Assessment of Sales Tax on Labor in the State of CT

Connecticut's sales tax is assessed on goods and services, including labor.

Connecticut assesses sales tax on exchanges of tangible goods and, since 1972, on the rendering of certain services. As of July 2011, the sales tax is generally 6.25 percent. You pay sales tax on labor when it occurs as part of a taxable service. Taxable services include the work of building contractors, computer specialists, personal service providers and business service providers.

Building Contractors

In addition to paying sales tax on the goods used in the completion of a construction contract, building contractors must charge sales tax on most services to existing income-producing property and some services to residential property. The service charge, which is the difference between the cost of materials and the total contract price, includes charges for labor. Services that are always taxable include landscaping, pool cleaning and maintenance, snow removal, window cleaning and extermination services.

Computer Services

Connecticut generally taxes computer and data processing services at a reduced rate of one percent. These services include activities like creating and modifying computer programs, providing data storage services, conducting computer trainings and installing software systems. The state requires a separate statement of charges for computer services that distinguishes them from other services and equipment sales. Connecticut assesses no sales tax on computer services associated with creating and maintaining web sites.

Personal Services

In Connecticut, you pay sales tax for the labor associated with a broad variety of personal services. Services for personal maintenance, including health club membership, spa treatments, nail care, cosmetic medical procedures and yoga instruction, are taxable. You pay sales tax on labor for necessities, like car repair or garbage removal from commercial property, and for the service of photographers, pet grooming and boarding, private investigators, flight instructors and employment agencies.

Business Services

Businesses pay sales tax on the labor associated with services for business analysis, public relations, management contracts and consulting. Environmental consulting services are excluded from taxation, however, and commercial air carriers are not taxed for services provided to aircraft of 6,000 pounds or more. The sales tax applies to credit information and reporting, personnel training, stenographic and telephone answering services, direct mail advertising, telecommunications and providing piped-in music to a business.

Exemptions

Connecticut does not assess sales tax on units of government and their agencies, including the federal government, state of Connecticut or any of its political subdivisions. Sales tax is generally not collected on building contracts for new construction, residential property, low-income housing or construction for charitable or religious organizations. The law exempts residential utilities like gas, electricity and water from sales tax and charges no sales tax for repairs to medically necessary equipment like walkers and wheelchairs.

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