SN 91(13)

Changes Affecting the Sales and Use Taxes on
Motor Vehicle Parking Services

This publication has been obsoleted in part by AN 94(3); Obsoleted by AN 2000(8)

BACKGROUND: Since July 1, 1989, the provision of motor vehicle parking services has been treated as a sale subject to the Sales and Use Taxes Act, when those services included both the parking and retrieval of motor vehicles ("valet parking").

PURPOSE: This Special Notice describes changes made by 1991 Conn. Pub. Acts 3, §103 (June Spec. Sess.) affecting the sales and use taxes on motor vehicle parking services.

EFFECTIVE DATE: Effective upon issuance and applicable to the provision of motor vehicle parking services on or after October 1, 1991.

STATUTORY AUTHORITY: Conn. Gen. Stat. §12-407 (2) (i) (N), as amended by 1991 Conn. Pub. Acts 3, §103 (June Spec. Sess.).

TAX RATE DECREASE: The tax rate that will apply to motor vehicle parking services provided on or after October 1, 1991 will decrease from 8% to 6%.

PARKING SERVICES TO BE TAXED, WHETHER OR NOT VEHICLES ARE BOTH PARKED AND RETRIEVED: While the provision of valet parking services will continue to be treated as a sale subject to the Sales and Use Taxes Act, the provision of parking services consisting merely of furnishing parking space, whether or not specifically designated, in a garage or lot will now be taxed, as long as the garage or lot has 30 or more spaces. There are two exceptions to this rule:

METERED SPACE: The furnishing of metered parking space will not be treated as a sale subject to the Sales and Use Taxes Act.

CERTAIN SEASONAL PARKING LOTS: The furnishing of parking space in a seasonal parking lot that is operated by United States government agencies, Connecticut municipalities or by organizations issued a Charitable and Religious Organizations Sales Tax Exemption Permit by the Department of Revenue Services will not be treated as a sale subject to the Sales and Use Taxes Act. Seasonal parking lot means a lot or garage for which a charge for parking is made during a limited portion of the year. E.g., a municipal parking lot at a beach for which a charge for parking is made only during the summer is a seasonal parking lot. The furnishing of parking space other than in a seasonal parking lot will be treated as a sale subject to the Sales and Use Taxes Act even if furnished by United States government agencies, Connecticut state agencies or Connecticut municipalities or by organizations issued a Charitable and Religious Organizations Sales Tax Exemption Permit by the Department of Revenue Services.

LANDLORD FURNISHING PARKING TO TENANTS: If a landlord furnishes parking spaces in a garage or lot having 30 or more spaces to its commercial or residential tenants in conjunction with their lease, the furnishing of such parking spaces will be treated as sales subject to the Sales and Use Taxes Act as follows:

• where a separate charge for the furnishing of such spaces is made by the landlord, that charge will be subject to sales and use taxes; provided, the landlord will have the burden of establishing that the charge has not been understated for tax avoidance purposes.
• where no separate charge for the furnishing of such spaces is made by the landlord, there shall be deemed to be no charge being made for parking services; provided, the landlord will have the burden of establishing that no greater rent is paid by tenants furnished parking spaces than is paid by tenants not furnished parking spaces. Where the landlord cannot meet that burden, any difference between the rent paid by tenants furnished parking spaces and the rent paid by tenants not furnished parking spaces that is attributable to the furnishing of such spaces will be deemed to be the charge being made for parking services.

EMPLOYER FURNISHING PARKING TO EMPLOYEES: If an employer furnishes parking spaces in a lot or garage having 30 or more spaces to its employees, the furnishing of such parking spaces will be treated as sales subject to the Sales and Use Taxes Act if a separate charge for the furnishing of such spaces is made by the employer.

CERTAIN CHARGES MADE TO STUDENTS BY COLLEGES AND UNIVERSITIES: Charges made for permits that allow students to register their vehicles and to park in certain designated areas (and not in other areas) if parking is available will not be treated as charges for sales subject to the Sales and Use Taxes Act.

GARAGES OPERATED BY NONPROFIT CHARITABLE HOSPITALS: Charges made for the furnishing of parking space in a garage or lot that is operated by a nonprofit charitable hospital will be exempt from sales and use taxes pursuant to Conn. Gen. Stat. §12-412 (5).

LEASE OF REAL PROPERTY FOR THE PURPOSE OF PARKING: The lease of a parking lot or garage with 30 or more parking spaces for the purpose of parking will be treated as a sale subject to the Sales and Use Taxes Act. The lease of real property for other than the purpose of parking will not be treated as such a sale.

THE PURCHASE OF PARKING SERVICES FOR RESALE TO OTHERS: A person who is registered for purposes of the Sales and Use Taxes Act as a parking service provider may issue a resale certificate to other such providers only if the parking spaces will be resold and not used by such person. For example, if the person leases 50 spaces in a parking garage and will sell 45 of the spaces, by means of monthly parking permits, to 45 of its employees and use five of those spaces for free parking for its customers, then the person may issue a resale certificate with respect to the 45 spaces (as the person is making retail sales of parking services with respect thereto), and is making retail purchases of parking services with respect to the other five spaces.

CERTAIN CHARGES MADE FOR IMPOUNDMENT OR STORAGE OF VEHICLES: The following charges will not be treated as charges for sales subject to the Sales and Use Taxes Act made in connection with:

• charges for the involuntary impoundment of motor vehicles or
• charges for the storage for an extended period of time (e.g., storage for the winter) of a motor vehicle, during which time the vehicle owner will not have free and unlimited access to the vehicle. (In contrast, a vehicle owner being furnished a parking space generally has the right to remove a vehicle at any time, either by the owner's own action or that of an attendant.)

REGISTRATION: Anyone making sales of motor vehicle parking services must register for purposes of the Sales and Use Taxes Act by completing Form REG-1, Application for Tax Registration Number.

EFFECT ON OTHER DOCUMENTS: LSN-94 (NEW 6/89) is superseded and may not be relied upon with respect to motor vehicle parking services provided on or after October 1, 1991.