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Refund Sales Tax on Returned Items

  • Dec 29, 2016 | Gail Cole

 Exchanging a gift in Connecticut? You may be entitled to a sales tax refund.

For retailers, the holiday frenzy doesn’t necessarily end once the holiday has passed. Ensuing days are often filled with returns and exchanges. Connecticut retailers are reminded to refund sales tax along with the purchase price when products are returned within 90 days of the date of purchase.

According to Connecticut State Representative Jeffrey J. Berger (D), “I have had several complaints from constituents that major retailers have refused to refund sales taxes on items returned within the time allowed by law.” Under Connecticut law, sales tax should be refunded on products returned with a receipt within 90 days.

In his press release on the subject, Rep. Berger links to a 2005 ruling by the Connecticut Department of Revenue Services, which maintains the following:

“Sales tax paid on the original sale may only be credited or refunded if the customer produces the original receipt or other verification of the date and place of purchase substantiating that the original sale was within 90 days of the date of the return and that Connecticut sales tax was paid in accordance with Conn. Gen. Stat. § 12-407(a)(8)(B)(ii) and §12-407(a)(9)(B)(ii).”

In the event products are exchanged for dissimilar merchandise or returned because of a defect, no additional sales tax is due. An example of a "similar exchange" is when you turn in a large sweater for a medium size; a "dissimilar exchange" is when you turn in a sweater for an Xbox. As explained by the department:

“When a retailer exchanges or replaces taxable merchandise with identical or similar merchandise for no additional consideration because of a defect or because the item is otherwise unsatisfactory to the customer, no additional sales tax is due from the customer regardless of whether the customer is unable to produce the original sales receipt or other verification of the date and place of purchase, and/or the exchange or replacement takes place more than 90 days after the original retail sale.”

The Department of Revenue Services encourages retailers to maintain accurate records of uneven exchanges, for audit purposes.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.