New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 24 - SALES AND USE TAX ACT › Subchapter 5 - CONTRACTORS AND SERVICES PERFORMED ON REAL PROPERTY › Section 18:24-5.16 - Certificate issuance and acceptance procedures

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Procedures to be
				followed by contractors and fabricator/contractors with respect to the issuance and
				acceptance of certificate forms are as follows:
1.
				Resale certificates may not be issued by a contractor on any purchase of
				construction materials, supplies, equipment, or services, except that a
				fabricator/contractor may issue a Resale Certificate (Form ST-3) or other approved
				form to his or her suppliers on all purchases of materials that become component
				parts of the items he or she fabricates.
2. Exempt Use Certificates (Form ST-4) or other
				approved forms may be issued by contractors and fabricator/contractors when the
				materials purchased are machinery, equipment, apparatus, or other tangible personal
				property, exempt at the time of purchase under the provisions of
				54:32B-8.1 3(a), (b), or (d); 8.14;
				8.29; or 8.36, which are purchased for incorporation into real property.
3. Exempt Organization Certificates (Form ST-5)
				may not be issued by a contractor or fabricator/contractor in connection with any
				purchase. The Exempt Organization Certificate should be obtained by a contractor or
				fabricator/contractor in all instances where he or she has performed any of the
				taxable services enumerated in
				18:24-5.6, 5.7, and 5.8.
4. Direct Payment Certificates (Form ST-6A) may be
				issued by a contractor or a fabricator/contractor only when he or she is a holder of
				a valid Direct Payment Permit (Form ST-6) and must be used in accordance with the
				directions issued for use thereof.
5.
				Neither Exempt Use Certificates (Form ST-4) nor Farmer's Exemption Certificates
				(Form ST-7) may be issued by a contractor or fabricator/contractor for his or her
				purchases of tangible personal property to be installed at a farming enterprise. A
				contractor may accept a Farmer's Exemption Certificate (Form ST-7) only when
				performing exempt production and conservation services for a farming enterprise. See
				18:24-19.1.
6. Certificates of Exempt Capital Improvement
				(Form ST-8) or other approved forms should be obtained by a contractor,
				subcontractor, or fabricator/contractor from his or her customer in any instance
				where the performance of his or her work results in an exempt capital improvement to
				real property. A contractor or a fabricator/contractor may accept a Certificate of
				Exempt Capital Improvement or other approved form as a basis for exemption from tax
				on his or her services only where his or her work has resulted in an exempt capital
				improvement to real property. The nature of the work performed is the determining
				factor in determining whether to collect tax on a contractor's services.
i. "Capital improvement" means an installation of
				tangible personal property which results in an increase in the value of the real
				property or a significant increase in the useful life of such property. See
				18:24-5.7.
ii. "Repair services" means services that fix
				problems with property in order to maintain the property's existing value and keep
				it in working condition.
iii.
				"Maintenance services" are services that preserve the existing condition of
				property.
iv. Examples of exempt capital
				improvements include, but are not limited to:
(1)
				New construction;
(2) New roof,
				installation of;
(3) Bathroom wall
				tiles, installation of;
(4) New bath
				fixtures, installation of;
(5) New
				kitchen fixtures, installation of;
(6)
				Paving of driveway;
(7) Paneling,
				installation of;
(8) In-ground swimming
				pool, installation of;
(9) New central
				air conditioner, installation of;
(10)
				Porch enclosure, construction of;
(11)
				New heating system, installation of;
(12) Rewiring;
(13) New electrical outlets, installation
				of;
(14) New siding, installation
				of;
(15) Garage, construction
				of;
(16) Patio, construction
				of;
(17) Storm doors and windows,
				installation of; and
(18) New water
				heater, installation of.
v.
				Examples of taxable capital improvements include, but are not limited to:
(1) Trees, shrubs, installation of;
(2) Tiled floors, installation of;
(3) Wall-to-wall carpeting, installation
				of;
(4) Security and alarm system,
				installation of; and
(5) New sod,
				installation of.
vi. The
				contractor may not accept a Certificate of Exempt Capital Improvement (Form ST-8) or
				other approved form for landscaping services, floor covering installation, or
				installation of alarm or security systems.
vii. The use of the Certificate of Exempt Capital
				Improvement (Form ST-8) or other approved form is required in all applicable
				transactions.
7. Contractor's
				Exempt Purchase Certificate (Form ST-13).
i. A
				contractor issues Form ST-13 or other approved form to the supplier when making
				purchases of materials, supplies, or services for use in performing work on the real
				property of an exempt organization, a New Jersey or Federal governmental entity, or
				a qualified housing sponsor.
8. An Exempt Qualified Business Permit/Exempt
				Purchase Permit (Form UZ-4) must be completed by the contractor when the contractor
				purchases materials or supplies exclusively for performing work for a qualified
				business at the business's real property located in an urban enterprise zone. Form
				UZ-4 is obtainable only from the qualified business. After completing Form UZ-4, the
				contractor must issue copies to its sellers and its subcontractors. Any
				subcontractor receiving Form UZ-4 must attach its name, address, and Certificate of
				Authority number (in addition to the name, address, and number of the contractor)
				and then give Form UZ-4 and attachments to its sellers. "Qualified business" means a
				person or entity that the Urban Enterprise Zone Authority has certified to be a
				qualified business according to the criteria in
				52:27H-62.c.
9. If a qualified housing sponsor, as defined in
				55:14K-3 of the New Jersey Housing and
				Mortgage Finance Agency Law of 1983, has received Federal, State, or local
				government subsidies, as verified by the New Jersey Housing and Mortgage Finance
				Agency on a Certification of Housing Sponsor form, in addition to New Jersey Housing
				and Mortgage Finance Agency financing for the specific housing project, contractors
				of the housing sponsor may purchase materials, supplies, and services tax free for
				the specific housing project. The contractor must receive a copy of the housing
				sponsor's Letter of Exemption for his or her records and may then issue a
				Contractor's Exempt Purchase Certificate (Form ST-13) to his or her suppliers to
				document his or her exempt purchases for the housing project.