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I work for a company based in Massachusetts but I work off site in Connecticut. I rent an office to work from in the town where I live because I don't have adequate space for a home office.

Recently, the town tax appraiser became aware of my existence and concluded that I am a taxable business. The result was they decided I personally had $9000 worth of taxable business assets and sent me an assessment notice. That number is ridiculously wrong but I don't want to dispute amounts. I don't believe I'm taxable at all.

A phone call to the tax assessor's office resulted in the conclusion that my only option is to file an assessment appeal.

Well, my appeal would be something along the lines of "I am not a business. I'm just an employee paying for office space and I'm therefore not taxable."

But when I plow through the CT tax statutes, I can't find the definition of who is actually taxable as a business. There's just too much law there.

How can I figure out whether my intended defense works? Paying for legal advice will certainly be more expensive than the taxes involved, so that's not an option.

Carey Gregory
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2 Answers2

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Offices are normally rented by businesses, so for the tax appraiser, your situation would be quite out of the ordinary. They appear to be stone deaf to the idea that an office may be rented not for business purposes, and so they lump all office renters together. If they do not want to hear you, all you can do is to keep evidence that:

  1. You are an employee;
  2. You attempted to tell them that you are not liable for the tax because you are not a business

— and present that should they ever attempt to prosecute you for tax evasion or similar.

Specifically, do:

  1. Keep your employment contract, communication with your bosses telling you what to do and records of them paying your taxes;
  2. Send a formal letter (not an appeal) to the tax appraiser explaining the situation

Should the issue ever be escalated, they will not be able to prove that you were a contractor/business (let alone beyond reasonable doubt), and you will be able to recover costs associated with this headache.

Greendrake
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Some of the comments above point you in the right direction. Your town tax office got it right, but also wrong: what's really happening probably, is that your MA employer (not you) is conducting business in CT, likely without filing first for what is known as a Certificate of Authority. Your employer also has to file CT state and local (your town, in this case) tax returns and pay whatever taxes are due. From your employer's point of view, you and your office constitute a branch office in CT.

The fact that you pay the rent for the office doesn't change this answer, although it may make your personal tax return situation more complicated (because of questions about the deductibility of employee business expenses). Assuming that your employer's tax adviser (and if it doesn't have one, it should...) agrees with the analysis, your employer should pay directly for the cost of the office (if necessary, by reducing your compensation by the amount of rent).

Jack Fleeting
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