Connecticut – Amended Sales and Use Tax Exemption, Luxury Tax Rates, and Remittance Requirements

SALT Report 2614 – Colorado Governor Dannel Malloy signed the State’s fiscal year 2014/2015 state budget into law. Included in the legislation is a reduction in the Connecticut luxury goods sales and use tax rate, an exemption for clothing and footwear, and new remittance requirements.

Luxury Goods Tax Rate

For sales that occur on or after July 1, 2013, the luxury goods sales and use tax rate on boats with a sales price of $100,000 or more is reduced from 7% to 6.35%. The bill also provides an exemption from sales and use tax for boats that are docked in Connecticut for 60 days or less in a calendar year.

Clothing and Footwear Exemption

On June 1, 2015, sales clothing and footwear are exempt from sales and use tax provided the cost is less than $50. However, the exemption excludes:

  • Any special athletic and protective clothing or footwear not normally worn except for its specialized use, and
  • Jewelry, handbags, luggage, umbrellas, wallets, watches, and similar items carried on or about the human body but not worn on the body

Sales Tax Remittance Program

For taxable periods from October 1, 2013 through April 1, 2014, the Commissioner is authorized to require any taxpayer who is delinquent in paying sales tax to electronically remit the tax collected from each sale the taxpayer makes by consumer credit or debit card or electronic transfer during the applicable tax period.

Taxpayers who are required to comply with these provisions will receive written notice from the Commissioner by October 1, 2013. Taxpayers who fail to comply with these provisions will be subject to any and all penalties imposed under the sales and use tax laws, including revocation of permits.

Analysis of Tax Collection and Remittance Methods

The Commissioner is required to analyze methods to enhance the collection and remittance of sales taxes by retailers, and report its findings by February 1, 2014. The Commissioner’s report will take the following into consideration:

  • The amount of tax that is annually uncollected or consistently delinquent,
  • The availability and effectiveness of alternative methods of collection,
  • The advisability of requiring more frequent remittance of taxes, and
  • Whether these methods are likely to reduce deficiencies and increase collections

Extension of Temporary Tax on Electric Generation Facilities

Effective June 18, 2013, the temporary tax on electric generation facilities is extended for three months, from July 1, 2013, to October 1, 2013.

For Further Information

Connecticut State Legislature – Act 184, Laws 2013