Form ST-120.1, Contractor Exempt Purchase Certificate – New York

Form ST-120.1, Contractor Exempt Purchase Certificate, is the New York State and Local Sales and Use Tax certificate that a registered contractor gives a vendor or subcontractor to buy tangible personal property or services for a specific project without paying sales or use tax.

The Tax Department prints it for use only by contractors registered with it for sales tax purposes. The contractor states a Certificate of Authority number, describes the project (its location, the owner, and the prime contract date) and marks the box for the reason the purchase is exempt. Those reasons are items A through S, explained in the instructions on pages 3 and 4. Items A through L cover tangible personal property, for example property incorporated into real property for an exempt organization, production machinery and equipment, solar energy systems equipment, or equipment for an exempt Housing Development Fund Corporation (HDFC). Items M through S cover services, such as services that will be resold or the installation of qualifying equipment.

The certificate is evidence for the vendor. A vendor that accepts a valid certificate in good faith is protected from liability for the tax. A separate ST-120.1 is required for each project.

It is not a general-purpose exemption. The form says it cannot be used to buy motor fuel or diesel motor fuel exempt from tax, and a contractor may not use it on the basis of Form ST-124, Certificate of Capital Improvement, furnished by a project owner.

Contractors who hold a valid New York State Certificate of Authority and are buying property or services for a project that fits one of items A through S use this certificate. The form is to be used only by contractors registered with the Tax Department for sales tax purposes. The Certificate of Authority must not have expired or been suspended or revoked.

Vendors and subcontractors receive it. A vendor takes it in place of collecting tax on a qualifying sale of tangible personal property. A subcontractor takes it for services, including services purchased between prime contractors and subcontractors or between two subcontractors.

Exclusions in the instructions:

• Contractors may not use it to buy services exempt from tax unless the services are resold to customers in connection with a project.
• Construction equipment, tools and supplies bought or rented for a project but not becoming part of the finished project may not be bought exempt with it.
• It cannot be used to buy exempt motor fuel or diesel motor fuel.
• It cannot be used on the basis of Form ST-124 supplied by the project owner.

The certification must be signed by the owner, partner, or authorized person of the purchasing contractor.

Complete the certificate before or when you make an exempt purchase, because the vendor must have it within 90 days after the property is sold or the service is rendered. Without a properly completed certificate in that period, the vendor must collect tax on the sale of taxable property or services. A vendor that receives a properly completed certificate more than 90 days after delivery shares with the purchaser the burden of proving the sale was exempt.

You need a new ST-120.1 for each project. The form is not valid unless every entry is completed, including the purchaser's certification on page 2. The form prints no expiration date and no separate filing deadline with the Tax Department; the vendor keeps it on file.

The contractor delivers the completed certificate to the vendor, or to the subcontractor when buying services. The form says it is required to be filed with, and delivered to, the vendor as agent for the Tax Department. It names no Tax Department mailing address, portal or appointment process.

• To the vendor or subcontractor: give the signed certificate with all entries completed at the time of purchase, and within 90 days of the sale or service at the latest.
• On purchase paperwork: purchase orders showing an exemption based on this certificate must contain the project address and the name and address of the project owners. Invoices and sales or delivery slips must also carry this information.
• Vendor record keeping: the vendor must be able to link each exempt invoice or source document to the certificate on file, and must keep the certificate at least three years after the due date of the sales tax return it relates to, or the date the return was filed, if later.

For help, the Tax Department lists www.tax.ny.gov, telephone assistance at 518-485-9863, forms and publications at 518-457-5431, and TTY/TDD through 7-1-1 (New York Relay Service). FillingPDF lets you fill out and download the PDF; submission follows the channels above.