This information is not current and is being provided for reference purposes only
PS 98(7)
The Motor Vehicle Rental Surcharge and
the Tourism Account Surcharge
This publication has been modified by PS 2000(1.1) and superseded by PS 2000(5)
Purpose: This Policy Statement describes the tourism account surcharge, incorporating amendments to Chapter 228e and the information in SN 92(14), Tourism Fund Surcharge on the Lease or Rental of Passenger Motor Vehicles for a Term of 30 Consecutive days or Less, as superseded by SN 93(10), 1993 Legislative Changes to the Tourism Fund Surcharge, and other Special Notices. It also describes the motor vehicle rental surcharge, incorporating amendments made to Conn. Gen. Stat. §12-692 and the information in SN 96(11), Motor Vehicle Rental Surcharge.
Background: On July 13, 1992, the Department of Revenue Services (DRS) issued SN 92(14). Since then, the Connecticut General Assembly has amended Chapter 228e, Tourism Account Surcharge, on three occasions. DRS has issued four Special Notices that deal, in whole or in part, with the tourism account surcharge.
On August 1, 1996, DRS issued SN 96(11), Motor Vehicle Rental Surcharge. Since then, the Connecticut General Assembly has twice amended Conn. Gen. Stat. §12-692, the statute that imposes the motor vehicle rental surcharge.
Effective Date: Effective for calendar years beginning on or after January 1, 1998.
Statutory Authority: Conn. Gen. Stat. §§12-665 through 12-668, and 12-692, as amended by 1997 Conn. Pub. Acts 4, §6 (June 18 Spec. Sess.) and 1998 Conn. Pub. Acts 262, §9.
Part I. Tourism Account Surcharge
Definitions: For purposes of the tourism account surcharge:
Passenger motor vehicle means every vehicle that is a "passenger motor vehicle," as defined in Conn. Gen. Stat. §14-1(a)(59). That definition provides that a "passenger motor vehicle" is "a motor vehicle used for the private transportation of persons and their personal belongings, designed to carry occupants in comfort and safety, with not less than fifty per cent of the total area enclosed by the outermost body contour lines, excluding the area enclosing the engine, as seen in a plan view, utilized for designated seating positions and necessary legroom with a capacity of carrying not more than ten passengers including the operator thereof."
Lessor means any person licensed by the Connecticut Department of Motor Vehicles (DMV) under Conn. Gen. Stat. §14-15 to engage in the business of leasing or renting motor vehicles without drivers in this state.
Day means each day, or portion of a day, for which a lessor charges a lessee for the lease or rental of a passenger motor vehicle. For example, a lessee rents a passenger motor vehicle on 8 a.m. one day, and returns it before 8 a.m. the following day. If the lessor charges one day’s rental to the lessee, the lessor imposes a $1 surcharge only, even though the rental includes a portion of two calendar days.
Imposition of Surcharge: A $1 per day tourism account surcharge is imposed on every lessor for the rental or lease of a passenger motor vehicle, if the vehicle is delivered to a lessee in Connecticut for a period of 30 consecutive calendar days or less. The surcharge applies regardless of where the vehicle is subsequently used or ultimately dropped off. The tourism account surcharge is added to the total amount that the lessor charges for the rental of the vehicle. The 6% Connecticut sales tax is not charged or collected on the tourism account surcharge.
Filing of Return and Payment of Surcharge: On or before the last day of the month following the end of each calendar quarter, each lessor must file a Form OP-337, Tourism Account Surcharge Return on the Rental/Leasing of Passenger Motor Vehicles, with DRS. The lessor lists on Form OP-373 the number and rental period of all passenger motor vehicles leased during the preceding reporting period and the amount of tourism account surcharge for the period. If the total tourism account surcharge liability for the twelve-month period ending on September 30 was $4,000 or more, DRS may require the lessor to file returns and pay the tourism account surcharge on a monthly basis.
Rentals not Subject to Surcharge:
If a passenger motor vehicle is delivered to a lessee outside Connecticut or if the rental is for a term of more than 30 consecutive calendar days, the rental is not subject to the tourism account surcharge, regardless of where the vehicle is subsequently used or ultimately dropped off. Also, if a lessee rents a passenger motor vehicle from a person that is not a lessor or rents a motor vehicle other than a passenger motor vehicle, the rental is not subject to the tourism account surcharge.
United States Government: A rental of a passenger motor vehicle by an agency of the United States Government is not subject to the tourism account surcharge as long as the agency (and not one of its employees) is the lessee.
