STATE OF CONNECTICUT
Substitute Bill No. 6605                         Page 1


                                            LCO No.
                                  General Assembly
                                  January Session, A.D., 1993

AN ACT PROMOTING  SIMPLICITY  IN THE DETERMINATION OF THE MEASURE
OF SALES AND USE TAXES AND THE OWNERSHIP OF SALES TAXES COLLECTED
BY A RETAILER FROM RETAIL CUSTOMERS.

    Be it enacted  by  the Senate and House of Representatives in
General Assembly convened:
    Section 1. Subsections  (8)  and (9) of section 12-407 of the
general statutes are repealed and the following is substituted in
lieu thereof:
    (8) "Sales price"  means  the total amount for which tangible
personal property is  sold, the total amount of rent received for
occupancy or the  total  amount received for any service rendered
on or after  July  1,  1975,  or  the  total amount of payment or
periodic payments received  for  leasing  or  rental  of tangible
personal property for  the  term  of  any  such  lease  or rental
occurring on or after July 1, 1975, valued in money, whether paid
in money or otherwise, without any deduction on account of any of
the following: (a) The cost of the property sold; (b) the cost of
materials used, labor  or  service cost, interest charged, losses
or any other  expenses;  [(c)  the  cost of transportation of the
property prior to  its purchase] (c) ANY CHARGES BY THE SELLER TO
THE PURCHASER FOR  SHIPPING  OR DELIVERY, NOTWITHSTANDING WHETHER
SUCH CHARGES ARE SEPARATELY STATED IN A WRITTEN CONTRACT, OR ON A
BILL OR INVOICE  RENDERED  TO  SUCH  PURCHASER  OR  WHETHER  SUCH
SHIPPING OR DELIVERY  IS PROVIDED BY THE SELLER OR A THIRD PARTY.
Such total amounts include all of the following: (a) Any services
that are a  part  of the sale; (b) any amount for which credit is
given to the  purchaser  by  the seller; (c) all compensation and
all  employment  related  expenses,  whether  or  not  separately
stated, paid to  or  on  behalf of employees of a retailer of any
service described in  subdivision  (i)  of subsection (2) of this
section. "Sales price" does not include any of the following: (a)
Cash discounts allowed and taken on sales; (b) any portion of the
amount charged for  property  returned  by  customers, which upon
rescission of the  contract of sale is refunded either in cash or
credit, provided the property is returned within ninety days from
the date of  purchase;  (c)  the amount of any tax, not including
any manufacturers' or  importers'  excise  tax,  imposed  by  the
United States upon  or  with  respect  to  retail  sales  whether
imposed upon the  retailer  or  the consumer; [(d) transportation
charges separately stated, if the transportation occurs after the
purchase of the property is made; (e)] (d) the amount charged for
labor rendered in  installing  or  applying  the  property  sold,
provided such charge  is  separately stated and exclusive of such
charge  for  any   service   rendered   within   the  purview  of
subparagraph (I) of  subdivision  (i)  of  subsection (2) of this
section; [(f)] (e)  the  amount  charged  for  separately  stated
compensation, fringe benefits,  workers' compensation and payroll
taxes or assessments  paid  to  or  on  behalf  of employees of a
retailer who has  contracted  to  manage  a  service  recipient's
property or business  premises  and  renders  management services
described in subdivision  (i)  of subsection (2) of this section,
provided (A) the  employees  perform such services solely for the
service recipient at  its  property  or business premises and (B)
"sales price" shall  include  the separately stated compensation,
fringe  benefits, workers'  compensation  and  payroll  taxes  or
assessments paid to  or on behalf of any employee of the retailer
who is an  officer,  director or owner of more than five per cent
of the outstanding  capital  stock of the retailer. Determination
whether  an employee  performs  services  solely  for  a  service
recipient at its  property  or  business premises for purposes of
this subdivision shall  be  made  by reference to such employee's
activities during the  time  period beginning on the later of the
commencement  of  the   management  contract,  the  date  of  the
employee's first employment  by the retailer or the date which is
six months immediately preceding the date of such determination.
