Current through March 14, 2024
(a)
Definitions.
(1) The term
"repair" means to mend or bring back to working order or operating condition an
item of tangible personal property that is broken, damaged, malfunctioning or
defective. The term "repair" does not include the service of installing new
parts or accessories that are not replacements for existing parts or
accessories.
(2)
(A) The term "maintenance" means to sustain
or maintain safe, efficient or continuous operation of tangible personal
property, or to keep tangible personal property in good working order by
preventing its decline, failure, lapse or deterioration. Some examples of
maintenance include cleaning, oiling, sharpening or polishing tangible personal
property.
(B) Because car washing
services were separately enumerated as taxable services under subparagraph (N)
of section
12-407(2)(i)
of the general statutes until the repeal of the tax on such services by 1993
Conn. Pub. Acts 74, § 23, the term "maintenance" excludes the washing of
motor vehicles as defined in section
14-1(a)(47)
of the general statutes, as from time to time amended. However, the term
"maintenance" does include the washing of other types of vehicles not
considered "motor vehicles" under said section
14-1(a)(47).
(C) Dry cleaning, laundry and tailoring
services are not considered repair or maintenance services to tangible personal
property as described in this section.
(3) The term "maintenance contract" means a
contract that provides for maintenance service to be performed on an item of
tangible personal property in the future. Maintenance service is not contingent
upon the malfunctioning of the tangible personal property covered under the
contract. Gross receipts from the sale of maintenance contracts are
taxable.
(4) The term "repair
contract" means a contract that provides for repair service to be performed on
an item of tangible personal property which is broken, damaged, defective or
malfunctioning at the time the parties enter into the contract. Gross receipts
from the sale of repair contracts are taxable.
(5) The term "warranty (or guarantee)
contract" means a contract that provides for repair service only in the event
of a future malfunctioning of an item of tangible personal property. Gross
receipts from the sale of warranty contracts are taxable.
(6) The term "integral part" means a part,
such as a spring, gear or lens used in photocopier repair, heels or soles used
in shoe repair, or chains used in repairing bicycles, that retains its separate
identity even after being incorporated into property undergoing repair or
maintenance. The term "integral part" does not include a material, such as
lubricant, stain, paint, varnish, polish, wire, solder or glue, that does not
retain its separate identity after being used to repair or maintain tangible
personal property but is consumed by such service provider in rendering
maintenance or repair services.
(b)
Charges by repair or maintenance
service providers.
(1) Providers of
repair or maintenance services shall separately state the charge attributable
to the sale of integral parts and the charge attributable to rendering
maintenance or repair services on the bill to the customer. Any fees, such as
"service call" charges, minimum charges, hourly or flat rates, mileage charges,
or pick-up or delivery charges, are taxable as charges for repair or
maintenance services.
(2) The fact
that tangible personal property was exempt from tax when it was purchased by a
recipient of repair or maintenance services does not mean that repair or
maintenance services rendered to it are not taxable. Thus, for example, repair
services to a manufacturing machine are taxable, even though the purchase of
the machine and the repair parts therefor were exempt under section
12-412(34)
of the general statutes.
(c)
Use of resale
certificates by providers of maintenance or repair services. Because
providers of maintenance or repair services are considered to be consumers of
supplies used in rendering their services, sales of tangible personal property,
other than integral parts, to a repair service provider who uses such property
in repairing tangible personal property are retail sales to such provider and
are taxable.
(d) Retailers of
tangible personal property who purchase repair or maintenance services for
tangible personal property that such retailers are holding for sale, lease or
rental in the normal course of business may purchase the repair or maintenance
services and the integral parts, as described in this section, on
resale.
(e)
Where repair or
maintenance services to tangible personal property are deemed to be
rendered.
