N.J. Admin. Code § 18:24-5.16

Current through Register Vol. 56, No. 24, December 18, 2024

Section 18:24-5.16 - Certificate issuance and acceptance procedures

(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 N.J.S.A. 54:32B-8.13(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 N.J.A.C. 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 N.J.A.C. 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 N.J.A.C. 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 N.J.S.A. 52:27H-62.c.

9. If a qualified housing sponsor, as defined in N.J.S.A. 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.

N.J. Admin. Code § 18:24-5.16

Amended by 48 N.J.R. 824(a), effective 5/16/2016