Connecticut’s budget bill (Senate Bill 1239 - Public Act No. 11-6) increases tax rates, repeals certain sales tax exemptions, and makes several services taxable services. The following tax rate increases are applicable to sales occurring after June 30, 2011 and to services beginning with the first billing period that includes July 1, 2011.
The general state sales and use tax rate increases to 6.35%, and the hotel occupancy tax will be 15%. Tax on rentals of motor vehicles for 30 days or less will increase to 9.35%.
In addition, the bill provides that 7% sales or use tax is due on the sale or use of the following:
- A vessel for more than $100,000
- A motor vehicle for more than $50,000
- Jewelry for a sales price of more than $5,000
- Clothing or footwear, including handbags, luggage, umbrellas, wallets, and watches for more than $1,000
The bill also repeals the following exemptions effective July 1, 2011:
- Clothing or footwear intended to sell for less than $50
- Non-prescription medicines
- Smoking-cessation products
- Valet parking at airports
- Services used in operating solid waste-to-energy facilities
- Services provided in the voluntary evaluation, prevention, treatment, containment, or removal of hazardous waste or other contaminants of air, water, or soil as part of services to industrial, commercial, or income-producing real property
- Yoga instruction provided at a yoga studio
The bill provides that the following services are taxable services effective July 1, 2011:
- Motor vehicle storage services, including storage of motor homes, campers, and camp trailers (Storage unit rentals were taxable prior to this bill.)
- Packing and crating services provided on a stand-alone basis (Packing associated with the sale of a taxable item has been and continues to be taxable.)
- Motor vehicle towing and road services (Motor vehicle repair services have been and continue to be taxable.)
- Intrastate transportation services provided by livery services, including limousines, community cars or vans, with a driver (Transportation by taxi, motor bus, or ambulance is not considered as an intrastate transportation service. Scheduled public transportation or services provided in connection with funerals are also excluded from the definition of an intrastate transportation service.)
- Pet grooming and boarding services, except when provided as an integral part of a veterinary service
- Pet obedience training
- Services in connection with a cosmetic medical procedure (Cosmetic medical procedure includes hair transplants, cosmetic injections, soft tissue fillers, dermabrasion and chemical peel, laser hair removal, laser skin resurfacing, laser treatment of leg veins, and sclerotherapy. It does not include reconstructive surgery, which means surgery performed on abnormal structures caused by or related to congenital defects, developmental abnormalities, trauma, infection, tumors, or disease, including procedures to improve function or give a more normal appearance.)
- Manicure and pedicure services
- Spa services
TECHNICAL INFORMATION CONTACT:
Jeremiah T. Lynch
Principal
Ryan
212.871.3901
jeremiah.lynch@ryan.com