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New York Tax Law Section 5-a - Certification Of Registration To Collect Sales And Compensating Use Taxes By Certain Contractors, Affiliates And Subcontractors.

Legal Research Home > New York Lawyer > Tax > New York Tax Law Section 5-a - Certification Of Registration To Collect Sales And Compensating Use Taxes By Certain Contractors, Affiliates And Subcontractors.

    § 5-a.  Sales  and  compensating  use  tax  obligations  of  certain
  contractors, subcontractors and their affiliates.  1.  For  purposes  of
  this section, the following terms shall have the specified meanings:
    (a)  "Affiliate"  means a person which, through stock ownership or any
  other affiliation, directly, indirectly or constructively
    (1) controls another person;
    (2) is controlled by another person; or
    (3) is, along with another person,  under  the  control  of  a  common
  parent.
    (b)  "Commodities"  means  commodities as defined in article eleven of
  the state finance law and tangible personal property.
    (c) "Contract" means an agreement between a contractor and  a  covered
  agency  for the sale of commodities or services having a value in excess
  of fifteen thousand dollars.
    (d) "Contractor" means a person awarded a contract.
    (e) "Covered  agency"  includes  the  state,  any  department,  board,
  bureau,  commission,  division,  office, council or agency of the state,
  and a public authority or a public benefit corporation.
    (f) "Sales and compensating use taxes" means state and local sales and
  compensating use taxes imposed by article twenty-eight and  pursuant  to
  the  authority  of  article  twenty-nine  of  this  chapter,  which  are
  administered by the commissioner.
    (g) "Services" means services as defined  in  article  eleven  of  the
  state finance law and taxable services.
    (h) "Subcontractor" means a person providing commodities or performing
  services for a contractor or another subcontractor in the fulfillment of
  a contract.
    (i) "State" means the state of New York.
    (j)  "Taxable  services" means services, the receipts from the sale of
  which are taxable by article twenty-eight or article twenty-nine of this
  chapter.
    (k)  The  terms  "person,"  "receipts,"  "sale,"  "tangible   personal
  property"  and  "vendor" have the meanings given in article twenty-eight
  of this chapter.
    2. (a) Notwithstanding  any  provision  of  law  to  the  contrary,  a
  contract  shall not be approved by the state comptroller or, in cases in
  which the state comptroller is not required to approve the contract,  by
  such  other  agency  or  unit  thereof  responsible  for approval of the
  contract, and shall not be  valid,  effective  or  binding  against  the
  covered  agency, if the contractor, any affiliate of the contractor, any
  subcontractor  or  any  affiliate  of  the  subcontractor  makes   sales
  delivered  by  any  means  to  locations  within  the  state of tangible
  personal property or taxable services having a value in excess of  three
  hundred   thousand   dollars,  and  is  not  registered  for  sales  and
  compensating use tax  purposes  with  the  commissioner  under  sections
  eleven  hundred  thirty-four  and  twelve  hundred  fifty-three  of this
  chapter.
    (b) Prior to the date a contract is to be submitted for approval,  the
  contractor shall certify in writing, under penalty of perjury, that:
    (1)  if the contractor makes sales delivered by any means to locations
  within the state of  tangible  personal  property  or  taxable  services
  having  a  value  in  excess  of  three  hundred  thousand  dollars, the
  contractor holds a valid certificate of  authority.  If  the  contractor
  does not make sales delivered by any means to locations within the state
  of  tangible  personal  property  or  taxable services having a value in
  excess of three hundred thousand dollars, then the contractor  shall  so
  certify;
    (2)  if  any  affiliate of the contractor makes sales delivered by any
  means to locations within the state of  tangible  personal  property  or
  taxable  services  having  a  value  in excess of three hundred thousand
  dollars, to the best of the contractor's knowledge, each such  affiliate
  holds  a valid certificate of authority. If the contractor does not have
  any affiliates making sales delivered by any means to  locations  within
  the  state  of  tangible  personal property or taxable services having a
  value in excess of three hundred thousand dollars, then  the  contractor
  shall so certify; and
    (3)  if  any subcontractor or any affiliate of the subcontractor makes
  sales delivered by any means to locations within the state  of  tangible
  personal  property or taxable services having a value in excess of three
  hundred thousand dollars, to the best  of  the  contractor's  knowledge,
  each  such  subcontractor  and  affiliate  holds  a valid certificate of
  authority.  If  there  is  no  subcontractor   or   affiliate   of   the
  subcontractor  making  sales  delivered by any means to locations within
  the state of tangible personal property or  taxable  services  having  a
  value  in  excess of three hundred thousand dollars, then the contractor
  shall so certify.
