This blog post may now be out of date. For our most up-to-date info on Connecticut sales tax, check out our “Connecticut Sales Tax Guide for Businesses.”
With all the changes in sales tax laws, it can be tough as an online seller to know which end is up and which end is down. Luckily, TaxJar is here to help! Here’s a guide for Connecticut – whether you operate in, out, or have nexus in the state, we’ll show you what you have to do to stay on the up and up.
You’re an online seller, but don’t live in Connecticut
Normally this is where we would tell you that you have no obligation to sales tax in the state if you don’t operate within or have nexus there. However, recently, Connecticut revoked Quill Corp. v. North Dakota which was basically the law holding the state to the Supreme Court ruling about sellers not collecting sales tax in states they don’t physically operate within.
What does this mean? While the Connecticut Department of Revenue has yet to provide any more detail on if and how they plan to require out of state sellers to collect sales tax, they seem to be taking steps toward this result.
Right now, online sellers should consult with their sales tax accountants on how best to handle sales tax in this state.
If you do decide to collect sales tax in Connecticut, the base rate is 6.35% for the whole state and there are no local rates, so at least they’ve streamlined it for everyone out of the state.
You live in and/or operate a business in Connecticut
If you operate a business or live in Connecticut, you’re required to comply with sales tax laws in the state. However, you’ll be happy to know that the state has streamlined everything for the most part, meaning you’ll have a much easier time getting your ducks in a row when it comes to sales tax in the state.
First, make sure you register your business. It’s easiest to register online.
Now, as far as collecting, there’s a statewide sales tax rate of 6.35%. Many states also require you to add local sales tax rates, but, as mentioned above, not Connecticut. This is a big break for you as a seller!
However, Connecticut does count sales tax on shipping. Make sure you tax your buyer on the shipping cost and add this to your total you send into the state.
If you are an online seller, live out-of-state, and use a fulfillment service (like FBA)
So what if you’re an online seller who sells through Amazon’s FBA or otherwise have nexus in the state of Connecticut? Do you have to collect sales tax?
The state doesn’t actually have an Amazon fulfillment warehouse…yet. There is one scheduled to open in the state this year (2014). When that opens, and you sell to someone in the state through Amazon, you will have nexus in the state and therefore must collect sales tax.
Otherwise, what constitutes nexus? Connecticut has a few rules about it. If your business has any physical presence (including selling tangible personal property for storage, use or other consumption in this state, or selling taxable services) you must register it with the state. However, the registration is the only real difference here, as you still must collect sales tax if you don’t have nexus. Also, the rate is the same – 6.35% with no local rates.
Collecting the correct sales tax rate
If you have sales tax nexus in the state of Connecticut, you must collect a sales tax rate of 6.35%. There are no local rates to worry about, so that number is all you’ll have to deal with, at least for now.
Make sure to take shipping charges into account as well, as Connecticut considers those applicable to sales tax.
Filing sales tax in Connecticut
If you need to file a sales tax return in Connecticut, TaxJar has your back. You can now enroll in AutoFile for the state of Connecticut and we’ll automatically file your sales tax return for you! Find out more at TaxJar.com.
Summing It Up: Connecticut sales tax is up in the air
When dealing with sales in Connecticut, consult with an account and keep a close eye on this blog for updates on their game-changing announcement about out-of-state sellers and sales tax.
If you do find that you have sales tax nexus in the state, you must collect sales tax on purchases from Connecticut buyers; luckily, though, Connecticut has streamlined the process a bit. There are no local rates to worry about, so all you have to collect is 6.35% for every transaction. Make sure to include shipping as well, as they consider that taxable.
Do you have experience selling in Connecticut? Have more questions about sales tax in the state? Mad how they’ve decided to ignore federal law and collect sales tax from out of state sellers? Comment below to get the discussion going!