During Connecticut's recently completed legislative session, attempts were made to simplify Connecticut's Sales and Use Taxes. Whether or not those attempts were successful will most likely be the subject of ongoing debates in the weeks and months ahead. For the time being, the following information may provide a helpful point of reference for some commonly asked questions.
Business Management Consulting Services are taxable at a rate of 6% if they are directly related to the core business of the service recipient.
Computer Training is taxable at the rate of 6% when the provider is engaged and paid by an employer receiving job-related training for employees located in Connecticut. The training must be directly related to teaching or upgrading skills required by employees in their day-to-day tasks.
Those who access services online are considered users of taxable computer and data processing services subject to a tax at the current rate of 5% when the benefit is received in Connecticut. It is the purchaser's responsibility to determine whether or not the tax is being included in their purchase. If it is not, they must remit the use tax annually for all purchases made during the previous year.
All services rendered in connection with the creation and maintenance of web sites on or after July 1, 1997 are exempt from Connecticut sales and use taxes.
Data Processing and Software Installation Services are taxable at rate of 5%. The rate on software installation services applies regardless of whether the software is pre-written, custom or customized. Software maintenance services are also taxed at a rate of 5%. If a computer maintenance contract includes data processing services or upgrades of pre-written software, the rate increases to 6% under most circumstances. Data processing services will be reduced according to the following schedule through July, 2002:
5% on or after 7/1/97 and before 6/30/98;
4% on or after 7/1/98 and before 6/30/99;
3% on or after 7/1/99 and before 6/30/00
2% on or after 7/1/00 and before 6/30/01
1% on or after 7/1/01 and before 6/30/02
0% on or after 7/1/02.