RATE OF SALES TAX:
6.35%
LOCAL & COUNTY MAXIMUM RATES:
There is no state sales tax.
Table of Contents
What Are the Taxable Goods and Services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Connecticut.
Traditional Products and Services
Physical property such as furniture, household appliances, and automobiles are examples of goods subject to sales tax in Connecticut.
Prescription and non-prescription medications, as well as foodstuffs, are tax-free.
Connecticut levies an excise tax of 8.1%, or 25 cents per gallon, on gasoline purchases.
In Connecticut, certain services are subject to sales tax. The Connecticut Office of Legislative Research provides a full list of taxable services on this website.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Businesses in Connecticut are required to collect sales tax on the sale of digital products or services. The sales tax rate is 1%.
How to Apply for Connecticut Sales Tax
If you’ve decided that you must charge sales tax on part or all of the items and services your company offers, the next step is to apply for a seller’s licence.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
Identification information for a business
Significant commercial activity
Type of business entity
Every company owner and officer
A Resale Certificate might help you save money.
When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Store Sales Shipping Within-State Sales Outside-State Sales
Retail Sales
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
There are two types of sales to consider when computing sales tax:
Sales inside the state
Out-of-State Purchases
Sales inside the state
It is simple to calculate Connecticut sales tax on products sold. Simply apply the 6.350% flat sales tax rate to all products, whether sold in-store or sent across the state.
Out-of-State Purchases
Connecticut firms must only pay sales tax on out-of-state sales if they have a presence in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your Connecticut seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in Connecticut are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.
Annual filing: If your company collects less than $83.33 in sales tax each month, you should submit returns on an annual basis.
Quarterly filing: If your company receives between $83.33 and $333.33 in sales tax each month, you should choose to submit quarterly returns.
Monthly filing: If your company receives more than $333.33 in sales tax each month, you must submit monthly returns.
Deadlines for Filing
The deadline for all Connecticut sales tax returns is the 31st of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day. The following are the filing deadlines for this year:
Penalties for Filing Late
If the file is not more than 5 days late, Connecticut assesses a late filing penalty of 2% of the recorded sales tax payable. After 5 days, the rate rises to 5% of the tax owed. This rate applies if the filing date is within 15 days of the due date; otherwise, the penalty is 10% of the amount due.
Connecticut levies 1% interest per month on any amount owed on a sales tax return that is over the due date. After the first month, the late filing penalty has increased to the maximum rate of 110% of the initial tax owed. This amount will be charged 1% compound interest each month until the date of payment.