(1) Repair or maintenance
services to tangible personal property shall be taxable if the repairs to the
tangible personal property are made in Connecticut. If the repairs are made
within Connecticut, the sale of repair services to an item of tangible personal
property shall be taxable, notwithstanding the fact that the materials consumed
in rendering such services were purchased outside Connecticut, the contract for
services was negotiated or executed outside Connecticut, some of the work with
respect to such services is performed for the service provider outside
Connecticut, the bill or invoice for such services is mailed to or from an
address outside Connecticut, or the purchaser of such services is a
nonresident. However, when a Connecticut repairer picks up, or is shipped, from
outside Connecticut an item of tangible personal property to be repaired,
repairs it in Connecticut, and then delivers the item or ships it to the
customer at an out-of-state location, the repair service, and any integral
parts sold in connection therewith, shall not be taxable in
Connecticut.
(2) Persons purchasing
repair or maintenance services to tangible personal property from out-of-state
retailers shall pay Connecticut use tax on such purchases if the item to which
such services are rendered is intended for use and is used within
Connecticut.
(f)
Taxability of sales, renewals or extensions of maintenance, repair and
warranty contracts.
(1) Sales of
maintenance, repair or warranty contracts are taxable, including the original
sale, a renewal or the exercise of an option to extend the term, either
automatically or by the action of either party to the contract. With respect to
contracts entered into prior to October 1, 1991, the gross receipts from any
renewal or exercise of an option to extend the term made on or after October 1,
1991 are taxable.
(2) Where repair
services to an item of tangible personal property are exempted, the sale,
renewal or exercise of an option to extend the term of a maintenance, repair or
warranty contract is also exempt. For example, the sale of a maintenance
contract for hearing aids is exempt because repair services to hearing aids is
exempted by section
12-412(19)
of the general statutes. Similarly, where repair services to an item of
tangible personal property are taxable at a reduced rate, the sale, renewal or
exercise of an option to extend the term of a maintenance, repair or warranty
contract is taxable at the reduced rate. For example, the sale of a maintenance
contract for a vessel is taxable at the reduced rate of tax in effect at the
time of such sale, because the tax on repairs to vessels is being phased out
pursuant to section
12-408(1)(F)
of the general statutes.
(g)
Taxability of services rendered
under maintenance, repair or warranty contracts. Retailers who perform
repair or maintenance work, including temporarily providing customers with
tangible personal property while the customer's property is being serviced,
without charge to the customer under the maintenance, repair or warranty
contract of a manufacturer or other person are not taxable on the amount of the
reimbursement received for such services from the warrantor. The tax is deemed
to have been paid at the time of the purchase of such contract. Similarly,
where the warrantor will reimburse the consumer for repair or maintenance
services rendered under a maintenance, repair or warranty contract, the charges
for the repair or maintenance services shall not be taxable, provided the
consumer furnishes the service provider with evidence of the maintenance,
repair or warranty contract (such as a copy of the contract covering the repair
or maintenance services). However, any other charge that the consumer is
obligated to pay under the terms of the maintenance, repair or warranty
contract, such as a deductible, or a charge for labor or parts that is not
covered under such contract, such as for an upgrade, is taxable.
(h)
Taxability of parts and services
purchased by retailers performing services under maintenance, repair or
warranty contracts.
(1)
(A) Purchases by retailers under nonexempt
maintenance, repair or warranty contracts. Retailers performing repair or
maintenance services under taxable maintenance, repair or warranty contracts
may purchase integral parts to be used in performing such services on a resale
basis. A retailer need not charge or self-assess tax at the time the retailer
uses the integral parts in repairing or maintaining tangible personal property,
unless the retailer makes a separate charge for the parts on the bill to the
customer, because the tax is deemed to have been paid at the time of the
purchase of the maintenance, repair or warranty contract. Integral parts may be
purchased on a resale basis whether or not the original contract was entered
into prior to October 1, 1991 or whether or not the original sale occurred in
Connecticut. Tangible personal property that is not an integral part used in
performing services under maintenance, repair or warranty contracts may not be
purchased on a resale basis.
