This Special Notice has been modified and superseded by SN 2001(7)
Sharing Certain Use Tax Revenue With Municipal Agencies
1997 Conn. Pub. Acts 229, §1
PURPOSE: The purpose of this Special Notice is to describe new legislation that allows the Commissioner of Revenue Services to share with municipal agencies a percentage of certain revenue that is collected by the Department of Revenue Services as a result of use tax assessments that are made against purchasers of vessels.
STATUTORY AUTHORITY: 1997 Conn. Pub. Acts 229, §1. (This provision has not yet been codified by the Legislative Commissioner’s Office.)
EFFECTIVE DATE: Effective for use tax assessments made with the assistance of municipal agencies on or after June 24, 1997.
SHARING CERTAIN USE TAX REVENUE WITH MUNICIPAL AGENCIES: Under 1997 Conn. Pub. Acts 229, §1, municipal agencies, by gathering and submitting information about vessels, can assist the Department of Revenue Services in identifying persons who may owe Connecticut use tax, and share a portion of the revenue that is collected. 1997 Conn. Pub. Acts 229, §1 provides:
The Commissioner of Revenue Services is authorized to pay to a municipal agency an amount not to exceed fifty per cent of the tax actually collected as the result of an assessment made under section 12-416 of the general statutes against the purchaser of a vessel, as defined in subdivision (24) of section 12-407 of the general statutes, if said commissioner, in his sole discretion, determines that information provided by such agency was instrumental in the making of such assessment.
The Department of Revenue Services imposes certain requirements that municipal agencies must follow when submitting information about vessels. An explanation of these requirements is set forth below.
DEFINITION OF VESSEL: Conn. Gen. Stat. §12-407(24) defines vessel with reference to Conn. Gen. Stat. §15-127. Conn. Gen. Stat. §15-127 defines the term vessel to mean "every description of watercraft, other than a seaplane on water, used or capable of being used as a means of transportation on water."
REGISTRATION AND TAXATION OF A VESSEL THAT IS IN CONNECTICUT WATERS FOR 60 DAYS: Under Conn. Gen. Stat. §15-142, a vessel that is in Connecticut for an aggregate of 60 days or more during the period from May 1 through October 31 is required to be registered with the Department of Motor Vehicles ("DMV"). (Conn. Gen. Stat. §15-143(a) provides a list of vessels that are not required to be registered.) A vessel need not be in Connecticut waters for 60 consecutive days for the rule to apply, but only for a total of 60 days between May 1 and October 31.
When a vessel is registered, the DMV issues two decals which must be prominently displayed on the vessel. Conn. Gen. Stat. §15-144 requires that the registration decals "be displayed on each side of the vessel at the bow in a manner prescribed by the Commissioner of Environmental Protection." (Note: All properly registered vessels should display their decals. Municipal agencies, therefore, should focus their efforts on those vessels that do not display DMV decals.)
The purchaser of a vessel that is required to be registered in Connecticut must also pay Connecticut sales or use tax on the purchase price of the vessel. The first time the purchaser of a vessel applies to the DMV for Connecticut registration, the purchaser must provide proof that sales or use tax has been paid to Connecticut, or to another state, on the purchase price or consideration paid for the transfer of ownership of the vessel. If no sales or use tax has been paid in Connecticut, or sales or use tax has been paid to another state at a rate lower than Connecticut’s 6% rate, Connecticut use tax is due.
Note: The Department of Revenue Services uses the 60-day rule as a guideline for determining whether a nonresident vessel is required to be registered with the DMV. Connecticut residents owning or renting realty in Connecticut may be subject to tax even if their vessels have been in Connecticut for less than 60 days.
The presence of a vessel in Connecticut waters during the month of October, however, may not contribute to establishing use tax liability. Conn. Gen. Stat. §12-413a provides an exemption from use tax for vessels brought into Connecticut exclusively for storage, maintenance, or repair between October 1 and April 30. Therefore, while the presence of a vessel in Connecticut waters during the month of October will count toward the 60-day registration requirement set forth in Conn. Gen. Stat. §15-142, such presence will not subject a vessel to use tax liability if the vessel is in Connecticut solely for storage, maintenance or repair purposes.
INFORMATION TO BE PROVIDED BY A MUNICIPAL AGENCY: In order for a municipal agency to be eligible to share a portion of the revenue collected by the Department of Revenue Services as a result of a use tax assessment made against the purchaser of an unregistered vessel that is being used or stored in Connecticut, such agency must have provided the Department of Revenue Services with information that was instrumental in the making of an assessment. Information that is submitted to the Department of Revenue Services must establish that an unregistered vessel was in Connecticut waters for an aggregate of 60 days between May 1 and October 31.
The types of information that will assist the Department in making an assessment include:
- Photographs, video tape, etc.;
- A police log book;
- An affidavit from an authorized agent of a municipality.
This list is not intended to be exhaustive. The Department will review all the information it receives and determine its validity.
PROCEDURES FOR SUBMITTING INFORMATION TO THE DEPARTMENT: A municipal agency wishing to submit information about a vessel must complete a Form AU-497. Municipal agencies should complete Form AU-497 and send it and any information about a vessel to:
Department of Revenue Services
Audit Division - RCA Unit
25 Sigourney Street
Hartford, CT 06106
The Department of Revenue Services will not consider any information submitted by a municipality that is not accompanied by a properly completed Form AU-497.
PERCENTAGE OF REVENUE PAID TO A MUNICIPAL AGENCY: A municipal agency that has provided the Department of Revenue Services with information that was instrumental in the making of a use tax assessment against the purchaser of a vessel not registered in Connecticut will be entitled to up to 50% of the use tax revenue actually collected by the Department of Revenue Services. This does not include any penalties or interest the Department of Revenue Services may collect. Once the tax has been fully collected, the Department of Revenue Services will send the municipality a check for its share of the use tax revenue collected.
When registering a vessel with the DMV, in addition to obtaining a decal and providing proof of sales tax paid, a registrant must pay a fee. This annual fee is based on the total footage of the vessel. A municipal agency is not entitled to a percentage of the annual fee that is collected by the DMV.
CONFIDENTIALITY: Conn. Gen. Stat. §12-15 prohibits the Department of Revenue Services from releasing return information to municipalities under most circumstances. Return information includes essentially any information that relates to the liability of any person for tax.
Due to the prohibitions on disclosure of return information, the only notification a municipality will receive regarding whether information submitted by it to the Department was instrumental in the making of a use tax assessment will be the receipt of a check from the Department of Revenue Services for the municipality’s share of the use tax collected.
EFFECT OF THIS DOCUMENT: A Special Notice is a document that announces a new policy or practice in response to changes in State or federal laws or regulations or to judicial decisions. A Special Notice indicates the Department’s informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or tax practitioners.
EFFECT ON OTHER DOCUMENTS: None affected.
FOR FURTHER INFORMATION: If you have questions about Connecticut taxes, please call the Department of Revenue Services during business hours, Monday through Friday:
- 860-297-5962 (Hartford calling area or from out-of-state); or
- 1-800-382-9463 (toll-free from within Connecticut).
FORMS AND PUBLICATIONS: You may obtain forms and publications at any hour, seven days a week:
Telecommunications Device for the Deaf (TDD/TT) users ONLY call 860-297-4911 during business hours.
Sharing tax revenue