The Idaho ST-124 Form, officially known as the New York State and Local Sales and Use Tax Certificate of Capital Improvement, serves a crucial role in the construction and home improvement industry. It is a document completed and signed by both the customer and the contractor undertaking a capital improvement project, which signifies that the work performed is a permanent enhancement to real property. Understanding the eligibility criteria and proper usage of this form is essential for both parties to ensure compliance with tax laws and to differentiate capital improvements from routine repairs or maintenance. For detailed guidance on filling out this form, click the button below.
Understanding the intricacies of the Idaho ST-124 form, officially titled "New York State and Local Sales and Use Tax Certificate of Capital Improvement," is crucial for contractors and their clients engaging in capital improvement work on real property. By mandate, this form serves as a key document to elucidate the tax implications of such projects—distinguishing between taxable purchases of materials and nontaxable capital improvement labor. Both the customer and the contractor must complete and sign off on this document, underscoring its importance in the process. It explicitly clarifies that it cannot be utilized for tax-exempt procurement of building materials, thereby navigating the complex terrain of taxation in the realm of construction and renovation. Additionally, the form contains specific sections dedicated to the description and verification of the capital improvement project, entwining legal, financial, and operational facets. Through stipulations about items becoming a permanent part of the property, and criteria for what constitutes a capital improvement—including the enhancement of property value or useful life and the permanent affixation to the property—it draws a clear line between improvements and mere repairs. The responsibilities of securing and maintaining this certification fall heavily on the contractor, who, without it, could face personal liability for uncollected taxes, alongside penalties and interest. This document not only serves as a protection for the contractor but also as a vital record for auditing and compliance purposes, underscoring the intersection of legal documentation with practical construction work in New York State.
New York State Department of Taxation and Finance
ST-124
New York State and Local Sales and Use Tax
Certificate of Capital Improvement
(2/12)
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.
Read this form completely before making any entries.
This certificate may not be used to purchase building materials exempt from tax.
Name of customer (print or type)
Name of contractor (print or type)
Address (number and street)
City
State
ZIP code
Sales tax Certificate of Authority number (if any)
To be completed by the customer
Describe capital improvement to be performed:
Project name
Street address (where the work is to be performed)
I certify that:
(mark one)
owner
tenant of the real property identified on this form; and
and
includes
does not include the sale of any tangible personal property that, when installed, does not
become a permanent part of the real property (for example, a free-standing microwave or washing machine).
I understand that:
labor if it is determined that this work does not qualify as a capital improvement; and
transferred to me pursuant to this contract when the property installed by the contractor does not become a permanent part of the real property; and
Signature of customer
Title
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 above, and that I accept this form in good faith. (A copy of the written contract, if any, is attached.) I understand that my failure to collect tax as a result of accepting an improperly completed certificate will make me personally liable for the tax otherwise due, plus penalties and interest.
Signature of contractor or officer
This certificate is not valid unless all entries are completed.
ST-124 (2/12) (back)
Guidelines
When the customer completes this certificate and gives it to the contractor, who accepts it in good faith, it is evidence that the work to be performed will result in a capital improvement to real property.
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. This certificate may not be issued unless the work qualifies as a capital improvement.
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.
For guidance as to whether a job is a repair or a capital improvement, see Publication 862, Sales and Use Tax Classifications of Capital Improvements and Repairs to Real Property.
A contractor, subcontractor, property owner, or tenant, may not use this certificate to purchase building materials or other
tangible personal property tax free.
of this certificate does not relieve the contractor of the liability for sales tax on the purchase of building materials or other tangible personal property subsequently incorporated into the real property as a capital improvement unless the contractor can legally issue Form ST-120.1, Contractor Exempt Purchase Certificate. (See Publication 862 for additional information.)
The term materials is defined as items that become a physical component part of real or personal property, such as lumber, bricks, or steel. This term also includes items such as doors, windows, sinks, and furnaces used in construction.
