DRS: Managing Exempt status

 
Managing Exemption Status

 
 


Types of Exempt Programs
  1. Nonprofit Organizations - described below in detail
  2. Farmer Tax Exemption
  3. Commercial Fisherman
  4. Low and Moderate Income Housing Facilities

Obtaining Exempt status
  1. Your organization must first apply to the Internal Revenue Service (IRS) to see if it meets the qualifications to be granted exemption from federal income tax under section 501(a) of the Internal Revenue Code and has been determined, by a determination letter issued by the United States Treasury Department, to be an organization described in section 501(c)(3) or (13) of the Internal Revenue Code.   You may contact the IRS Tax Exempt and Government Entities Division for further information at 877-829-5500.
  2. Once you receive the determination letter a copy of the letter must be submitted with your Registration application for the purposes of being exempt from Connecticut sales and use taxes.
  3. As of July 1, 1995, the Department no longer issues exemption permits.  We will however, honor a permit from an organization that was issued prior to July 1, 1995.
  4. If an exempt organization was not issued a Connecticut E# permit prior to July 1, 1995, it will be exempt from Connecticut sales and use taxes only if it has been issued a federal determination letter or group ruling letter by the IRS stating that it is exempt from federal income tax under section 501(a) of the Internal Revenue Code and has been deemed, by the IRS, to be an organization described in section 50l(c)(3) or (13) of the Internal Revenue Code

Using the exemption certificates
  • CERT-112 - Used when purchasing meals and/or lodging if qualifications are met.
    • CERT-112 requires pre-approval.
    • Should be submitted two to three weeks prior to the date of the event
    • Attach copy of event flyer when submitting certificate.
    • You will be notified if approved or denied.  If approved you (the organization) must present the original form to the vendor of meals/lodging
    • Keep copy for your records
NOTE:  If using the same vendor for the same services throughout the year, use CERT-123 instead.  You must attach proof of your exempt status to the certificate.
  • CERT-119 - Used when purchasing goods and services exempt from tax
    • The purchases made by the organization must exclusively be for the purposes for which the organization was established and organization funds are used to pay for the purchase(s).
    • Officers, employees or members of the organization cannot make purchases for their personal use.
    • CERT-119 must be completed and presented to retailer at time of sale.
    • MUST attach copy of exemption federal determination letter, E-permit issued by Department of Revenue Services prior to July 1995.
    • DO NOT SEND CERT-119 to DRS
  • CERT-122 - This certificate is used by exempt organizations or qualifying governmental agencies to request a refund of Connecticut sales and use taxes paid on the qualifying purchase of meals or lodging by the exempt organization or qualifying governmental agency using their own funds.

This certificate may be used if all three of the requirements are met.

    • The retailer must directly invoice and charge the exempt organization or qualifying governmental agency for the meals and/or lodging.
    • The invoice must be paid by a check drawn on the account of the exempt organization or qualifying governmental agency or by a credit card issued in the name of the exempt organization or qualifying governmental agency.
    • The exempt organization or qualifying governmental agency is not reimbursed, in whole or part, by those consuming the meals and/or lodging.
    • The completed CERT-122 is submitted to the Department of Revenue Services for review.  If the CERT-122 is approved, the appropriate data is forwarded to our Refunds Clearances and Adjustments area for processing.
  • CERT-123 - This certificate is used by exempt organizations or qualifying governmental agencies to purchase meals and/or lodging from the same retailer, for a period of one year, exempt from the Connecticut sales and use taxes.
This certificate may be used if all four of the requirements are met.
    • The retailer must directly invoice and charge the exempt organization or qualifying governmental agency for the meals and/or lodging.
    • The invoice must be paid by a check drawn on the account of the exempt organization or qualifying governmental agency or by a credit card issued in the name of the exempt organization or qualifying governmental agency.
    • The exempt organization or qualifying governmental agency is not reimbursed, in whole or part,  by those consuming the meals or lodging.
    • The purchase of the meals and/or lodging occurs prior to the expiration date on the blanket certificate.

The exempt entity may use this certificate provided they are paying for the meals and lodging using their own funds and they will not be reimbursed by the individuals receiving the meals or lodging. The retailer must directly invoice the exempt organization or qualifying governmental agency and the invoice must be paid by a check drawn on the account of the exempt organization or qualifying governmental agency or credit card issued to the exempt organization. The certificate must be approved by the Department of Revenue Services and is valid for one year from the date of approval.