United States Government Employees: The rental of a passenger motor vehicle by an employee of an agency of the United States Government is subject to the surcharge unless the rental company directly invoices and charges the agency for the rental and the agency directly pays the rental company for the rental. The agency must pay with a check drawn on its own account or with a credit card issued in its name (and not in the name of one of its employees unless the credit card is an "I.M.P.A.C." card). Subject to the conditions set out in PS 95(2), Retailer’s Acceptance of U.S. Government "I.M.P.A.C." Credit Card for Purchases Exempt under Conn. Gen. Stat. §12-412(1), a rental of a passenger motor vehicle by an employee of an agency of the United States Government using the "I.M.P.A.C." credit card issued in the name of the employee is not subject to the tourism account surcharge. However, a rental by an employee of an agency of the United States Government using any other credit card issued in the name of the employee or paying cash is subject to the surcharge.
Diplomats: Subject to the conditions set out in PS 93(2), Sales and Use Tax Exemptions for Diplomatic Personnel, the rental of a passenger motor vehicle by a diplomat is not subject to the surcharge.
All Other Rentals Subject to Tourism Account Surcharge: All other leases or rentals of passenger motor vehicles for a term of 30 consecutive calendar days or less are subject to the tourism account surcharge. This includes leases or rentals that are exempt from sales and use taxes, such as leases or rentals to an agency of the State of Connecticut (or an employee of the agency), a Connecticut municipality (or an employee of the municipality), or a tax-exempt organization.
Part II. Motor Vehicle Rental Surcharge
Definitions: For purposes of the motor vehicle rental surcharge:
Passenger motor vehicle means every vehicle that is a "passenger motor vehicle," as defined in Conn. Gen. Stat. §14-1(a)(59) (see above), that is rented without a driver and is part of a motor vehicle fleet of five or more passenger motor vehicles used for rental purposes by a rental company. A passenger motor vehicle may be registered either with the Connecticut Department of Motor Vehicles (DMV) or with a similar department of another state.
Rental company means any business entity engaged in the business of renting passenger motor vehicles without drivers in Connecticut to lessees and that uses for rental purposes a motor vehicle fleet of five or more passenger motor vehicles in Connecticut.
Rental company does not include any person, firm or corporation licensed or required to be licensed pursuant to Conn. Gen. Stat. §14-52 as a new car dealer, repairer or limited repairer. Rental company also does not include any person, firm or corporation licensed or required to be licensed pursuant to Conn. Gen. Stat. §14-52 as a used car dealer if the person, firm or corporation is not primarily engaged in the business of renting passenger motor vehicles without drivers in Connecticut to lessees. Any affiliated or related person, firm or corporation that is otherwise a rental company but is not itself licensed or required to be licensed pursuant to Conn. Gen. Stat. §14-52 as a new car dealer, used car dealer, repairer or limited repairer is not excluded from the definition of "rental company."
Lessee means any person who rents a passenger motor vehicle from a rental company for the person’s own use and not for rental to others.
Imposition of Surcharge: A 3% motor vehicle rental surcharge is imposed on the total amount that a rental company charges a lessee for the rental of a passenger motor vehicle, where the vehicle is delivered to a lessee in Connecticut for a period of 30 consecutive calendar days or fewer. The surcharge applies regardless of where the vehicle is subsequently used or ultimately dropped off. The rental contract must separately state the amount of the motor vehicle rental surcharge. The rental surcharge is added to the total amount that the rental company charges the lessee for the rental of the vehicle. The 6% Connecticut sales tax must be charged and collected on that sum.
Filing of Return and Payment of Surcharge: On or before February 15 annually, each rental company must file a Form OP-383, Motor Vehicle Rental Surcharge Report, with DRS and report the total motor vehicle rental surcharge actually collected on the rental of passenger motor vehicles by the rental company to lessees during the preceding calendar year. Each rental company must also remit with Form OP-383 the portion of the total motor vehicle rental surcharge collected that exceeds the sum of the personal property tax that it actually paid during the year to any Connecticut municipality on passenger motor vehicles that were rented by it to lessees during the year and the registration and titling fees that it actually paid during the year to DMV on the vehicles. The rental company is not entitled to retain any excess and must pay it over to DRS with Form OP-383.
Where any rental company does not own one or more of the passenger motor vehicles that it rents to lessees, but leases those rental vehicles from another person (such as the owner), this sum may include any property tax and registration and titling fees that the rental company is contractually required to pay, and does in fact pay, during the calendar year to the other person with respect to the motor vehicles, if the other person pays the property tax to a Connecticut municipality and the fees to DMV.
Rentals not Subject to Surcharge:
If a passenger motor vehicle is delivered to a lessee outside Connecticut or if the rental is for a term of more than 30 consecutive calendar days, the rental is not subject to the motor vehicle rental surcharge, regardless of where the vehicle is subsequently used or ultimately dropped off. If a motor vehicle other than a passenger motor vehicle is rented to a lessee, the rental is not subject to the motor vehicle rental surcharge.