Floor covering
Floor covering such as carpet, carpet padding, linoleum and vinyl roll flooring, carpet tile, linoleum tile, and vinyl tile installed as the initial finished floor covering in new construction, a new addition to an existing building or structure, or in a total reconstruction of an existing building or structure, constitutes a capital improvement regardless of the method of installation. As a capital improvement, the charge to the property owner for the installation of floor covering is not subject to New York State and local sales and use taxes. However, the retail purchase of floor covering (such as carpet or padding) itself is subject to tax.
Floor covering installed other than as described above does not qualify as a capital improvement. Therefore, the charges for materials and labor are subject to sales tax. The contractor may apply for a credit or refund of any sales tax already paid on the materials.
The term floor covering does not include flooring such as 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 (a), (b), and (c) above apply to such flooring.
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 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 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. The individual charge for any of these items is also taxable as the sale of tangible personal property.
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. 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.
The contractor 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.
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Before starting the process of filling out the New York State Department of Taxation and Finance ST-124, New York State, and Local Sales and Use Tax Certificate of Capital Improvement, it's crucial to understand its proper usage and the responsibilities entailed. This form acts as an acknowledgment between the customer and the contractor regarding a capital improvement project, stating that the work performed is indeed a capital improvement as defined by New York State law. The completed form, signed by both parties, serves as evidence that the contractor is not required to collect sales tax from the customer for the capital improvement. It's imperative that contractors keep the completed form on file as part of their tax records. The following steps outline the process for correctly completing the ST-124 form.
Following these steps will ensure the ST-124 form is filled out correctly, validating the capital improvement work agreed upon and providing necessary documentation for tax purposes. By completing and properly filing this document, contractors and customers attest to the accuracy of the information regarding the capital improvement project, thereby fulfilling their legal obligations.
What is an ST-124 form and when is it used?
The ST-124 form, also known as the New York State and Local Sales and Use Tax Certificate of Capital Improvement, is a document utilized in the state of New York. It is specifically used when a contractor performs work that results in a capital improvement to real property. This form serves as proof that the work undertaken substantially adds to the value of the property or prolongs its useful life, with the improvement becoming a permanent part of the property. The contractor keeps this completed and signed form as evidence to exempt the project from sales tax.
Who needs to complete the ST-124 form?
Both the customer ordering the capital improvement and the contractor performing the work need to complete the ST-124 form. The customer is responsible for providing a description of the capital improvement and certifying their relation to the property, while the contractor must affirm that they are undertaking the described work and accept the certificate in good faith.
What criteria must be met for work to be considered a capital improvement?
For work to be classified as a capital improvement under the ST-124 certificate, it must meet three key criteria: (a) it must substantially add to the value of the real property or appreciably prolong its useful life, (b) become part of the real property or be permanently affixed to the property in such a way that its removal would cause material damage, and (c) be intended as a permanent installation.
Can the ST-124 form be used to purchase building materials exempt from sales tax?
No, the ST-124 form cannot be used to purchase building materials or other tangible personal property exempt from sales tax. Contractors must pay sales tax on the purchase of materials used in a capital improvement project. However, the contractor is not required to collect sales tax from the customer for the cost of the actual capital improvement work performed.
What happens if the work does not qualify as a capital improvement?
If the work performed does not meet the criteria for a capital improvement, the exemption provided by the ST-124 form does not apply. In such cases, the contractor may be liable for any sales tax, penalties, and interest on the labor and materials provided. The customer might also face tax liabilities for any tangible personal property transferred in the course of work that does not become a permanent part of the property.
How does a contractor determine if a job is a repair or a capital improvement?
Contractors can refer to Publication 862, Sales and Use Tax Classifications of Capital Improvements and Repairs to Real Property, for guidance on whether a job constitutes a repair or a capital improvement. The publication provides detailed criteria and examples to help differentiate between the two.
Are there any specific rules for floor coverings?
