Connecticut Sales Tax
The state of Connecticut requires businesses that have nexus to collect sales taxes from their buyers. These include sellers who have a physical presence in the state such as a store, warehouse or distribution center.
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Generally, businesses that sell goods or services in Connecticut must collect sales tax from their customers. This is typically done by itemizing the sales tax component of each transaction on the customer’s invoice. Connecticut sales tax rate is 6.35%, though specific rates for particular goods and services may differ. Some goods are exempt from sales tax, including bicycle helmets, most non-prepared food items, and medicines. Businesses should review their sales tax collection laws frequently to ensure they are up to date.
Businesses must also understand and apply nexus rules correctly. Nexus is the term used to describe a business’s commercial connection to a state, whether physical or economic. If a business has nexus in Connecticut, it must collect and remit sales tax, file reports, and keep accurate records. It is crucial for businesses to understand both physical and economic nexus, as well as the rules for exemptions. Many businesses wind up overpaying the state after a sales tax audit due to not fully understanding these complex rules.
Connecticut Sales Tax Permit Registration
If you sell goods or services in Connecticut, you must register and collect sales tax to avoid penalties and late fees. You also must apply the correct sales tax rate to each sale, file and remit returns, and keep accurate records.
The first step is to register for a sales tax permit. You can find instructions on the Department of Revenue website. Note that nexus in Connecticut is based on economic activity rather than physical presence, so online sellers should be aware of the risks of unintentional nexus-triggering activities (e.g., clickstreaming). Once you’re registered, the Department of Revenue will assign a filing frequency for your business. The filing frequencies are based on your business size and sales volume.
Connecticut Sales Tax Due Dates
Once you’ve registered, it’s important to understand your sales tax collection and filing responsibilities. Most tangible products are taxable in the state, including most clothing and footwear, but many exemptions exist. Digital products are typically taxable, too – such as media streaming services and eBooks – but rules can vary.
If you’re selling in Connecticut, keeping accurate records of all sales transactions is crucial. This will help you ensure you’re charging the right sales tax amount and filing your returns correctly. Once you’ve collected sales tax, you’ll need to remit it to the state by the due date. Connecticut sales tax returns are due on the last day of the month following the sales tax filing period.
Connecticut Sales Tax Exemption
Some goods in Connecticut are exempt from sales tax, including bicycle helmets, most non-prepared food items, medicines, and more. Other goods and services are taxable, such as most clothing and footwear, food served in restaurants, and energy and utility usage. Manufacturers and industrial processors who are engaged in production activities may qualify for an exemption from state sales tax on the purchase of electricity, natural gas, and water used for production purposes.
Connecticut Exemption Certificates