    (9) "Gross receipts"  means  the  total  amount  of the sales
price, of the  retail  sales of retailers, or the total amount of
the rent received  for occupancy or the total amount received for
any service rendered  on  or  after  July  1,  1975, or the total
amount of payment  or  periodic  payments received for leasing or
rental of tangible  personal  property  for  the term of any such
lease or rental  occurring  on  or  after July 1, 1975, valued in
money,  whether received  in  money  or  otherwise,  without  any
deduction on account of any of the following: (a) The cost of the
property sold; however,  in  accordance  with such regulations as
the commissioner of  revenue  services may prescribe, a deduction
may be taken  if  the  retailer  has  purchased property for some
other purpose than  resale,  has  reimbursed  his  vendor for tax
which the vendor  is required to pay to the state or has paid the
use tax with respect to the property, and has resold the property
prior to making  any  use  of  the property other than retention,
demonstration or display while holding it for sale in the regular
course of business. If such a deduction is taken by the retailer,
no refund or credit will be allowed to his vendor with respect to
the sale of  the  property;  (b)  the cost of the materials used,
labor  or service  cost,  interest  paid,  losses  or  any  other
expense; [(c) the cost of transportation of the property prior to
its sale to  the  purchaser] (c) ANY CHARGES BY THE SELLER TO THE
PURCHASER FOR SHIPPING  OR DELIVERY, NOTWITHSTANDING WHETHER SUCH
CHARGES ARE SEPARATELY  STATED  IN  THE WRITTEN CONTRACT, OR ON A
BILL OR INVOICE  RENDERED  TO  SUCH  PURCHASER  OR  WHETHER  SUCH
SHIPPING OR DELIVERY  IS PROVIDED BY THE SELLER OR A THIRD PARTY.
The  total  amount  of  the  sales  price  includes  all  of  the
following: (a) Any  services that are a part of the sale; (b) all
receipts, cash, credits  and property of any kind; (c) any amount
for which credit  is  allowed by the seller to the purchaser; (d)
all compensation and  all employment related expenses, whether or
not separately stated,  paid  to  or  on behalf of employees of a
retailer  of  any   service   described  in  subdivision  (i)  of
subsection (2) of  this  section. "Gross receipts" do not include
any of the  following:  (a)  Cash  discounts allowed and taken on
sales; (b) any portion of the sales price of property returned by
customers, which upon  rescission  of  the  contract  of  sale is
refunded either in  cash  or  credit,  provided  the  property is
returned within ninety days from the date of sale; (c) the amount
of any tax, not including any manufacturers' or importers' excise
tax, imposed by  the United States upon or with respect to retail
sales whether imposed  upon  the  retailer  or the consumer; [(d)
transportation charges separately  stated,  if the transportation
occurs after the  sale of the property is made to the  purchaser;
(e)] (d) the  amount  charged for labor rendered in installing or
applying the property  sold,  provided  such charge is separately
stated and exclusive  of  such  charge  for  any service rendered
within the purview  of  subparagraph  (I)  of  subdivision (i) of
subsection (2) of  this section; [(f)] (e) the amount charged for
separately  stated  compensation,   fringe   benefits,   workers'
compensation and payroll  taxes  or  assessments  paid  to  or on
behalf of employees  of a retailer who has contracted to manage a
service recipient's property  or  business  premises  and renders
management services described  in  subdivision  (i) of subsection
(2) of this  section,  provided  (A)  the  employees perform such
services solely for  the  service  recipient  at  its property or
business premises and  (B)  "gross  receipts"  shall  include the
separately  stated  compensation,   fringe   benefits,   workers'
compensation and payroll  taxes  or  assessments  paid  to  or on
behalf of any  employee  of  the  retailer  who  is  an  officer,
director or owner  of  more than five per cent of the outstanding
capital stock of  the retailer. Determination whether an employee
performs services solely  for a service recipient at its property
or business premises  for  purposes  of this subdivision shall be
made by reference  to  such employee's activities during the time
period  beginning  on  the  later  of  the  commencement  of  the
management contract, the  date of the employee's first employment
by the retailer  or  the  date  which  is  six months immediately
preceding the date of such determination.
