CT Tax Law Changes Signed into Law with New Budget Bill07/31/2019
When Governor Lamont signed the budget bill earlier this summer, quite a few changes were made to our sales and use taxes. Here is a breakdown of what changed.
- Exemptions Eliminated: On January 1, 2020, some items currently exempted from sales and use taxes will be taxed, including safety apparel, specified parking spaces, dry cleaning and laundry services (except those that are coin operated), and interior design services unless they are purchased by a business for their own use.
- Rates Changed (effective October 1, 2019):
- Digital goods (audio and/or visual works, ring tones and reading materials that are accessed or transferred electronically) and prewritten software (also accessed electronically) will be taxed at the full 6.35% sales tax rate unless purchased by a business for its own use.
- The tax rate on dyed diesel fuel sold for marine purposes drops to 2.99%.
- Rates on meals sold at restaurants, in grocery stores, or from caterers, as well as alcoholic and soft drinks sold at bars and restaurants, will increase to 7.35%.
- Short-term rental taxes: Also effective October 1, 2019, any short-term rental property owner (i.e. AirBNBs) who had sales of at least $250k in the prior year must get a permit to start collecting room occupancy tax of 15% for hotels and lodging houses, and 11% for bed and breakfasts.
- Reduced taxes on event venues: Stick with us, because this one gets even more confusing than others. Sales tax rates on certain venues were reduced from 10% to 7.5% on July 1, 2019 and will further reduce to 5% on July 1, 2020. Venues include:
- OXL Center (Hartford)
- Dillon Stadium (Hartford)
- New Britain Stadium (but only Athletic League professional baseball games)
- Webster Bank Arena (Bridgeport)
- Harbor Yard Amphitheater (Bridgeport)
- Dodd Stadium (Norwich)
- Oakdale Theatre (Wallingford)
- Rentschler Field (East Hartford)
Dunkin’ Park in Hartford is the outlier here, already receiving the 5% rate as of 7/1/2019 and becoming exempt on 7/1/2020.
- Economic & Click-Through Nexus: Anyone selling $100k (formerly $250k) worth of tangible personal property or services from outside of CT to someone inside of CT in a 12-month period now must pay sales tax in CT.
Additionally, the Department of Revenue Services Commissioner was directed to consult with the Streamlined Sales Tax Governing Board to create a list of certified service providers to facilitate CT tax collection and payment. While not decided yet, the plan may require retailers to use service providers from this list. They have until Feb. 5, 2020 to submit the plan and a draft of proposed legislation to implement it.
If you have any questions about how these changes may impact you or your business, or just want clarification on them, don’t hesitate to reach out to us.