Sen. Abrams Calls for Department of Revenue Services to Change Interpretation of Sales Tax Application to Meals

HARTFORD, CT –State Senator Mary Daugherty Abrams (D-Meriden, Middlefield, Rockfall, Middletown, Cheshire) on Monday called for the Department of Revenue Services to reassess its interpretation of a Policy Statement issued earlier this month. Sen. Abrams joined the state Senate Democratic Caucus in signing a letter to DRS Commissioner Scott D. Jackson requesting the DRS revise their interpretation. The letter is below.

“I was extremely concerned to hear the interpretation of this change went much further than legislators intended in its development,” said Sen. Abrams. “It is clear that the DRS expanded these taxes to cover a significant number of products, instead of the more restrained changes intended when the budget was developed and approved earlier this year. I join my colleagues in calling for revisions before any consumers are financially impacted.”

The department’s interpretation of the budget broadens the base on meals and beverages covered by the sales tax, which is not the legislative intent of the budget and goes against the interpretation of all three nonpartisan offices. This interpretation would lead to a different fiscal note from the Office of Fiscal Analysis. DRS did not provide any feedback when the budget was heard in committee, nor did they when the language was included in the tax package that was voted out of the Finance Committee. Sen. Abrams expressed her disapproval of the department’s interpretation of the budget.

Dear Commissioner Jackson:

We are writing in reference to the recent Department of Revenue Services Policy Statement (PS 2019(5)) that was issued on September 6, 2019.

We were shocked to see that DRS has somehow interpreted the language in the budget (PA. 19-117) to significantly broaden the base on what meals and beverages would be covered by the sales tax. This interpretation goes against the legislative intent of the new law and against the interpretation of the new law by all three of our nonpartisan offices.

As you may be aware, this language was incorporated in Raised Bill 7408 that was heard by the Finance, Revenue and Bonding Committee on April 10, 2019. Unfortunately, as has become commonplace, DRS did not testify on this bill, so if DRS did think this language would drastically increase the base of taxable items, that opinion was not shared with the General Assembly.

Subsequently, when this language was included in the tax package that was voted out of the Finance Committee (SB 877), again we were not given any DRS input on this interpretation.

Furthermore, during our extensive budget negotiations, and discussions of the fiscal implications of this language in the final budget, never did DRS or the Office of Policy and Management indicate that their interpretation of this language was any different than that of our Office of Fiscal Analysis or Office of Legislative Research.

This unexpected interpretation from DRS would lead to a drastically different fiscal note from OFA and a significant change to our budget assumptions currently adopted, something that was never intended by the General Assembly or the administration.

We are asking that DRS, in consultation with OPM, revise this Policy Statement to more accurately reflect the legislative intent that was clear to all parties during our budget negotiations.