Form ST-124 at a glance
What it is: Form ST-124 is the Certificate of Capital Improvement for New York State and Local Sales and Use Tax, from the Department of Taxation and Finance.
Who signs: After this certificate is completed and signed by both the customer and the contractor performing the capital improvement, it must be kept by the contractor. Copies of this certificate must be furnished to all subcontractors on the job and retained as part of their records. Read this form completely before making any entries. This certificate may not be used to purchase building materials exempt from tax.
A filled-in Form ST-124 example: a roofer and a homeowner
How to fill out Form ST-124, box by box
Name of contractor and name of customer
Print or type the name of the contractor and the name of the customer, each with the address (number and street), the city, the state and the ZIP code.
Enter the sales tax Certificate of Authority number, if any.
Describe capital improvement to be performed
The customer completes the part that describes the capital improvement to be performed.
A capital improvement to real property is an addition or alteration to real property that: (a) substantially adds to the value of the real property or appreciably prolongs the useful life of the real property, and (b) becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself, and (c) is intended to become a permanent installation.
The work performed by the contractor must meet all three of these requirements to be considered a capital improvement.
Project name and street address where the work is to be performed
Enter the project name, the street address where the work is to be performed, the city, the state and the ZIP code.
I certify that: owner or tenant, and items that will not become a permanent part of the real property
By signing you certify that you are the owner or tenant of the real property identified on this form (mark an X in one); that the work described in Describe capital improvement to be performed will result in a capital improvement to the real property as outlined in the instructions of this form; and that this contract includes or does not include the sale of any items that will not become a permanent part of the real property, for example a free-standing microwave or washing machine (mark an X in one).
I understand that
I understand that: I will be responsible for any sales tax, interest, and penalty due on the contractor's total charge for tangible personal property and for labor if it is determined that this work does not qualify as a capital improvement; and I will be required to pay the contractor the appropriate sales tax on tangible personal property (and any associated services) when the property installed by the contractor does not become a permanent part of the real property; and I will be subject to civil or criminal penalties (or both) under the Tax Law if I issue a false or fraudulent certificate.
Signature of customer, Title and Date
The customer enters Signature of customer, Title and Date.
To be completed by the contractor
I, the contractor, certify that I have entered into a contract to perform the work described by the customer named in Name of customer, and that I accept this form in good faith. (A copy of the written contract, if any, is attached.)
The contractor's failure to collect tax as a result of accepting an improperly completed certificate will make the contractor personally liable for the tax otherwise due, plus penalties and interest.
The contractor or officer enters Signature of contractor or officer, Title and Date.
This certificate is not valid unless all entries are completed.
More rules for Form ST-124
The failure to get a properly completed certificate, however, does not change the taxable status of a transaction; a contractor may still show that the transaction was a capital improvement.
No credit or refund is allowed for the tax paid on the cost of materials by the contractor.
A contractor, subcontractor, property owner, or tenant, may not use this certificate to purchase building materials or other tangible personal property tax free.
A certificate is accepted in good faith when a contractor has no knowledge that the certificate is false or is fraudulently given, and reasonable ordinary due care is exercised in the acceptance of the certificate.
If you are a contractor who installs items such as washing machines, clothes dryers, dishwashers, refrigerators, furniture, etc., which when installed or placed in real property do not become part of the real property, you must collect tax on your charge for the installation.
Contractors and subcontractors must keep any exemption certificate for at least three years after the due date of the last return to which it relates, or the date the return was filed, if later.
The contractor must also maintain a method of associating an exempt sale made to a particular customer with the exemption certificate on file for that customer.
Common questions about Form ST-124
Are capital improvements taxable in New York?
If a contractor performs work that constitutes a capital improvement, the contractor must pay tax on the purchase of building materials or other tangible personal property, but is not required to collect tax from the customer for the capital improvement.
Is there a deadline?
If a contractor gets a properly completed Form ST-124 from the customer within 90 days after rendering services, and accepts it in good faith, the customer bears the burden of proving the job or transaction was not taxable. If a contractor does not get a properly completed Certificate of Capital Improvement within 90 days, the contractor bears the burden of proving the work or transaction was a capital improvement.
When is this form not the right one?
This certificate may not be issued unless the work qualifies as a capital improvement.
Sources
[1] Form ST-124 (12/15), Certificate of Capital Improvement, New York State Department of Taxation and Finance (the Official source link on this page).
