Thursday, June 20, 2013

Certification Requirements for Businesses that Contract with New York State

In certain instances, section 5-a of the Tax Law requires businesses that are awarded contracts with New York State to certify that they are registered to collect New York State and local sales and use taxes (sales tax) on sales delivered to locations within New York.

The purpose of section 5-a is to ensure that contractors do not get state work unless they, their affiliates, and their subcontractors making sales of tangible personal property or taxable services are registered to collect New York State’s sales tax. This means that certain businesses, including in some cases out-of-state businesses not currently registered to collect New York State sales taxes, will need to register for New York State sales tax purposes.

This bulletin explains the general rules related to the certification requirements for contractors and their affiliates and subcontractors. For more detailed information on the contractor certification requirements imposed under section 5-a of the Tax Law, see Publication 223, Questions and Answers Concerning Tax Law Section 5-a (as amended, effective April 26, 2006).

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