 

Qualification Requirements
 
A qualifying organization may purchase meals and lodging exempt from Connecticut sales and use taxes if ALL of the following conditions are met:
  1. The retailer directly invoices and charges the qualifying organization for the meals or lodging.
  2. The qualifying organization directly pays the retailer with a check drawn on its own account or with a credit card issued in its own name.
  3. The qualifying organization is not reimbursed, in whole or in part, by the donation or otherwise, for its payment of the meals or lodging by those consuming the meals or lodging.

Requesting a duplicate E-permit
 
NOTE:  This is applicable only to organizations who were issued a Exemption permit by the Connecticut Department of Revenue Services prior to July 1, 1995.
  • If the organization changes its name or address, it is required to notify the Department of Revenue Services in writing, on organization letterhead, to request an updated duplicate permit.  Your request for a name change should include the Articles of Incorporation, if incorporated, or a copy of the by-laws, if not incorporated.  Your request for a change of address must be on organization letterhead and must be the physical location of the organization.  In both instances the organization must return the incorrect permit to the Department.
  • If the organization has misplaced its exemption permit, it should submit a request in writing on organization letterhead to the Department.

General Exemption questions answered
  • What Should An Organization Do If It Paid Tax On The Purchase Of Meals Or Lodging But It Believes That The Purchase Qualified For Exemption From Sales And Use Taxes?

The organization must complete CERT 122, and submit it, along with required documentation, to the Department of Revenue Services,  450 Columbus Blvd., Hartford, CT  06103 for processing of the refund.

If the purchase qualifies for exemption from the sales and use taxes, a refund will be issued within 6 weeks.  The refund process will be expedited if the organization includes all the necessary documentation.

  • Do Connecticut State Agencies And Agencies Of Connecticut Municipalities Qualify For Exemption From Connecticut Sales And Use Taxes?

Yes. Connecticut State Agencies when making purchases of meals and lodging  exempt from the Connecticut sales and use taxes must complete CERT-112 or CERT-123 When making purchases of goods and services other than meals or lodging, the organization must use a Governmental Agency Exemption Certificate.

  • Are Agencies Of Other States Or Of Municipalities Located In Other States Exempt From Connecticut Sales And Use Taxes?

No.   There is no reciprocal agreement among the states in honoring the exempt status of agencies of other states.

  • Can an Out-Of-State Organization Use The Exemption Permit  Issued By Their State To Make Purchases of Goods and Services Exempt From The Connecticut Sales And Use Taxes?

No.  There is no reciprocal agreement among the states in honoring exemption permits.  However, if the organization was issued an exemption permit by the Connecticut Department of Revenue Services prior to July 1, 1995, or has been issued a federal determination letter or group ruling letter by the IRS stating that it is exempt from federal income tax under section 501(a) of the Internal Revenue Code and has been determined by the IRS, to be an organization described in section 50l(c)(3) or (13) of the Internal Revenue Code, may make purchases exempt from Connecticut sales and use taxes by following the procedures described under Qualification Requirements.

  • Can Schools, Colleges And Universities Purchase Goods And Services Exempt From The Connecticut Sales And Use Taxes?

A private school, college and university that was issued an exemption permit by the Connecticut Department of Revenue Services prior to July 1, 1995 or that has been issued a federal determination letter or group ruling letter by the IRS stating that it is exempt from federal income tax under section 501(a) of the Internal Revenue Code and has been determined, by the IRS, to be an organization described in section 50l(c)(3) or (13) of the Internal Revenue Code, may make purchases exempt from Connecticut sales and use taxes by following the procedures described under Qualification Requirements.

Connecticut public schools and universities are exempt from Connecticut sales and use taxes under Conn. Gen. Stat. 12-412(1).  When making purchases of goods and services these institutions must use a Governmental Agency Exemption Certificate.

  • Can Out-Of-State Schools, Colleges And Universities Make Purchases Of Goods And Services Exempt From The Connecticut Sales And Use Taxes?

Out of-state public schools and universities are not exempt from the Connecticut sales and use taxes as there is no reciprocal agreement to honor other states exemption permits.

However, an out- of- state private school, college or university that was granted an exemption permit by the Connecticut Department of Revenue Services prior to July 1, 1995 or has been issued a federal determination letter or group ruling letter by the IRS stating that it is exempt from federal income tax under section 50l(a) of the Internal Revenue Code and has been determined, by the IRS, to be an organization described in section 50l(c)(3) or (13) of the Internal Revenue Code, may make purchases exempt from Connecticut sales and use taxes by following the procedures described under Qualification Requirements