Fillable Form St-124 - Certificate Of Capital Improvement (Page 2 of 2) in pdf

Page 2 of 2 ST-124 (12/15)

Instructions

When the customer completes this certificate and gives it to the

Temporary facilities at construction sites

contractor, who accepts it in good faith, it is evidence that the

Subcontracts to provide temporary facilities at construction sites

work to be performed will result in a capital improvement to real

that are necessary for the construction of a capital improvement

property.

are considered to be part of the capital improvement project.

Examples of temporary facilities include temporary:

A capital improvement to real property is an addition or alteration

to real property that:

• heat, electric, or plumbing services;

(a) substantially adds to the value of the real property or

• protective pedestrian walkways; and

appreciably prolongs the useful life of the real property, and

• scaffolding services.

(b) becomes part of the real property or is permanently affixed

A primary contractor purchasing qualifying temporary facilities

to the real property so that removal would cause material

from a subcontractor must give the subcontractor a copy of

damage to the property or article itself, and

Form ST-124 issued to the primary contractor by the customer

(including a customer that is an exempt organization) to

purchase the subcontractor’s services exempt from tax.

The work performed by the contractor must meet all three of

these requirements to be considered a capital improvement.

A certificate is accepted in good faith when a contractor has no

This certificate may not be issued unless the work qualifies as

knowledge that the certificate is false or is fraudulently given,

a capital improvement. See Tax Bulletin Capital Improvements

and reasonable ordinary due care is exercised in the acceptance

(TB-ST-104).

of the certificate.

If a contractor performs work that constitutes a capital

If a contractor gets a properly completed Form ST-124 from the

improvement, the contractor must pay tax on the purchase

customer within 90 days after rendering services, and accepts it

of building materials or other tangible personal property, but

in good faith, the customer bears the burden of proving the job

is not required to collect tax from the customer for the capital

or transaction was not taxable.

improvement. No credit or refund is allowed for the tax paid

on the cost of materials by the contractor. See Tax Bulletin

If you are a contractor who installs items such as washing

Contractors – Sales Tax Credits (TB-ST-130).

machines, clothes dryers, dishwashers, refrigerators, furniture,

etc., which when installed or placed in real property do not

For guidance as to whether a job is a repair or a capital

become part of the real property, you must collect tax on your

improvement, see Publication 862, Sales and Use Tax

charge for the installation. The individual charge for any of these

Classifications of Capital Improvements and Repairs to Real

items is also taxable as the sale of tangible personal property.

Property.

If a contractor does not get a properly completed Certificate of

A contractor, subcontractor, property owner, or tenant, may

Capital Improvement within 90 days, the contractor bears the

not use this certificate to purchase building materials or other

burden of proving the work or transaction was a capital

tangible personal property tax free. A contractor’s acceptance

improvement. The failure to get a properly completed certificate,

of this certificate does not relieve the contractor of the liability for

however, does not change the taxable status of a transaction; a

sales tax on the purchase of building materials or other tangible

contractor may still show that the transaction was a capital

personal property subsequently incorporated into the real property

improvement.

as a capital improvement unless the contractor can legally issue

Form ST-120.1, Contractor Exempt Purchase Certificate. (See

Contractors and subcontractors must keep any exemption

Publication 862 for additional information.)

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 term materials is defined as items that become a physical

The contractor must also maintain a method of associating an

component part of real or personal property, such as lumber,

exempt sale made to a particular customer with the exemption

bricks, or steel. This term also includes items such as doors,

certificate on file for that customer.

windows, sinks, and furnaces used in construction.

Need help?

Floor covering

Floor covering such as carpet, carpet padding, linoleum and

Visit our website at

vinyl roll flooring, carpet tile, linoleum tile, and vinyl tile installed

• get information and manage your taxes online

as the initial finished floor covering in new construction, a

new addition to an existing building or structure, or in a total

• check for new online services and features

reconstruction of an existing building or structure, constitutes a

capital improvement regardless of the method of installation. As

Telephone assistance

a capital improvement, the charge to the property owner for the

installation of floor covering is not subject to New York State and

Sales Tax Information Center:

(518) 485-2889

local sales and use taxes. However, the retail purchase of floor

To order forms and publications:

(518) 457-5431

covering (such as carpet or padding) itself is subject to tax.

Text Telephone (TTY) Hotline (for persons with

Floor covering installed other than as described above does

hearing and speech disabilities using a TTY):

(518) 485-5082

not qualify as a capital improvement. Therefore, the charges for

Persons with disabilities: In compliance with the

materials and labor are subject to sales tax. The contractor may

Americans with Disabilities Act, we will ensure that our

apply for a credit or refund of any sales tax already paid on the

lobbies, offices, meeting rooms, and other facilities are

materials.

accessible to persons with disabilities. If you have questions

The term floor covering does not include flooring such as

about special accommodations for persons with disabilities, call the

information center.

ceramic tile, hardwood, slate, terrazzo, and marble. The rules

for determining when floor covering constitutes a capital

improvement do not apply to such flooring. The criteria stated in

Privacy notification

(a), (b), and (c) above apply to such flooring.

See our website or Publication 54, Privacy Notification.

Form St-124 - Certificate Of Capital Improvement Page 2

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