If a passenger motor vehicle is rented to a lessee by a person that is not a rental company (such as any person, firm or corporation that is licensed or required to be licensed pursuant to Conn. Gen. Stat. §14-52 as a new car dealer, repairer or limited repairer), the rental is not subject to the motor vehicle rental surcharge. However, if the person is not itself a party to the rental agreement and merely facilitates the rental of the passenger motor vehicle to the lessee by a third party that is itself a rental company, the rental is subject to the surcharge.
For example, if a person licensed or required to be licensed pursuant to Conn. Gen. Stat. §14-52 as a repairer:
- arranges for a customer to rent a passenger motor vehicle from a third party rental company, and
- the rental agreement is between the customer and the third party rental company,
the rental is not considered a rental by the repairer and will be subject to the motor vehicle rental surcharge.
United States Government: A rental of a passenger motor vehicle by an agency of the United States Government is not subject to the motor vehicle rental surcharge as long as the agency (and not one of its employees) is the lessee.
United States Government Employees: A rental by an employee of an agency of the United States Government is subject to the surcharge, unless the rental company directly invoices and charges the United States Government agency for the rental and the agency directly pays the rental company for the rental. The agency must pay with a check drawn on its own account or with a credit card issued in the agency’s name (and not in the name of one of its employees unless the credit card is an "I.M.P.A.C." card). Subject to the conditions set out in PS 95(2), a rental of a passenger motor vehicle by an employee of an agency of the United States Government using the "I.M.P.A.C." credit card issued in the name of the employee is not subject to the motor vehicle rental surcharge. However, a rental by an employee of an agency of the United States Government using any other credit card issued in the name of the employee or paying in cash is subject to the surcharge.
Diplomats: Subject to the conditions set out in PS 93(2), the rental of a passenger motor vehicle by a diplomat is not subject to the surcharge.
All Other Rentals Subject to Motor Vehicle Rental Surcharge: All other leases or rentals of passenger motor vehicles for a term of 30 consecutive calendar days or fewer are subject to the motor vehicle rental surcharge. This includes leases or rentals that are exempt from sales and use taxes, such as leases or rentals to an agency of the State of Connecticut (or an employee of the agency), a Connecticut municipality (or an employee of the municipality), or a tax-exempt organization.
Part III. Interaction of the Two Surcharges
Typically, if one of the surcharges applies to the lease or rental of a passenger motor vehicle, the other surcharge applies as well. However, a new car dealer, repairer or limited repairer that is licensed or required to be licensed by DMV pursuant to Conn. Gen. Stat. §14-52 is not required to charge and collect the motor vehicle rental surcharge. The dealer, repairer or limited repairer is required to charge and collect the tourism account surcharge on its motor vehicle rentals if it is also licensed by DMV to lease or rent motor vehicles pursuant to Conn. Gen. Stat. §14-15. The same is true of any used car dealer licensed or required to be licensed by the DMV pursuant to Conn. Gen. Stat. §14-52, but not primarily engaged in the business of renting passenger motor vehicles without drivers in Connecticut to lessees, and thus not required to charge and collect the motor vehicle rental surcharge. That used car dealer must charge and collect the tourism account surcharge on its motor vehicle rentals if it is also licensed by the DMV to lease or rent motor vehicles pursuant to Conn. Gen. Stat. §14-15.
The motor vehicle rental surcharge is in addition to the tourism account surcharge. However, the tourism account surcharge is not included in the amount on which either the sales tax or the motor vehicle rental surcharge must be charged or collected. On the other hand, the motor vehicle rental surcharge is included in the amount on which the sales tax must be charged and collected.
Example: A rental company rents a passenger motor vehicle to a lessee for five days. The total amount that the rental company charges the lessee for the rental of the motor vehicle is $40 per day.
Amount on which motor vehicle rental surcharge must be collected:
| ($40 multiplied by 5 days) | $200.00 |
| Motor vehicle rental surcharge (3%, or .03 multiplied by $200) | + 6.00 |
| Amount on which sales tax must be charged and collected | $206.00 |
| Sales tax | |
| (6%, or .06 multiplied by $206) | + 12.36 |
| Subtotal | $218.36 |
| Tourism account surcharge ($1 multiplied by 5 days) | + 5.00 |
| Total | $223.36 |
Effect on Other Documents: SN 93(10) and SN 96(11) are modified and superseded, and may no longer be relied upon after the date of issuance of this Policy Statement.
Effect of This Document: A Policy Statement is a document that explains in depth a current department policy or practice affecting the liability of taxpayers.
PS 98(7)
Sales and Use
Motor Vehicle Rental Surcharge
Issued 12/23/98