Connecticut Administrative Code
Title 12 - Taxation
407(2)(i)(I) - Services to Real Property
Section 12-407(2)(i)(I)-1 - Services to industrial, commercial or income-producing real property
Universal Citation: CT Reg of State Agencies 12-407(2)(i)(I)-1
Current through September 9, 2024
(a) In general. Section 12-407(2) (i) (I) of the general statutes defines "sale" and "selling" as including the rendering of services to industrial, commercial or income-producing real property. Subsection (b) of this regulation defines the term "real property" and describes the real property that is affected by this regulation. Subsection (c) of this regulation describes the circumstances under which services to real property are considered to be rendered in the construction of new real property and the circumstances under which services to real property are not considered to be rendered in the construction of new real property. Subsection (d) of this regulation defines the term "industrial real property." Subsection (e) of this regulation defines the term "commercial real property." Subsection (f) of this regulation defines the term "income-producing real property." Subsection (g) of this regulation describes the services that are affected by this regulation. Subsection (h) of this regulation pertains to the taxability of charges made by a person rendering services to industrial, commercial or income-producing real property to a property owner. Subsection (i) of this regulation pertains to the taxability of charges made by one person rendering services to industrial, commercial or income-producing real property to another such person reselling such services to a property owner. While this regulation pertains, for purposes of supplementary interpretation, as the phrase is used in section 12-2 of the general statutes, to said section 12-407(2) (i) (I), the promulgation of this regulation is authorized by section 12-426(1) of the general statutes.
(b) Real property.
(1) The term
"real property," as used in section
12-407(2) (i)
(I) of the general statutes and in this
regulation, means property that is considered to be real property under the
laws of the State of Connecticut.
(2) The provisons of subdivision (1) of this
subsection to the contrary notwithstanding, the repair and maintenance of such
property as furnaces (boilers or burners), central air conditioning units,
central vacuuming units, manufacturing production machinery, refrigeration
units, modular lighting units, pumps, tanks or alarm systems will be considered
to be services defined as a "sale" or "selling" under subparagraph (Q) (repair
services to any electrical or electronic device) or (DD) (repair or maintenance
services to any item of tangible personal property) of section
12-407(2) (i)
of the general statutes, and will not be
considered to be services rendered to "real property," as used in said section
12-407(2) (i)
(I) and in this regulation. However, the
repair and maintenance of ducting, piping or wiring for such property will be
considered to be services rendered to "real property," as used in said section
12-407(2) (i)
(I) and in this regulation, and will not be
considered to be services defined as a "sale" or "selling" under subparagraph
(Q) or (DD) of said section
12-407(2)
(i).
(c) Construction of new real property.
(1) Buildings. Services to
real property are within the purview of section
12-407(2) (i)
(I) of the general statutes if and only if
the services are rendered to existing industrial, commercial or
income-producing real property. Services to real property that are rendered in
the construction of new industrial, commercial or income-producing real
property are not within the purview of said section
12-407(2) (i)
(I). Services to real property will be
considered to be rendered in the construction of new real property only to the
extent that they are directly connected with the construction of a new building
(or a new addition that expands the cubic footage of an existing building);
otherwise, services to real property will not be considered to be rendered in
the construction of new real property. Where only the external walls and roof
of an existing building are left in place, services will nonetheless be
considered to be rendered in the construction of new real property, as long as
new floors, new internal walls, new support columns and new electrical and
mechanical systems are constructed, provided where a structure purported to be
a certified historic structure, as defined in
26
U.S.C. §
48(g) (3) (A),
is being substantially rehabilitated, as defined in
26
U.S.C. §
48(g) (1) (C),
and the rehabilitation will be a certified rehabilitation, as defined in
26
U.S.C. §
48(g) (2) (C),
new floors, new internal walls and new support columns will not be required to
be constructed to the extent that such construction would prevent such
structure from being listed in the National Register or certified as a
certified historic structure, as the case may be.
