CT Sales and Use Tax

[Stephen R.]

I registered my real estate investing business with the CT Department of Revenue Services and the questionnaire mandated I apply for a Sales & Use tax permit. I have a C corp and hire a CG, to whom I issue a 1099 at the end of the year, to complete the rehab on any properties. I am only rehabbing residential real estate, and my contract with the GC is both labor and material included or labor only, with my purchasing the material separately. I am also a licensed real estate agent.

I have read through the DRS website regarding the services which are subject to Sales and Use tax, and the information by industry type, (none of which include real estate) and can't think of any instance in which I would be subject to tax. When I contacted DRS they claimed I would be characterized as a building contractor. However, even if that were accurate, which I don't believe it is, I still can't understand a point at which I would owe sales and use taxes. Even if I purchase material separately, any required sales tax is collected at the time of purchase. And according to the regulations, labor is not taxable on residential real estate.

My only thought is that when filling out the application I inaccurately selected “yes” when asked “Do you sell, or will you be selling, goods in Connecticut (wither wholesale or retail)? Would the term “goods” not be applicable to the sale of real property, a house?

Have any other CT investors been required to register for a Sales and Use Tax permit?