    Sec. 2. Subsection  (1)  of  section  12-411  of  the general
statutes is repealed  and  the  following  is substituted in lieu
thereof:
    (1)  An  excise   tax  is  hereby  imposed  on  the  storage,
acceptance,  consumption or  any  other  use  in  this  state  of
tangible  personal  property  purchased  from  any  retailer  for
storage, acceptance, consumption  or any other use in this state,
the acceptance or  receipt of any services constituting a sale in
accordance with subdivisions (i) to (l), inclusive, of subsection
(2) of section  12-407,  or, the storage, acceptance, consumption
or any other  use  in  this  state  of tangible personal property
which has been  manufactured,  fabricated, assembled or processed
from materials by  a person, either within or without this state,
for storage, acceptance,  consumption  or  any  other use by such
person in this  state,  TO  BE  MEASURED  BY  THE  SALES PRICE OF
MATERIALS, at the  rate of six per cent of the sales price of the
property or the consideration paid for any such services, except,
in lieu of  said  rate of six per cent, (A) at a rate of five and
one-half per cent of the sales price of any repair or replacement
parts exclusively for  use in machinery, as defined in subsection
(34) of section  12-412,  used  directly  in  a  manufacturing or
agricultural production process,  (B)  at  a  rate  of  four  and
one-half per cent of the sales price of any motor vehicle sold to
any person who  is  a  member  of  the armed forces of the United
States and is  on  full-time active duty in Connecticut but whose
permanent residence is  in another state, (C) at a rate of twelve
per cent of the rent paid for occupancy of any room or rooms in a
hotel or lodging  house  for  the  first  period of not exceeding
thirty consecutive calendar  days,  and  (D)  with respect to the
storage, acceptance, consumption  or use in this state of vessels
purchased from any  retailer for storage, acceptance, consumption
or any other  use in this state by any resident of another state,
at a rate  which  is the lesser of: (i) Six per cent of the sales
price thereof or  (ii) the percentage of such sales price that is
payable as a  use  tax  by  purchasers  making  purchases  in the
purchaser's state of  residence,  provided  the retailer requires
and maintains an affidavit or other evidence, satisfactory to the
commissioner, concerning the purchaser's state of residence.
    Sec. 3. Section  12-412c  of the general statutes is repealed
and the following is substituted in lieu thereof:
    (a) On [and]  OR after July 1, 1986, the sale of a new mobile
manufactured home, AND  ON  OR  AFTER JULY 1, 1993, THE SALE OF A
NEW MODULAR OR  PREFABRICATED  HOME, from a manufacturer shall be
subject to sales  [tax]  AND USE TAXES under this chapter, except
that for purposes of said [tax] TAXES the sales price of such new
mobile manufactured home  OR  NEW  MODULAR  OR PREFABRICATED HOME
shall be deemed  to  be  seventy  per  cent of the manufacturer's
sales price applicable with respect to such sale. For the purpose
of this subsection,  "mobile  manufactured  home" means a home at
least twelve feet  in  width,  which cannot proceed under its own
power, which is  towed or placed on flatbed trucks to be taken to
its destination and  which  requires  a limited duration oversize
load permit in  order  to  be transported on the highways of this
state, AND A  "NEW MODULAR OR PREFABRICATED HOME" MEANS A MODULAR
OR PREFABRICATED HOME,  AS DEFINED IN SECTION 21-85 WHICH HAS NOT
BEEN PREVIOUSLY SOLD OR OCCUPIED AS A DWELLING UNIT.
