charged at the rate of 1 2/3% per month from the due date of the tax return. There are also criminal sanctions for willful failure to file a tax return.