(B)
When a retailer of repair or maintenance services does not itself repair or
maintain tangible personal property but instead contracts with a third party
repairer to perform such obligations, the retailer may purchase the services of
the third party repairer on a resale basis. Such repairs may be purchased on
resale whether or not the original contract was entered into prior to October
1, 1991 and whether or not the original sale occurred in Connecticut. The
retailer need not charge tax at the time it renders repair or maintenance
services (unless the retailer makes a separate charge for the services on the
bill to the customer) because the tax is deemed to have been paid at the time
of the purchase of the maintenance, repair or warranty contract.
(2) Exception for purchases by
retailers under nontaxable maintenance, repair or warranty contracts. Where the
purchase, renewal or extension of a maintenance, repair or warranty contract
either is exempt or is taxable at a rate which has been phased out to zero
percent, the retailer of services under such contract may purchase integral
parts or the services of a third party repairer on resale, but shall charge tax
on such parts or services to the customer.
(i)
Where maintenance, repair or
warranty contracts are deemed to be sold.
(1) The sale of a maintenance, repair or
warranty contract in the same transaction with the tangible personal property
covered by such contract is deemed to take place at the location where such
property is sold. Thus, a transaction in which tangible personal property and a
maintenance, repair or warranty contract for such property is sold is taxable
when it takes place in Connecticut.
(2) If a maintenance, repair or warranty
contract is sold after the sale of the tangible personal property to which it
relates, the transaction shall be treated as having occurred at the location
where the benefit of such contract is realized, which is where the property
that is covered by the maintenance, repair or warranty contract is located.
Absent evidence of where such property is located, the benefit of the services
is deemed to occur, in the case of a business purchaser, at its principal place
of business, and, in the case of any other purchaser, at his or her billing
address.
If the location where a maintenance, repair or warranty
contract is deemed to be sold is within Connecticut, the sale of such contract
shall be treated as having occurred within Connecticut, notwithstanding the
fact that the contract was negotiated or executed outside Connecticut, some of
the work with respect to such contract is performed for the service provider
outside Connecticut, the bill or invoice for such contract is mailed to or from
an address outside Connecticut or the service recipient is a
nonresident.
A person purchasing a maintenance, repair or warranty contract
from an out-of-state retailer shall pay Connecticut use tax on such purchase if
the item to which such contract pertains is intended for use and is used within
Connecticut.
(3) A
maintenance, repair or warranty contract purchased for a motor vehicle,
aircraft or vessel at the same time as the motor vehicle, aircraft or vessel is
purchased is deemed to be sold at the location of such purchase. A maintenance,
repair or warranty contract purchased in Connecticut shall be taxable at the
tax rate that applies to sales of services described in section 12-4072idd of
the general statutes, even if the motor vehicle, aircraft or vessel is
purchased exempt or at a reduced rate of tax by a nonresident of Connecticut. A
maintenance, repair or warranty contract that is purchased after the motor
vehicle, aircraft or vessel to which it relates was purchased, or that is
renewed, is considered to be sold at the location where the motor vehicle,
aircraft or vessel is registered.
(j)
Cross-references. For
specific provisions regarding repair or maintenance services to motor vehicles,
see subparagraph (M) of section
12-407(2)(i)
of the general statutes and any regulations thereunder. For radio or television
repair services, see subparagraph (O) of said section
12-407(2)(i)
and any regulations thereunder. For furniture reupholstering and repair
services, see subparagraph (P) of said section
12-407(2)(i)
and any regulations thereunder. For repair services to any electrical or
electronic device, see subparagraph (Q) of said section
12-407(2)(i)
and any regulations thereunder. For locksmith services rendered to an item of
tangible personal property, see subparagraph (T) of said section
12-407(2)(i)
and any regulations thereunder. For swimming pool cleaning and maintenance
services rendered with respect to tangible personal property, see subparagraph
(AA) of said section
12-407(2)(i)
and any regulations thereunder.