Yes, floor coverings such as carpet and linoleum have specific rules under the ST-124 guidelines. If installed as the initial finished floor covering in new construction, an addition, or a total reconstruction, it's considered a capital improvement. This means the installation is not subject to sales tax. However, if installed under other circumstances, it does not qualify as a capital improvement, making the charges for materials and labor subject to sales tax.
What are a contractor’s responsibilities after accepting an ST-124 form?
Upon accepting an ST-124 form, contractors are responsible for ensuring that the form is properly completed. They must maintain the form for at least three years after the associated return's due date or the date the return was filed, whichever is later. The contractor must also establish a method to link the exempt sale to the specific customer and exemption certificate.
Where can I find additional help or information?
For further assistance or information regarding the ST-124 form or related tax issues, individuals can visit the New York State Department of Taxation and Finance website at www.tax.ny.gov. This site offers a wealth of resources, including the ability to manage taxes online, check for new services, and access additional guidance. For direct inquiries, the Sales Tax Information Center can be contacted at (518) 485-2889.
When filling out the New York State ST-124 form, a Certificate of Capital Improvement, individuals often encounter pitfalls that could be easily avoided. Understanding these common mistakes is crucial for accurately completing the form, ensuring that the capital improvement is properly documented, and avoiding any legal issues that may arise from incorrect submissions.
One frequent error involves not fully completing the form. Every field on the ST-124 must be filled out to validate the certificate. This includes detailed information about the customer and contractor, a comprehensive description of the capital improvement project, and both parties' acknowledgment and certification signatures with dates. Leaving sections incomplete may render the document invalid.
Another mistake is incorrectly characterizing the nature of the work performed. It's essential to distinguish between a capital improvement and a repair or maintenance work, as the tax implications differ. A capital improvement substantially adds to the value of the real property, prolongs its useful life, becomes part of the real property, and is intended to be a permanent installation. Misclassification can lead to tax liabilities and penalties.
Individuals sometimes fail to verify that the work qualifies as a capital improvement before using the ST-124 form. According to the guidelines, only work that meets specific criteria qualifies as a capital improvement. For example, floor covering installed in certain circumstances can qualify, whereas other installations such as free-standing appliances do not. Ensuring that the work meets these requirements is crucial for the form to be applicable.
A fourth error occurs when customers or contractors overlook the importance of attaching a copy of the written contract (if available) to the completed ST-124 form. This document serves as additional proof of the agreement and the scope of work, supporting the validity of the capital improvement claim.
Finally, not retaining the completed form for the requisite period is a common oversight. Contractors are required to keep the ST-124 form for at least three years after the due date of the last return to which it relates, or the date the return was filed, whichever is later. This retention is necessary for audit purposes and to prove compliance with tax laws should any questions arise.
To avoid these mistakes, both customers and contractors should:
By paying close attention to these details, individuals can ensure correct and efficient processing of their Certificate of Capital Improvement, adhering to legal requirements and avoiding unnecessary complications.
In the complex realm of capital improvements and tax documentation, the New York State ST-124 form, or the Certificate of Capital Improvement, plays a critical role. This form is crucial for contractors and property owners alike as it provides a tax-exempt status for certain types of property improvements in New York. Alongside the ST-124 form, several other documents are frequently utilized to ensure compliance and streamline tax exemption processes. The list below outlines some of the key documents and forms that are often used in conjunction with the ST-124 form.
Understanding and utilizing these documents in conjunction with the ST-124 form can greatly streamline the process of certifying a project as a capital improvement and obtaining the associated tax benefits. Contractors and property owners should familiarize themselves with these forms to ensure compliance and optimize tax efficiencies. Each document serves a specific purpose and, when used correctly, provides clarity and legal standing to the intricate processes of capital improvements and property taxation.
