DRS: Registration Information

 
Registration Information

 
 

  1. What do I need to do before registering with DRS?
  2. What type of Business Entity will your business be?
  3. Are you buying an existing business or corporation?
  4. Who must register with DRS?
  5. What tax types do I need to register for with DRS?
  6. How much is my registration fee?
  7. Doing a craft fair/flea market?
  8. Ready to Register? How do I obtain a Sales Tax Permit?
  9. How long is the sales tax permit good for?
  10. What is the current Sales Tax Rate?
  11. Sales Tax Forms
  12. Sales Tax Guides
  13. Sales and Use Taxes Regulations

 
What do I need to do before registering with DRS?
Informational CHECKLIST to aide you in creating your business entity.
  1. Identify the licenses you may need to start your business.  Visit the Connecticut Licensing Information Center, a program of the Connecticut Economic Resource Center at 1-800-392-2122. 
  2. Federal Employer Identification Number (FEIN), if applicable this is issued by the Internal Revenue Service (IRS) - Find out if you need one
  3. Check the availability of the desired business entity name with the Connecticut Secretary of the State' Office (SOS)
  4. If purchasing a business BEFORE you buy it be sure to obtain a Certificate of Tax Clearance, otherwise you may be liable for any tax obligations from the previous owner.

Choosing a type of Business Entity for your business (not a complete list)
  1. Sole Proprietorship - owned and operated by one individual.
  2. Partnership - the relationship between two or more persons who join together to carry on a trade or business.
  3. Corporation - is an entity created under state law with a legal existence separate and apart from its shareholders.
  4. Limited Liability Companies (LLC) - including a single member limited liability company (SMLLC), is another entity created under state law with a legal existence separate and apart from its members.
  5. Non profit - any social, civil, religious, political subdivision or educational organization that has been federally recognized thus qualifying them to be exempt from Connecticut sales and use taxes.  An organization that was issued a federal Determination Letter of exemption under Section 50l(c)(3) or (13) of the Internal Revenue Code is a ”qualifying organization” for the purposes of the exemption from sales and use taxes.

Buying an existing business or corporation
  • To avoid successor liability, the purchaser must obtain a Tax Clearance Certificate for sales and use taxes or admissions and dues tax, or both, before it purchases an existing business.  The purchaser of the business should request a Tax Clearance Certificate between the time the purchaser commits to buy the business and the closing.  The Department of Revenue Services (DRS) recommends that the purchaser request a Tax Clearance Certificate at least 90 days before the closing.

Who must register with DRS?
 
You must obtain a Sales and Use Tax Permit from the Department of Revenue Services (DRS) if you intend to engage in any of the following activities in Connecticut:
  • Sale, rental, or lease of goods;
  • Sale of a taxable service; or
  • Operation of a hotel, motel, or lodging house.

What tax types do I register for?
 
In-State:
Out-of-State:
 
Out of state contractors - Under the new law effective (October 1, 2011) there are 2 types of nonresident contractors: verified or unverified

 

Verified Contractors- are treated just like resident contractors.  There is no 5 % holdback required by the prime or general contractor.

 

Steps to become verified: 

  1. Register with DRS via REG-1 for all appropriate taxes- SUT & WTH,  and COR or BET & PSC
  2. Submit Form AU-960 “Non-Resident Contractor Request for Verified Contractor Status”   If you have a 3 year filing history with DRS and no delinquencies, then just complete steps 1 & 2, otherwise go to Step 3
  3. Submit AU-961 “Verification Bond”

If verified the contractor will receive a “Notice of Verified Status” which they would show to the general or prime contractor that hired them.  The verification is for a 2 year period 1/1/12 through 12/31/13.  Once verified the out of state contractor wouldn’t need to file any other bonds for jobs commencing during the 2 year period.  At the end of the 2 years they would submit another AU-960 requesting the next 2 years i.e. 1/1/14 through 12/31/15.  The verification and bonding does not take the place of any tax returns that are due from the company.  

Unverified nonresident:

  1. The prime or general contractor that hired an unverified subcontractor will withhold 5% of their contract.  The unverified nonresident can request that the money be released by submitting Form AU-967 “Request for Certificate of Compliance” It must be signed by the Prime/General and the nonresident subcontractor and submitted within 90 days of the completion date.
    • If Certificate of Compliance is issued DRS will instruct company holding back the 5 % to release the withheld amount to the nonresident contractor
    • If Certificate of Compliance is denied or not requested within 90 days of the completion the company holding back the 5 % will remit the withheld amount on their own Sales & Use tax returns
  2. The 5 % holdback does not take the place of any tax returns due from the unverified nonresident contractor. 
The Procedure Governing Nonresident Contractors is covered under SN 2012(2)

Doing a craft fair/flea market
  • You must obtain a Sales and Use Tax Permit from the Connecticut Department of Revenue Service if you will be selling at a flea market, craft show, trade show, antique show, fair, etc. in Connecticut even if you will only be making sales for one day.  You must display the permit prominently in your booth or table.  See our informational page on fairs/flea market sales.


Ready to register here is how to obtain your Sales and Use Tax Permit?
 
To register you must complete Form REG-1, Business Taxes Registration Application.

How much is my registration fee?
  • The registration fee is $100 one time permit fee.

How long is the sales tax permit good for?
  • Your Sales and Use Tax Permit expires every five years and is automatically renewed and mailed to you at no cost as long as your account is active.  Be sure that we have your correct mailing address to ensure that you receive your renewal in a timely fashion.

What is the current sales tax rate?
  • There is one statewide sales tax rate.  The statewide rate is 6.35% which applies to the retail sale, lease, or rental of most goods and taxable services.