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  Donating inventory - Is use tax due?

Q. If I donate inventory from my business, do I owe sales or use tax?


A. Generally, when an item is removed from a retailer's inventory and the item is given away for no charge to the customer, the retailer must self-assess the Connecticut use tax. The tax is based on the retailer's purchase price for that item. However, pursuant to Conn. Gen. Stat. § 12-413(4), use tax does not apply to items held for resale that retailers remove from inventory and donate to the United States or its agencies, the State of Connecticut and its political subdivisions or their agencies, or any organization that is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code.

(Updated: 2015)

This answer is intended to provide general information concerning a frequently asked question about a current position, policy, or practice associated with the taxes administered by the Connecticut Department of Revenue Services.  It may include an informal interpretation of Connecticut tax law by the Department of Revenue Services (DRS).  However, it is not intended to serve as a legal ruling.

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