DRS: IP 2011(15), Q & A on the Connecticut Individual Use Tax

 
 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

25 Sigourney Street
Hartford CT 06106-5032
 
 
 
 
 
 

 
 
 
IP 2011(15)
 
Q & A on the Connecticut Individual Use Tax
 

 
Purpose: This Informational Publication answers commonly-asked questions about Connecticut individual use tax.
 
This Informational Publication has been updated so as to reflect legislation enacted during the 2011 regular session of the Connecticut General Assembly that affects Connecticut use tax filing and payment obligations.
 

 

1. What is use tax?

Use tax is the tax you are required to pay when you use a taxable good or service in Connecticut on which you did not pay sales tax to a retailer.  The use tax is complementary to the sales tax. Together, the sales and use taxes treat purchases of taxable goods and services that are used in Connecticut equally, whether the goods and services are purchased within or outside Connecticut.

 


 

2. When is the use tax due?

Any individual who purchases taxable goods or services for use in Connecticut and does not pay Connecticut sales tax on such goods or services owes Connecticut use tax at the time said individual uses the goods or service in Connecticut.  If you do not comply with the use tax provisions, you may owe tax plus penalties and interest. For purchases made by a person engaged in a trade or business, see Question 9.
 

 

3. On what kinds of goods or services must I pay use tax?

You must pay use tax on taxable goods whether purchased, leased or rented, and taxable services. Examples of taxable goods include furniture, jewelry, automobiles, appliances, cameras, computers, and computer software.

Examples of taxable services include repair services to your television, motor vehicle, or computer; landscaping services for your home; and reupholstering services for your household furniture.

Important: Please be aware that the General Assembly enacted legislation that made several new services taxable and repealed several tax exemptions effective July 1, 2011. For a full listing and description of these services and repealed exemptions, please see Special Notice 2011(9), 2011 Legislative Changes Affecting Sales and Use Taxes.
 

 

4. What are the sales and use tax rates?

The general sales tax rate, effective for sales occurring on and after July 1, 2011, is 6.35% for purchases of taxable goods or services; however, the tax on computer and data processing services remains at 1%. 

Important: Please be aware that the General Assembly enacted legislation subjecting the sale of certain items of tangible personal property to tax at the rate of 7% tax rate as of July 1, 2011.  For more information regarding those items subject to tax at the rate of 7%, please see Special Notice 2011(9), 2011 Legislative Changes Affecting Sales and Use Taxes.

 


 

5. Are there exemptions from the use tax?

Yes. Generally, any purchase or lease of goods or services exempted from Connecticut sales tax is also exempted from Connecticut use tax. Some examples are newspapers, magazines by subscription, compact fluorescent light bulbs, Internet access services and repair and maintenance services to vessels.
 

 

6. What if a Connecticut retailer does not collect tax on a sale of goods or services that is subject to Connecticut tax?

If a Connecticut retailer does not collect sales tax on a sale of taxable goods or services, you must remit the use tax liability for your purchases to the Department of Revenue Services (DRS).
 

 

7. How do I report use tax liability to DRS?

You are required to report your use tax liability on Form OP-186, Connecticut Individual Use Tax Return, Form CT-1040, Connecticut Resident Income Tax Return, or Form CT-1040NR/PY, Connecticut Nonresident and Part-Year Resident Income Tax Return, for purchases made during the preceding calendar year.

 


 

8. When must individuals pay use tax?

You must pay use tax no later than April 15 for purchases made during the preceding calendar year.

As explained in Question 7 above, your use tax liability may be reported either on Form OP-186, Form CT-1040 or CT-1040NR/PY. If you are not required to file a Connecticut income tax return, you must file and pay your use tax liability using Form OP-186 no later than April 15. You may file one Form OP-186 for the entire year or you may file several returns throughout the year.

 


 

9. Does a person engaged in a trade or business have to pay use tax on purchases made for use in the trade or business?

Yes. If the person makes purchases of taxable goods (such as office furniture, computers, and supplies) or services out-of-state for use in a trade or business in Connecticut, that person must register with DRS for business use tax purposes and report purchases on Form OS-114, Sales and Use Tax Return. See Informational Publication 2003(31), Q & A on the Connecticut Use Tax for Businesses and Professions.


 

10. What if I buy taxable goods or services from an out-of-state mail-order company, television shopping channel, or over the Internet and the vendor does not charge Connecticut tax?

