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  Taxable purchases made by an Environmental consultant and whether resale certificate should be provided on labor...
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Q: Should an environmental consultant who purchases taxable services such as laboratory testing and remediation services from other entities (a) provide a resale certificate to the labor subcontractor, or (b) should they pay tax to the labor subcontractor and then invoice their customer by itemizing the lab or subcontractor charges and indicate on the invoice "tax included" or "tax collected by lab or subcontractor"?

  Answer
 

A: The rule in Conn. Gen. Stat. §12-410(5) and Conn. Agencies Regs. §12-410(5)-1 applies, which provides that taxable services may only be purchased on resale if the service rendered to the end customer is also a taxable service. Therefore, a provider of nontaxable environmental consulting services under Conn. Gen. Stat. §12-407(a)(37)(J) must pay tax on its purchases of, e.g., laboratory testing services provided on soil samples that are taxable under Conn. Gen. Stat. §12-407(a)(37)(I). Because the environmental consultant is not rendering a taxable service, it should not refer to sales tax in its invoice to its client.

(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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