Connecticut Tax Nexus

Businesses with nexus in Connecticut are required to register with the Connecticut Department of Revenue Services (DRS) and to charge, collect and remit the appropriate tax.

Generally, a business has nexus in Connecticut when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives. However, out-of-state sellers can also establish nexus in the ways described below.

Connecticut nexus for out-of-state sellers

Affiliate nexus

If your business has ties to businesses in Connecticut, including affiliates, it may have nexus. In 2011, Connecticut law (Chapter 219, Section 12-407(12)) was expanded “to provide that an out-of-state retailer will have nexus with Connecticut based on certain arrangements with remote affiliates located in Connecticut.” These include, but are not limited to:

  • Engaging in regular or systematic solicitation of sales of tangible personal property in Connecticut by the display of advertisements on billboards or other outdoor advertising, distribution of catalogs, periodicals, advertising flyers or other advertising by means of print, radio or television media, or by mail, telegraphy, telephone, computer database … or other communication system, for the purpose of effecting retail sales of tangible personal property, provided that 100 or more retail sales are made from outside Connecticut to destinations within the state during the preceding 12-month period
  • Being owned or controlled, either directly or indirectly, by a retailer engaged in business in Connecticut which is the same as, or similar to, the line of business in which the retailer so owned or controlled is engaged
  • Repairing or servicing under a warranty in Connecticut, either directly or indirectly through an agent, independent contractor or subsidiary, property sold to consumers in Connecticut

Click-through nexus

Referrals, including online referrals, from in-state entities may also trigger nexus for an out-of-state business if both the following conditions are met:

  • The in-state business receives a commission or other consideration that is based upon the sale of tangible personal property or services by the retailer who directly or indirectly refers potential customers, whether by a link on an internet web site or otherwise, to the retailer
  • The cumulative gross receipts from sales by the retailer to customers in the state who are referred to the retailer by all people with this type of agreement with the retailer exceeds $2,000 during the four preceding four quarterly periods

Special notice

In 2013, the Connecticut Department of Revenue Services (DRS) issued a revocation of Special Notice 92(19), Effect of Quill Corp. v. North Dakota on the Collection of Use Tax by Retailers Who Engage in Business in Connecticut Only by Selling Items through Mail Order Catalogs with Delivery by Common Carrier. The revocation declared simply, “This Special Notice may no longer be relied upon.” Businesses that may be affected by this revocation notice are advised to consult with a tax specialist or the DRS.

See 2011 Legislative Changes Affecting Sales and Use Tax; Chapter 219, Section 12-407(12); Revocation of Special Notice 92(19); Collection of use tax by out-of-state retailers; and Sales and Use Taxes – Nexus.