Connecticut Sales Tax Guide 2024: Compliance, Rates, and Regulations for Businesses

Connecticut sales tax at a glance

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Connecticut sales tax rates in 2023

The Connecticut sales tax rate in 2023 is 6.35%. This comprises a base rate of 6.35% plus no additional mandatory local rates. Since there are no local taxes, the 6.35% statewide rate applies uniformly across the state.

FAQs

How do you calculate Connecticut sales tax?

To calculate Connecticut sales tax, multiply the 6.35% tax rate by the purchase price. For instance, if the purchase price is $100, the sales tax would be $6.35.

What are the penalties for not paying Connecticut sales tax?

The penalty for underpayment of Connecticut sales tax is 15% of the tax due or $50, whichever is greater. Late payments are also subject to interest at 1% per month.

What’s the difference between destination-based and origin-based sales tax states?

Destination-based sales tax states tax transactions based on where the purchaser receives the product. Origin-based sales tax states tax transactions based on where the seller is located.

Is the Connecticut sales tax destination-based or origin-based?

Connecticut is a destination-based sales tax state. Sales tax is collected based on where the purchaser receives the product, not where the seller is located.

Is Connecticut a Streamlined Sales Tax state?

Connecticut is not a Streamlined Sales Tax state. The Streamlined Sales Tax Project (SSTP) aims to simplify sales tax collection across states, but Connecticut has not joined the SSTP or implemented its Streamlined Sales and Use Tax Agreement (SSUTA).

Sales tax nexus table in Connecticut

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FAQs

Do I need a Connecticut seller's permit if I’m only a wholesaler?

Yes, wholesalers in Connecticut require a seller's permit, even if they only make sales for resale. The permit requirement applies to anyone making sales of tangible goods in the state.

Do I need a Connecticut seller's permit if I only sell temporarily in the state?

Yes, you need a seller's permit in Connecticut, even for temporary sales. This includes selling at craft fairs, trade shows, or other short-term events.

What's exempt from sales tax in Connecticut

Connecticut provides sales tax exemptions for many types of goods and services, including:

• Most food and beverages sold for human consumption
• Prescription drugs and nonprescription medicines
• Newspapers, magazines, and periodicals
• Machinery used directly in manufacturing

FAQs

Are groceries taxable in Connecticut?

No, most grocery food items are exempt from sales tax in Connecticut. However, prepared meals, candy, soft drinks, and other specified items are taxable.

Are digital products taxable in Connecticut?

Yes, digital products like software, ebooks, music, movies, etc., are subject to Connecticut sales tax. The tax rate is 6.35% unless it falls under the 1% computer services category.

Is software-as-a-service (SaaS) taxable in Connecticut?

Yes, SaaS is considered a digital service and is taxable in Connecticut. The tax rate is 6.35% unless the SaaS involves computer/data services, which are taxed at 1%.

Are services taxable in Connecticut?

Yes, Connecticut taxes several categories of services, including repair, management consulting, telecom, and certain contractor services. See the full list of taxable services.

Excise taxes in Connecticut

Connecticut levies excise taxes on alcohol, tobacco, gasoline, and other fuels:

• Cigarettes - $4.35 per pack of 20
• Other tobacco products - 50% of wholesale price
• Alcoholic beverages - ranges from $0.03 to $1.2 per gallon. 
• Motor fuels - 25 cents per gallon

Connecticut has also legalized recreational marijuana but has not yet implemented marijuana excise taxes.

Remote sellers in Connecticut

Remote sellers with no physical presence in Connecticut must collect and remit sales tax once they exceed $100,000 in gross annual sales or 200 separate transactions. 

Prepaid sales tax rates for fuel products in Connecticut

Connecticut requires prepaid sales tax on the following motor vehicle fuels:

• Gasoline - 25 cents per gallon
• Diesel - 49.2 cents per gallon

Collecting sales tax in Connecticut

Let’s look at the steps to collect sales tax in Connecticut now.

How to collect sales tax in Connecticut if you are not based in Connecticut (Out-of-State)

Out-of-state sellers must register with the Connecticut Department of Revenue Services (DRS) and obtain a Connecticut seller's permit if they meet the economic nexus thresholds:

• 200 or more separate retail sales shipped to Connecticut AND
• $100,000 or more in gross receipts from sales shipped to Connecticut

These thresholds apply to sales made in the prior 12-month period.

Once these economic nexus thresholds are met, out-of-state sellers must register for a Connecticut seller's permit. This can be done online through the DRS website.

With a seller's permit, out-of-state sellers can collect and remit Connecticut sales tax even without having a physical presence in the state. The seller's permit allows you to conduct business and make sales to Connecticut customers legally.

Some other ways to reach sales tax nexus for out-of-state sellers include:

• Having employees, agents, or independent contractors conducting business in Connecticut on behalf of the seller.
• Owning or leasing tangible personal property or real property in Connecticut.
• Having an affiliated business physically located in Connecticut.

Should you collect sales tax on shipping charges in Connecticut?

Yes, Connecticut sellers should collect sales tax on shipping charges associated with taxable sales. If the shipped items are subject to sales tax, the shipping and delivery charges are also taxable.

This applies regardless of whether the seller or a third party performs the shipping. The charges are considered part of the sales price.

