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Question: We are a small contractor operating in New York. If we have a subcontractor working for us and we don't want to be charged sales tax, when it's a capital improvement project, how do we complete the ST 124? Do we complete the customer section of that form and our subcontractor complete the contractor section?

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Response: As the prime contractor, you should obtain Form ST-124 - Certificate of Capital Improvement from your customer and retain it for your records. When purchasing the services of a subcontractor for the capital improvement project, provide the subcontractor with a copy of the certificate from the customer. You do not complete and provide a separate Form ST-124 to the subcontractor. Each contractor is responsible for paying tax on the purchase of materials that are incorporated into the capital improvement.

Diane L. Yetter
President
YETTER-tax meets technology
Sales Tax Institute
(312) 701-1800

Sales Tax Questions answered by Diane Yetter.

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