Connecticut Use Tax

Article ID: 34639  

Connecticut Use Tax


What is the use tax?

Connecticut taxpayers owe use tax on purchases of taxable goods or services when Connecticut sales tax is not collected at the time of sale. Most often, this results from purchases made online or out-of-state. Together, sales and use taxes assure that taxable purchases of goods and services used in Connecticut are treated equally and fairly.


Who pays use tax?

If Connecticut sales tax is not paid to the retailer at the time of purchase, Connecticut law requires that the purchaser pay use tax directly to the DRS.


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. Taxable goods include: furniture, jewelry, automobiles, appliances, cameras, computers, and computer software. Taxable services include: repair services to your television, motor vehicle, or computer; landscaping services for your home; and reupholstering services for your household furniture


Are there exemptions from the use tax?

Yes. Generally, any purchase or lease of goods or services exempted from Connecticut sales tax is also exempt 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.


Do I owe Connecticut use tax on all my out-of-state purchases of taxable goods and services?

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 – but the $25 exemption does not apply to goods shipped or mailed to you. Generally, if you purchase taxable goods from mail order companies, over the Internet or at an out-of-state location and had those goods shipped to Connecticut or brought back into Connecticut for use in Connecticut and did not pay Connecticut sales tax, you must pay the Connecticut use tax


What is the use tax rate?

Use tax rates are the same as sales tax rates. The general rate is 6.35% for purchases of taxable goods or services. The rate on computer and data processing services is 1%. However, the sales tax rate on certain items of tangible personal property is 7%. (See Schedule 4, Individual Use Tax, on Page 32.)


When must individuals pay the use tax?

You must pay use tax no later than April 15 for purchases made during the preceding calendar year (January - December). Your use tax liability may be reported either on Form OP-186, Form CT-1040, Form CT-1040NR/PY, or Form CT-1040X. 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. If you are engaged in a trade or business, you must register with DRS for business use tax and report purchases made in connection with your trade or business on Form OS-114, Sales and Use Tax Return.


What are the 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 For additional information, see Informational Publication 2011(15), Q&A on the Connecticut Individual Use Tax. IP 2011(15) failure to file a tax return. When you sign an annual income tax return, you are legally declaring the truthfulness, completeness, and correctness of all information – including the section for use tax payment.


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 sales tax rate (1% , 6.35%, or 7%).


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

If the goods or services were purchased for use in Connecticut, and the tax due and paid to the other state is less than the Connecticut tax, you must report and pay the difference between the Connecticut tax and the tax paid to the other state. If the tax 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. The Connecticut tax of $60 ($1,000 X 6%) is reduced to $10, after allowing $50 credit for the tax paid to the other state. If no tax was paid to the other state, the Connecticut use tax is $60.

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Views: 1642 Created on: Jun 15, 2013