The Idaho ST-124 form is similar to various other documents used within the United States to certify different aspects of selling, improving, or purchasing real and personal property. These documents vary slightly based on their intended use, jurisdiction, and specific requirements for validation. Among these, notable forms include the California Use Tax Certificate, Massachusetts Certificate of Capital Improvement, and Texas Sales and Use Tax Exemption Certification. Each serves a purpose closely aligned with the aim of the Idaho ST-124 form but is tailored to meet the unique regulatory and tax environments of their respective states.
California Use Tax Certificate - The California Use Tax Certificate, much like the Idaho ST-124 form, plays a crucial role for contractors and consumers in determinations related to tax liabilities on purchased goods for a capital improvement project. However, the California Use Tax Certificate specifically focuses on items purchased outside of California for use within the state, highlighting the nuance of use tax versus sales tax. This form requires similar disclosures about the nature of the improvement project and the relationship of the purchased goods to it. Where the Idaho ST-124 form is designed to ensure that capital improvements are properly identified and tax-exempt, the California certificate zeroes in on the use tax obligations that might arise from out-of-state purchases connected to these projects.
Massachusetts Certificate of Capital Improvement - Similar to its Idaho counterpart, the Massachusetts Certificate of Capital Improvement (Form ST-12) is utilized to demarcate the purchases of services and goods that qualify as capital improvements from those that are merely taxable repairs or maintenance. The Massachusetts version explicitly delineates that certain works can be deemed as capital improvements, providing tax exemptions for the involved transactions. The stringent conditions outlined for a project to qualify as a capital improvement in Massachusetts are reflective of the Idaho ST-124’s criteria, albeit adapted to fit the Massachusetts Department of Revenue's stipulations. Both forms mandate comprehensive details about the project, the property owner, and the contractor to verify the work's qualifying nature.
Texas Sales and Use Tax Exemption Certification - Texas’s approach to distinguishing between taxable purchases and those qualifying for exemption due to their role in capital improvement projects comes in the form of the Texas Sales and Use Tax Exemption Certification. Like the Idaho ST-124, this form is fundamental in identifying transactions that should not be taxed because they are integral to a capital improvement. However, the Texas Exemption Certification is broader, applicable to a variety of exemptions beyond capital improvements. The form requires detailed information from the purchaser about the nature of the exemption claimed, ensuring transparency and compliance with the Texas Comptroller’s regulations. It serves a pivotal role in streamlining tax exemption claims for eligible capital improvements, as does the Idaho ST-124, by specifying the criteria under which improvements are considered non-taxable.
When completing the Idaho St 124 form, it's essential to follow guidelines that ensure the process is smooth and free from common errors. Below are points to consider for what you should and shouldn't do:
Understanding the distinction between capital improvements and simple repairs or maintenance is crucial, as it impacts tax obligations. Contractors should also remember the necessity of retaining this certificate and providing accurate documentation to validate the capital improvement status of their work.
Misconceptions about the New York State Department of Taxation and Finance ST-124, also known as the New York State and Local Sales and Use Tax Certificate of Capital Improvement, can lead to confusion among contractors and customers alike. Let's address some common misunderstandings:
Understanding these aspects of the ST-124 form ensures both contractors and customers navigate the complexities of tax liabilities and exemptions accurately, avoiding potential legal and financial issues down the line.
When filling out and using the New York State Department of Taxation and Finance ST-124 form, there are crucial aspects to understand to ensure compliance and correct application. These key takeaways help guide contractors and customers through the process:
Contractors must maintain detailed records, including the ST-124 form and any contracts related to the capital improvement project, for at least three years. These documents are crucial for proving the nature of the work should tax authorities require verification.
In summary, proper utilization of the ST-124 form is vital for contractors and customers engaging in capital improvement projects on real property in New York State. Understanding the definitions, obligations, and record-keeping requirements ensures not only compliance with tax laws but also protects against potential financial liabilities.
Idaho Tax Forms for 2022 - Details the scheduled start and completion dates for the project to help monitor timelines.
Idaho Sales Tax Exemption Form St-104 - Supports economic activity by making Idaho an attractive place for nonresidents to buy vehicles, thanks to the tax exemption.