If you buy taxable goods or services for use in Connecticut and did not pay Connecticut sales tax, you owe and must remit use tax to Connecticut on those purchases.
 

 

11. Is an out-of-state merchant misleading me if he tells me I do not need to pay Connecticut tax on my purchase?

Yes. While you may not have to pay sales tax in the state where you bought the goods or services, you must pay Connecticut use tax on taxable goods or services purchased for use in Connecticut.
 

 

12. Can an out-of-state business, such as a mail-order company, collect Connecticut use tax on taxable goods mailed or delivered into Connecticut?

Yes. If the business has registered to collect Connecticut use tax, it must collect the tax from you. If the business has not collected Connecticut use tax, you must report and pay the tax yourself.

 


 

13. What if I buy taxable goods or services in another state and the vendor charges sales tax for the other state?

If the taxable goods or services were purchased for use in Connecticut and the sales tax due and paid to the other state is less than the Connecticut use tax, you must report and pay the difference between the Connecticut use tax and the sales tax paid to the other state. If the sales tax correctly paid to the other state is equal to or more than the Connecticut tax, you owe no use tax to Connecticut.

Example: You purchased a $1,000 refrigerator in another state and paid $50 tax to that state. If you bought the refrigerator for use in Connecticut, you owe Connecticut use tax of $13.50, calculated as follows: the Connecticut tax of $63.50 ($1,000 x 6.35%) is reduced to $13.50 after allowing $50 credit ($63.50- $50.00 = $13.50) for the tax paid to the other state. If no tax was paid to the other state, the Connecticut use tax would be $63.50.
 

 

14. Do I owe Connecticut use tax on all my out-of-state purchases of goods that are taxable in Connecticut?

No. If all the goods purchased and brought into Connecticut at one time total $25 or less, you do not have to pay Connecticut use tax. The $25 exemption does not apply to goods shipped or mailed to you.
 

 

15. What are the use tax filing requirements for motor vehicles, snowmobiles, vessels, and aircraft?

Generally, if the item is not purchased from a retailer, the Connecticut Department of Motor Vehicles collects the use tax when you register a motor vehicle, snowmobile, or vessel. You must report the use tax liability on aircraft on your Connecticut income tax return or on Form OP-186.

If you do not intend to register your motor vehicle, snowmobile, or vessel immediately after you purchase it, you must report the use tax liability for purchases made during the prior calendar year on your Connecticut income tax return or Form OP-186. If the purchase is made in connection with a trade or business carried on by an individual, see Question 9.

 


 

16. How does an individual calculate their use tax liability?

Calculate the use tax by multiplying the total cost of the taxable goods or services purchased, including separately stated charges such as shipping and handling, by the applicable tax rate.
 

 

17. Are there penalties and interest for not paying the use tax?

Yes. The penalty is 10% of the tax due. Interest is charged at the rate of 1% per month from the due date of the tax return. There are also criminal sanctions for willful failure to file a tax return.

 


 
Effect on Other Documents: This Informational Publication modifies and supersedes Informational Publication 2009(33), Q & A on the Connecticut Individual Use Tax.
 

 
Effect of This Document: An Informational Publication issued by the Department of Revenue Services (DRS) addresses frequently-asked questions about a current position, policy, or practice, usually in a less technical question and answer format.
 

 

For More Information: Call DRS during business hours, Monday through Friday:

  • 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only); or
  • 860-297-5962 (from anywhere).
TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.
 

 
Forms and Publications: Visit the DRS website at to download and print Connecticut tax forms and publications.
 

 

Paperless Filing/Payment Methods (fast, easy, free, and confidential):

 

Business and individual taxpayers can use the Taxpayer Service Center (TSC) at www.ct.gov/TSC to file a variety of tax returns, update account information, and make payments online.

File Electronically: You can choose first-time filer information and filing assistance or log directly into the TSC to file returns and pay taxes.

Pay Electronically: You can pay taxes for tax returns that cannot be filed through the TSC. Log in and select the Make Payment Only option. Designate a payment date up to the due date of the tax and mail a paper return to complete the filing process.
 

DRS E-Alerts Service: Get connected to the latest news from DRS. Receive notification by email of changes to legislation, policies, and procedures. DRS E-Alerts provide information for employer’s withholding tax, News – Press Releases, and Top 100 Delinquency List. Visit the DRS website at www.ct.gov/DRS and select e-alerts from the left navigation bar.


IP 2011(15)

Sales and Use Tax

Individual Use Tax

Issued: 10/20/2011