This Special Notice is obsoleted by IP 2002(11)
Purchases and Sales by Nonprofit Nursing Homes, Nonprofit Rest Homes and Nonprofit Homes for the Aged
PURPOSE: In 1993 Conn. Pub. Acts 332, Section 20, the General Assembly amended the exemption from sales and use taxes provided in Conn. Gen. Stat. Section 12-412(5) for sales of tangible personal property or services to and by nonprofit charitable hospitals to include such sales to and by nonprofit nursing homes, nonprofit rest homes and nonprofit homes for the aged that are licensed by the Connecticut Department of Public Health and Addiction Services (formerly the Department of Health Services) pursuant to Chapter 368v of the general statutes, where such sales and purchases are for the exclusive purposes of such institutions. This Special Notice describes the procedure under which nonprofit nursing homes, nonprofit rest homes and nonprofit homes for the aged will be issued exemption permits.
STATUTORY AUTHORITY: 1993 Conn. Pub. Acts 332, Section 20, amending Conn. Gen. Stat. Section 12-412(5).
EFFECTIVE DATE: Effective for sales to and by nonprofit nursing homes, nonprofit rest homes and nonprofit homes for the aged occurring on and after January 1, 1994.
QUALIFYING ORGANIZATIONS: The terms "home for the aged", "nursing home" and "rest home" are defined in Conn. Gen. Stat. Section 19a-490(c) as "an establishment which furnishes, in single or multiple facilities, food and shelter to two or more persons unrelated to the proprietor and, in addition, provides services which meet a need beyond the basic provisions of food, shelter and laundry."
APPLICATION FOR EXEMPTION PERMIT: A home that is described in Conn. Gen. Stat. Section 19a-490(c) may submit an application for recognition of exemption to the Department of Revenue Services (Form L219N), if it is a nonprofit organization and has been issued a license by the Connecticut Department of Public Health and Addiction Services pursuant to chapter 368v of the general statutes. Upon the submittal of a properly completed Form L219N by a qualifying home to the Department, the Department will issue an exemption permit with an "E-number" to the home. Only one permit will be issued to the home, so the permit should be kept with the home's permanent records.
MAKING EXEMPT PURCHASES UNDER CONN. GEN. STAT. Section 12-412(5): Purchases by a home to which an exemption permit has been issued by the Department are exempt from sales and use taxes only if they are in furtherance of the purposes for which the home was established. For example , the home may not make purchases on behalf of its officers or employees or on behalf of other organizations, or make exempt purchases of items to be resold by the home (in the latter case, the home may issue a resale certificate pursuant to Conn. Gen. Stat. Section 12-410 to make purchases of items that it will resell).
To make exempt purchases under Conn. Gen. Stat. Section 12-412(5), the home must furnish an exemption certificate (CERT-113) to its retailers at the time that it makes such purchases. Merely informing retailers that the home has been issued an exemption permit or even displaying the permit will not be sufficient. Failure to issue an exemption certificate can result in a tax assessment, plus statutory interest and penalties, being made against the retailer or against the home.
Generally, the purchase of meals by a home from a restaurant or other eating establishment, and the purchase of lodging from hotels or motels, will be subject to tax. The purchase of meals or lodging will not be taxable if and only if (1) the restaurant, hotel or motel bills the organization directly, (2) the organization pays the restaurant, hotel or motel bill by a check drawn on the organization's checking account or by credit card that is issued to the organization, (3) the home is not reimbursed, directly or indirectly, in part or in full, for the cost of such meals or lodging by those served the meals or provided lodging, and (4) the home obtains prior written authorization from the Department to purchase the meals or lodging under the exemption by completing Bulletin 34A and submitting it to the Taxpayer Services Division at least two weeks in advance of the purchase of the meals or lodging. (If the purchase qualifies for exemption, the home will be issued a letter of exemption by the Taxpayer Services Division which the home must provide to the restaurant, hotel or motel.)
EXEMPT SALES BY QUALIFYING HOMES: A qualifying home may also make exempt sales of tangible personal property or services under Conn. Gen. Stat. Section 12-412(5), where such sales are for the exclusive purposes of the home. In addition, sales of items for not more than $100 each by a gift shop that is located in a qualifying home and that is operated by a nonprofit auxiliary organization remain exempt under Conn. Gen. Stat. Section 12-412(56), as long as any profits from such sales are retained by the home for the benefit of its patients. Each home that has been issued an exemption permit by the Department and that makes sales of tangible personal property or taxable services on more than a casual and occasional basis (see Conn. Agencies Regs. Section 12-426-17) must file a Sales and Use Tax Return (Form OS-114) at least quarterly (unless permitted to file annually; see Conn. Agencies Regs. Section 12-426-24), reporting all its sales and claiming any exemption thereon.
EFFECT OF THIS DOCUMENT: A Special Notice is a document that announces a new policy or practice in response to changes in state or federal laws or regulations or to judicial decisions. A Special Notice indicates the Department's informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or tax practitioners.
PLEASE NOTE THE FOLLOWING NEW INFORMATION ABOUT DRS.
FOR FURTHER INFORMATION: To order forms and publications or for further information, call the Department of Revenue Services at 860-297-5962 (Hartford area or out-of-state) or 1-800-382-9463 (in-state). Forms and publications may be ordered through voice-mail 24-hours a day by choosing Option 3 on your touch tone telephone.
Electronic Delivery Options: You can also obtain tax forms and publications 24-hours a day from our Web home page at https://www.ct.gov/drs. Telecommunications Device for the Deaf (TDD/TT) users only call 860-297-4911 during business hours.