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    Tuesday, April 16, 2024

    Death remains a certainty, but taxes ...?

    Signs hang on the walls of Cece Nails in Waterford alerting customers to the new 6 percent sales tax that took effect Friday.

    Everyone knows that poodles are pets, but what about horses?

    Why could an expensive cigar cost less today than it did three days ago?

    And what's the deal with getting a massage? I need to pay taxes on it, but my neighbor doesn't?

    Nutmeggers awoke to a brave new tax world Friday morning, and with it came a slew of questions - from consumers, business owners and virtually anyone who consumes anything in Connecticut.

    At the state Department of Revenue Services, where tax-related questions have been coming in almost nonstop, July 1 and the days leading up to it were chaotic.

    This is despite the agency's having updated its website, sent out targeted mailings to businesses and working with groups like the Connecticut Business & Industry Association and Connecticut Retail Merchants' Association to get the word out about tax increases, new taxes and eliminated exemptions, DRS spokesperson Sarah Kaufman said.

    "This is one of the broadest tax increases we've seen," she said. "We're trying to make sure people have all the information they need."

    The agency is constantly updating its new Frequently Asked Questions segment online at (www.ct.gov/drs), she added, for everything from fuel, cigarettes and alcohol excise taxes to changes to the corporate business tax and income tax.

    "We're getting a lot of phone calls from merchants wanting to know how this is going to impact (their) business," she said.

    "Some people are upset; (other) people are just wanting clarification. We're trying to get information out to people because we understand this is a lot for people to absorb. There are questions they may have about 'What does this cover? What does it not cover?' And it is coming into a holiday weekend."

    Lawyers for the agency have been working day and night to ferret out the legislative intent of the changes, and interpret them on the fly.

    The agency has seven staff attorneys, one general counsel and four litigators.

    "They've been very busy," Kaufman said. "There's been a lot of late nights. We're trying to get to what was the legislative intent and get that information out there."

    One of the new taxes is on pet boarding services and grooming, and taxpayers have called DRS asking whether horses, which some people board, are pets.

    "It was decided a horse is not a pet," Kaufman said.

    Spa services are now being taxed, but some merchants have called wanting to know if all massages provided at spas are taxed.

    The legal answer: It depends.

    Microderm abrasion and waxing are taxable, as are massages, but not massages performed by a licensed massage therapist, Kaufman said. Hair removal is taxable, but not if it's done by a licensed person.

    And over-the-counter smoking cessation products are taxed unless they are prescribed, she said.

    In these cases, she explained, services or products dispensed for medical purposes are not taxable.

    - Patricia Daddona

    Up in smoke

    An unintended consequence of the new state taxes may be to make some expensive cigars cheaper.

    The tax rate on most tobacco products increased July 1 from 27.5 percent to 50 percent of the wholesale sales price. But in the case of cigars, that 50 percent tax cannot exceed 50 cents per cigar.

    Previously, cigars were taxed at the 27.5 percent rate without a cap, said Kaufman, the DRS spokeswoman.

    Joseph Presti, owner of Cigar Store & More LLC in Groton, said if he buys a box of 20 cigars for $20 wholesale, each cigar would cost $1 and be taxed at 50 percent, or 50 cents. If that box costs more than $20, then each cigar would cost more than $1 but still have a tax of 50 cents.

    The wholesale price of cigars varies, but Presti said that because he sells premium cigars, most of his inventory purchased after July 1, when the taxes went into effect, will drop slightly in price.

    "Customers will see a savings, but with every cigar it will be different because the wholesale price is not all the same," he said. "With a box of cigars that is $30 versus $300, the savings is going to change. It's numbers, it's percentages. To say that every cigar is going be $2 cheaper, that's not the way it's going to be."

    - Jennifer McDermott

    Unaware of changes

    At Cadmarie Salon & Spa in downtown New London, owner Cadmarie Bordeaux was unaware of the new tax that went into effect Friday on previously untaxed services, including manicures and pedicures.

    Bordeaux said she figured that if there were any changes to state taxes, she would have received a letter from the state alerting her to the 6.35 percent sales tax that nail salons will now have to collect from customers.

    "I guess I'll start tomorrow," she said, adding later, "If it starts today, that means that has to come out of my pocket."

    The salon, at 107 State St., will also have to adjust how it records nail services in its computerized system. Bordeaux said she'd talk to her bookkeeper about how the sales tax will affect the business' overall budget.

    "I'm not worried," Bordeaux said. "I don't believe in worrying. But I'm pretty sure it's going to take a toll on certain businesses."

    Bordeaux wasn't the only one in the dark about the new tax. No customers have asked about the tax, Bordeaux said.

    Customers who currently tip anywhere from 10 percent to 15 percent will probably scale back on their tips, Bordeaux said.

    "I'm pretty sure people will have to adjust," she said. "But if it's mandatory, it's mandatory. . What are you going to do? Can't fight the government."

    Meanwhile, at the Cece nail salon in Waterford on Friday, the salon had multiple signs posted throughout the salon that read: "Dear Customer - Like you we are at the mercy of the government. We now have to charge tax 6%. We are sorry we now have to start charging tax July 1st. Thank You."

    - Jenna Cho

    Still a bargain

    The new sales tax on clothing also applies to thrift stores, which sell many secondhand clothing items.

    "I can't believe it would go this far," said Agnes Previtera of Oakdale outside the Goodwill Store in Norwich Friday.

    "I don't think he'll get re-elected ever. And I helped put him in there," she said about Gov. Dannel P. Malloy.

    Previtera bought stuffed animals for her grandchildren Friday and didn't buy clothes. But "everything I'm wearing" came from the Goodwill Store, she said. Living on a fixed income has forced her to rearrange her habits. With the high price of gasoline, she waits until she has several stops to make along a given route.

    "I buy clothes here. You're foolish not to," Previtera said.

    Joseph Galasso, vice president of retail operations for Goodwill, said store officials don't like to charge sales tax on clothing, especially with customers on fixed incomes. But in a way, the new tax could help Goodwill Stores across the state, including those in Norwich and Groton, he said.

    "In this economy, we tend to do well where people are looking for a bargain," Galasso said. "Maybe they'll come to us to see if they can find a good used pair of jeans before they go to Kohl's or somewhere."

    At Goodwill, jeans and other pants are $4.99, shirts and shorts are $3.99, plus tax now.

    "The biggest impact is clothing," Galasso said. "Whatever the calculation is, it won't hurt them as much as going to Kohl's for a $40 coat. Our coats start at $12.99. It might help our business, but I am concerned because it will take money out of all of our pockets. Fifty cents here, $1 there, $2, it all adds up. That's what I'm concerned about."

    - Claire Bessette

    Scott Lang lights up a cigar in the smoking lounge at Cigar Store & More in Groton as smokers in the state face new taxes that took effect Friday.

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