(2) Site improvements. Services involved in
the making of improvements to real property that put the property affected to a
new use, such as the construction of roadways, walkways (concrete or asphalt),
parking lots, patios (concrete or asphalt), swimming pools, tennis courts or
decks, will be considered to be rendered in the construction of new real
property, whether or not the making of such improvements is directly connected
with the construction of a new building (or a new addition that expands the
cubic footage of an existing building). Services involved in the making of
improvements to real property that merely enhance an existing use of the
property affected, such as the installation of wells, septic systems, utility
lines, storm water drainage systems or outdoor lighting systems will not be
considered to be rendered in the construction of new real property, unless the
construction of such improvements is directly connected with the construction
of a new building (or a new addition that expands the cubic footage of an
existing building). If the presumption described in subdivision (2) of
subsection (g) of this regulation is rebutted, services involved in the
construction of improvements to real property such as ponds, walls, fences or
gates will not be considered to be rendered in the construction of new real
property, unless the construction of such improvements is directly connected
with the construction of a new building (or a new addition that expands the
cubic footage of an existing building). Services to real property involved in
the renovation of existing site improvements will not be considered to be
rendered in the construction of new real property, whether or not the
renovation of such improvements is directly connected with the construction of
a new building (or a new addition that expands the cubic footage of an existing
building).
(3) New construction
certificate. Unless a certificate, the form of which shall be prescribed by the
commissioner, is issued to the service provider by the owner of the property
when services to real property are rendered, it shall be presumed that such
services are rendered to existing industrial, commercial or income-producing
real property. The certificate shall relieve the service provider from the
burden of proving that such services were not rendered to existing industrial,
commercial or income-producing real property only if taken in good faith from
the owner. The good faith of the service provider will be questioned if such
provider has knowledge of facts that give rise to a reasonable inference that
the certificate is inaccurate.
(d) Industrial real property.
(1) In general. The term "industrial real
property" means an industrial plant, as the term is used in section
12-412(18)
of the general statutes and in any
regulations interpreting said section. The term "industrial real property" also
includes ancillary real property, such as shipping docks and
warehouses.
(2) Services rendered
to tenants. Where services are rendered to a person who has a leasehold
interest in industrial real property and who has directly contracted with the
service provider for such services, such services will be considered to be
services to industrial real property, even if such lessee has no right of
reimbursement from the lessor.
(e) Commercial real property.
(1) In general. The term "commercial real
property" means real property devoted to, held or leased for commercial use or
activity. By way of example and not limitation, commercial use or activity
includes buying, selling or leasing of goods or services and any other activity
carried on with the public, whether or not for profit. The term "commercial
real property" also includes ancillary real property, such as garages and
warehouses.
(2) Services rendered
to tenants. Where services are rendered to a person who has a leasehold
interest in commercial real property and who has directly contracted with the
service provider for such services, such services will be considered to be
services to commercial real property, even if such lessee has no right of
reimbursement from the lessor.
(f) Income-producing real property.
(1) In general. Except as
otherwise provided in subdivision (2) of this subsection, the term
"income-producing real property" means real property held for or used in the
production of income.
(2) Excluded
property. The provision of subdivision (1) to the contrary notwithstanding, the
term "income-producing real property" does not include-
(A) real property used exclusively for
residential purposes and consisting of three or fewer dwelling units, in one of
which units the owner resides; and
(B) housing facilities, as the term is used
in section
12-412(29)
of the general statutes, owned by an organization that has been ruled by the
commissioner to be a nonprofit housing organization, as the term is defined in
said section
12-412(29)
and in any regulations interpreting said section.
(3) Services rendered to residential tenants.
Where services are rendered to a residential tenant who has directly contracted
with the service provider for such services and who has no right of
reimbursement from the landlord, such services will not be considered to be
services to income-producing real property.
(4) Services rendered to residential
condominium associations. Where services are rendered to a residential
condominium association which has directly contracted with the service provider
for such services, such services will be considered to be services to
income-producing real property to the same extent that the number of
condominium units not occupied by owners bears to the total number of
condominium units. Unless a certificate, the form of which shall be prescribed
by the commissioner, is issued to the service provider by the condominium
association when services are rendered, it shall be presumed that all
condominium units are not occupied by owners. The certificate shall relieve the
service provider from the burden of proving that services were not rendered to
income-producing real property only if taken in good faith from the condominium
association. The good faith of the service provider will be questioned if such
provider has knowledge of facts that give rise to a reasonable inference that
the certificate is inaccurate.
(5)
Services rendered to residential condominium unit owners. Where services are
rendered to a residential condominium unit owner who has directly contracted
with the service provider for such services, such services will be considered
not to be services to income-producing real property if the owner occupies the
unit to which services are rendered, and will be considered to be services to
income-producing real property if the owner does not occupy the unit.
(g) Services affected.