    (b) On [and]  OR after July 1, 1986, the resale of any mobile
manufactured home located  in  a  mobile  manufactured  home park
licensed pursuant to  chapter  412  or located on a single-family
lot as a permitted nonconforming use or as otherwise permitted by
the zoning regulations  of  the municipality in which the home is
located, AND ON  OR AFTER JULY 1, 1993, THE RESALE OF ANY MODULAR
HOME, shall be  exempt from the sales [tax] AND USE TAXES imposed
by this chapter  and  shall be taxed as a conveyance of realty in
accordance with the provisions of chapter 223.
    Sec. 4. Subsection  (2)  of  section  12-408  of  the general
statutes is repealed  and  the  following  is substituted in lieu
thereof:
    (2)  Reimbursement  for  the  tax  hereby  imposed  shall  be
collected  by  the  retailer  from  the  consumer  and  such  tax
reimbursement,  termed  "tax"   in   this   and   the   following
subsections, shall be  paid  by  the consumer to the retailer and
each retailer shall  collect from the consumer the full amount of
the tax imposed  by  this chapter or an amount equal as nearly as
possible or practicable  to  the average equivalent thereof. Such
tax shall be  a  debt  from the consumer to the retailer, when so
added to the  original  sales  price, and shall be recoverable at
law in the  same  manner  as  other  debts  except as provided in
section  12-432a.  THE  AMOUNT  OF  TAX  REIMBURSEMENT,  WHEN  SO
COLLECTED, SHALL BE  DEEMED TO BE A SPECIAL FUND IN TRUST FOR THE
STATE OF CONNECTICUT.  Whenever such tax, payable by the consumer
(A) with respect  to a charge account or credit sale occurring on
or after July  1,  1984,  is  remitted  by  the  retailer  to the
commissioner and such sale as an account receivable is determined
to be worthless  and is actually written off as uncollectible for
federal income tax  purposes  or  (B)  to a retailer who computes
taxable income, for  purposes  of  taxation  under  the  Internal
Revenue Code of  1986,  or  any subsequent corresponding internal
revenue code of  the United States, as from time to time amended,
on the cash  basis  method  of  accounting with respect to a sale
occurring on or  after  July 1, 1989, is remitted by the retailer
to the commissioner  and  such  sale  as an account receivable is
determined to be  worthless,  the amount of such tax remitted may
be credited against  the tax due on the sales tax return filed by
the retailer for  the  monthly  or quarterly period, whichever is
applicable, next following  the  period  in  which such amount is
actually so written  off,  but  in  no event shall such credit be
allowed later than  three  years  following  the date such tax is
remitted.  The commissioner  shall,  by  regulations  adopted  in
accordance with chapter  54,  provide  standards  for proving any
such claim for  credit. If any account with respect to which such
credit is allowed  is  thereafter  collected  by  the retailer in
whole or in  part,  the  amount so collected shall be included in
the sales tax return covering the period in which such collection
occurs. The tax  applicable  in any such case shall be determined
in accordance with the rate of sales tax in effect at the time of
the original sale.
    Sec. 5. Subsection  (4)  of  section  12-411  of  the general
statutes is repealed  and  the  following  is substituted in lieu
thereof:
    (4)  The  tax  required  to  be  collected  by  the  retailer
constitutes a debt  owed  [by] TO the retailer [to this state] BY
THE PERSON PURCHASING TANGIBLE PERSONAL PROPERTY OR SERVICES FROM
SUCH RETAILER. THE  AMOUNT  OF  TAX,  WHEN SO COLLECTED, SHALL BE
DEEMED  TO  BE   A  SPECIAL  FUND  IN  TRUST  FOR  THE  STATE  OF
CONNECTICUT.
    Sec. 6. This  act  shall  take  effect  from  its passage and
sections  1  to  3,  inclusive,  shall  be  applicable  to  sales
occurring on and after July 1, 1993.

FIN  COMMITTEE VOTE: YEA 27 NAY 10  JFS
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