If taxable and non-taxable items are shipped together in one package, sellers can prorate the shipping charges based on the proportion of taxable products. Only the portion attributed to the taxable items is subject to sales tax.

Filing and paying sales taxes in Connecticut

All Connecticut sales and use tax returns must be filed and paid electronically using the Department of Revenue Services (DRS) Taxpayer Service Center (TSC).

Connecticut retailers registered for sales tax cannot file paper returns or make payments by check. Electronic filing and payment are mandatory.

Some key steps for electronic filing include:

• File Form OS-114 to report sales tax collections
• Report both taxable and nontaxable sales
• Take credit for any allowable deductions
• Calculate interest and penalties if applicable
• Make an electronic payment for amounts due

Electronic payment options include direct withdrawal from a bank account (free), as well as payment by credit card or debit card (fees apply).

Sales tax return filing schedule and due dates in Connecticut

Connecticut assigns filing frequencies of monthly, quarterly, or annual based on anticipated sales tax liability.

The sales tax return is due on the last day of the month following the end of the filing period.

The due dates for each filing period are.

Monthly Filing Deadlines:

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Quarterly Filing Deadlines:

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Annual Filing Deadline:

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Even if you made no taxable sales or owe no tax for a period, you must file a Connecticut sales tax return.

Filing penalties in Connecticut

Connecticut imposes a penalty of 15% of unpaid taxes due or $50 for late return filings, whichever is greater. Late tax payments also incur interest at 1% per month.

FAQs

What are the Connecticut sales tax due dates?

Due dates vary based on filing frequency - monthly, quarterly, or annual. See the schedules above for each period's exact due date.

I didn’t collect any Connecticut sales tax during this period. Do I still need to file a return?

Yes, every retailer must file a Connecticut sales tax return for each period even if you collected $0 sales tax.

Can I get an extension on filing my Connecticut sales tax return?

Yes, you can request a filing extension for up to 30 days by submitting Form CT-8809, Request for Extension of Time to File Informational Returns, before the original due date.

Can I amend a Connecticut sales tax return?

Yes, you can file an amended OS-114 return to correct errors or omissions from a previous return. You must pay any additional tax due plus applicable interest and penalties.

What is the penalty for filing and paying Connecticut sales tax late?

The penalty is 15% of unpaid tax due or $50, whichever is greater. Late payments also incur interest at 1% per month until the balance is paid.

Audit & appeals process

Connecticut's audit and appeals process involves several steps if a business is audited by the Department of Revenue Services (DRS).

The process begins when the auditor contacts the business to schedule the sales tax audit. The auditor will review records and returns to check for unpaid taxes.

If the audit finds discrepancies, the business can contest the findings with the auditor first. If the issues are not resolved, the company can file an appeal with the DRS Appellate Division.

If the appeal is unsuccessful, the final step is to appeal to the Connecticut Superior Court. Having an experienced representative is crucial during the appeals process.

Connecticut sales tax audit process

The typical Connecticut sales tax audit process is:

• The auditor makes initial contact to schedule the audit
• An entrance conference was held to explain the scope of the audit
• Auditor reviews records and tax returns
• Auditor compares returns to financial records
• Auditor examines exempt sales and out-of-state sales
• Auditor reviews tax treatment for expenses and assets
• Exit conference held to discuss audit findings
• An audit report issued with an assessment of tax due
• Opportunity to contest audit findings with the auditor
• Formal appeal process, if needed

What to expect during the audit?

The auditor will request access to all sales records, financial statements, invoices, bank statements, and other documents needed to verify sales tax compliance.

The auditor will compare returns to sales records to confirm all taxable sales were reported. They will examine documentation for exempt sales and out-of-state sales.

The auditor may also request purchase records to conduct a use tax review. This ensures all taxable purchases are appropriately taxed.

After the audit – Appealing the results

If the business disagrees with the audit findings, it can contest them first with the auditor informally. 

Failing that, a formal appeal can be filed with the DRS Appellate Division within 60 days of the notice of assessment.

If the appeal is unsuccessful, the final step is filing a request with the Connecticut Superior Court. Experienced representation is highly advisable during appeals.

Sales tax registration in Connecticut

Here are the steps for registering for sales tax in Connecticut:

How to register for sales tax in Connecticut?

To register for a Connecticut Sales and Use Tax Permit, complete Form REG-1—Business Taxes Registration Application online or by mail.

You'll need to provide basic information like your business name, address, ownership details, and a description of your business activities.

There is a $100 registration fee to obtain a sales tax permit. Once registered, you can begin collecting and remitting sales tax.

Registration requirements for online sellers in Connecticut

Remote sellers must collect Connecticut sales tax if they exceed $100,000 in annual gross receipts from sales to Connecticut or 200 or more retail sales shipped to Connecticut in the prior 12-month period.

Cost of registration for a Connecticut sales tax license

The fee to register for a Connecticut Sales and Use Tax Permit is $100. There are no recurring annual fees, but the permit must be renewed every two years.

Agencies to register within Connecticut

• Department of Revenue Services (sales tax)
• Secretary of State (business registration)
• Department of Labor (unemployment tax)

More Information & Contacts

• Connecticut Department of Revenue Services (DRS)
• Phone: 860-297-5962
• Website: https://portal.ct.gov/DRS

There you have it—an in-depth guide on Connecticut's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.