(1) In general. Except as
otherwise provided in subdivision (2) of this subsection, services to
industrial, commercial or income-producing real property mean those services
set out in section
12-407(2) (i)
(I) of the general statutes (namely,
management, electrical, plumbing, painting and carpentry services) and include
but are not limited to such services affecting real property as roofing,
siding, excavating, foundation work, plastering, heating, air conditioning,
ventilation, welding, flooring, sandblasting, carpeting, elevator or escalator
work, wallpapering, masonry, refuse removal, demolition and structural
inspection.
(2) Services elsewhere
described. Any provision of subdivision (1) of this subsection to the contrary
notwithstanding, services to industrial, commercial or income-producing real
property do not include the rendering of services defined as a "sale" or
"selling" under subparagraph (F) (architectural, building engineering and
building planning or design services), subparagraph (S) (land surveying
services), subparagraph (V) (locksmith services), subparagraph (X) (landscaping
and horticultural services), subparagraph (Y) (window cleaning services),
subparagraph (Z) (maintenance services), subparagraph (AA) (janitorial
services), subparagraph (BB) (exterminating services) or subparagraph (CC)
(swimming pool cleaning and maintenance services) of said section
12-407(2)
(i). The services involved in the
construction of irrigation systems, lawn sprinkler systems, patios (other than
concrete or asphalt) and walkways (other than concrete or asphalt) will be
treated as services defined as a "sale" or "selling" under subparagraph (X) of
said section
12-407(2)
(i). The services involved in the
construction of ponds, walls, fences or gates will be presumed, until the
contrary is established, to be services defined as a "sale" or "selling" under
subparagraph (X) of said section
12-407(2)
(i). This presumption may be rebutted only if
the service provider clearly establishes that the services rendered are not
intended to be landscaping services. For example, a service provider installing
a chain-link fence that encloses a swimming pool and that is installed to
comply with a law requiring that swimming pools be enclosed can establish that
the services rendered are not intended to be landscaping services.
(h) Taxability of charges made by service provider to owner.
(1)
Where a service provider is considered to have consumed materials or supplies
used by such provider in fulfilling a construction contract, the portion of
such provider's charge that is attributable to the cost to such provider of
such materials or supplies shall not be treated as a charge for services to
industrial, commercial or income-producing real property. The service provider
shall give a bill or invoice to the property owner that either separately
states the charge for such services and the cost to such provider of such
materials or supplies or, in the alternative, states only the total charge,
including the charge for the services and the tax thereon, together with the
words "tax included."
(2) In the
event that a construction contractor, in fulfulling a construction contract,
purchases services to industrial, commercial or income-producing real property
from a construction subcontractor for resale to the property owner, and such
subcontractor accepts a resale certificate from such contractor, then the cost
of materials or supplies used by such subcontractor in fulfilling the
subcontract may be taken into account by such contractor on the bill or invoice
to the property owner as long as such subcontractor gives a bill or invoice to
such contractor that separately states the charge for such services and the
cost to such subcontractor of the materials or supplies considered to have been
consumed in fulfilling the subcontract.
(3) The term "construction contract" means a
contract for the repair, alteration, improvement, remodeling or construction of
real property. Materials or supplies are considered to be used in fulfilling a
construction contract when they are physically incorporated in and become a
permanent part of real property.
(i) Taxability of charges made by one service provider to another provider reselling to owner.
(1) Where a service provider renders services
to industrial, commercial or income-producing real property to another service
provider who will resell such services to the owner of the real property, such
service provider may either accept a resale certificate from the reseller of
such services or, in the alternative, refuse to accept such resale
certificate.
(2) If the service
provider accepts a resale certificate from such reseller, the bill or invoice
to such reseller shall either separately state the charge for the services and
the cost to such provider of the materials or supplies used by such provider in
fulfilling a construction contract or, in the alternative, state only the total
charge, including the charge for the services, together with the words "tax not
included."
(3) If the service
provider refuses to accept a resale certificate from such reseller, the bill or
invoice to such reseller shall either separately state the charge for the
services and the cost to such provider of the materials or supplies used by
such provider in fulfilling a construction contract or, in the alternative,
state only the total charge, including the charge for the services and the tax
thereon, together with the words "tax included."
(4) The term "construction contract" means a
contract for the repair, alteration, improvement, remodeling or construction of
real property. Materials or supplies are considered to be used in fulfilling a
construction contract when they are physically incorporated in and become a
permanent part of real property.
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