SALT Report 2577 – The New York Department of Taxation and Finance issued a bulletin that discusses the certification requirements for business that contract with the State. Under section 5-a of the New York Tax Law businesses that are awarded contracts with the State and meet certain conditions are required to certify that they are registered to collect State and local sales and use taxes.
The purpose of this law is to ensure that contractors do not get State work unless they, their affiliates, or their subcontractors who make sales of tangible personal property or taxable services are registered to collect New York State’s sales tax. Therefore, these businesses, as well as out-of-state businesses that are not currently registered to collect sales tax, will need to register with the Department.
Contractors that are awarded State contracts that are in excess of $100,000 are required to certify that they are registered with the Department to collect sales tax. This process can be done by filing Form ST-220-TD, Contractor Certification. This form only needs to be filed once, so long as the information on the form is correct.
Contractors who make sales of tangible personal property or services in excess of $300,000 within New York must also certify that they are registered to collect sales tax. The $300,000 threshold includes the four sales tax quarters that immediately precede the quarter in which Form ST-220-TD is filed.
In addition to filing Form ST-220-TD, contractors must also certify to the procuring covered agency that it has filed Form ST-220-TD with the Department. To do so, the contractor must file Form ST-220-CA, Contractor Certification to Covered Agency, and provide it to the procuring covered agency.
Certain contracts may be exempt from the contractor certification requirements if the procuring covered agency and the Office of the State Comptroller determine that the contract is necessary to:
- Address an emergency, or
- Ensure the public health, safety, or welfare when an urgent event arises
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