    (c)  The  contractor's  certification,  along  with  true  copies,  if
  applicable,  of the certificate of authority held by the contractor and,
  if applicable, by, each affiliate of the contractor, each  subcontractor
  and  each  affiliate of the subcontractor, shall be incorporated in, and
  made a part of, the contract.
    (d) A  contractor,  affiliate  of  the  contractor,  subcontractor  or
  affiliate   of   the   subcontractor   which  registers  for  sales  and
  compensating use tax  purposes  with  the  commissioner  under  sections
  eleven  hundred  thirty-four  and  twelve  hundred  fifty-three  of this
  chapter in order to comply with the provisions of this subdivision shall
  file a certificate of registration with the commissioner at least twenty
  days prior to the date the contract is to be submitted for  approval  to
  the state comptroller or, in cases in which the state comptroller is not
  required  to  approve the contract, to such other agency or unit thereof
  responsible  for  approval  of  the  contract.  Once  registered,   such
  contractor,  affiliate  of the contractor, subcontractor or affiliate of
  the subcontractor shall be a vendor and shall comply with and be subject
  to the provisions of  articles  twenty-eight  and  twenty-nine  of  this
  chapter.
    (e)  The  registration  requirement  prescribed by this subdivision in
  order for a contract to be approved shall be in addition  to  any  other
  requirements  prescribed  by  law  for  approval of contracts to which a
  covered agency is a party.
    3. (a) During the term of a contract, the  contractor  shall,  at  the
  times  specified  in  paragraph  (b)  of  this  subdivision,  certify in
  writing, under penalty of perjury, that:
    (1) if the contractor makes sales delivered by any means to  locations
  within  the  state  of  tangible  personal  property or taxable services
  having a  value  in  excess  of  three  hundred  thousand  dollars,  the
  contractor  holds  a  valid  certificate of authority. If the contractor
  does not make sales delivered by any means to locations within the state
  of tangible personal property or taxable  services  having  a  value  in
  excess  of  three hundred thousand dollars, then the contractor shall so
  certify; and
    (2) if any affiliate of the contractor makes sales  delivered  by  any
  means  to  locations  within  the state of tangible personal property or
  taxable services having a value in  excess  of  three  hundred  thousand
  dollars,  to the best of the contractor's knowledge, each such affiliate
  holds a valid certificate of authority. If the contractor does not  have
  any  affiliates  making sales delivered by any means to locations within
  the state of tangible personal property or  taxable  services  having  a
  value  in  excess of three hundred thousand dollars, then the contractor
  shall so certify; and
    (3)  if  any subcontractor or any affiliate of the subcontractor makes
  sales delivered by any means to locations within the state  of  tangible
  personal  property or taxable services having a value in excess of three
  hundred thousand dollars, to the best  of  the  contractor's  knowledge,
  each  such  subcontractor  and  affiliate  holds  a valid certificate of
  authority.  If  there  is  no  subcontractor   or   affiliate   of   the
  subcontractor  making  sales  delivered by any means to locations within
  the state of tangible personal property or  taxable  services  having  a
  value  in  excess of three hundred thousand dollars, then the contractor
  shall so certify.
    (b) The contractor's certification shall be made:
    (1) in the case of an approved contract having a term of more than one
  year, annually, by the day prior to the commencement date  of  the  next
  succeeding year of the contract;
    (2)  in  the  case  of  an  approved contract which authorizes renewal
  thereof at the conclusion of an initial or subsequent term, by  the  day
  prior to the commencement date of the applicable renewal term.
    (c)  The  contractor's  certification,  along  with  true  copies,  if
  applicable, of the certificate of authority held by the contractor  and,
  if  applicable,  by each affiliate of the contractor, each subcontractor
  and each affiliate of the subcontractor making sales  delivered  by  any
  means  to  locations  within  the state of tangible personal property or
  taxable services having a value in  excess  of  three  hundred  thousand
  dollars, shall be incorporated in, and made a part of, the contract.
    (d)  If,  at the times specified in paragraph (b) of this subdivision,
  the  contractor  fails  to  make  the  certification  required  by  this
  subdivision,  or if, during the term of the contract, the covered agency
  discovers that such certification was false when made, then such failure
  or false certification shall be a material breach of the  contract,  and
  the  contract  shall  be  subject  to  termination if the covered agency
  determines that such action is in the best interests of such agency.
    (e) A  contractor,  affiliate  of  the  contractor,  subcontractor  or
  affiliate   of   the   subcontractor   which  registers  for  sales  and
  compensating use tax  purposes  with  the  commissioner  under  sections
  eleven  hundred  thirty-four  and  twelve  hundred  fifty-three  of this
  chapter in order to comply with the provisions of this subdivision shall
  file a certificate of registration with the commissioner at least twenty
  days prior to making sales delivered by any means  to  locations  within
  the  state  of  tangible  personal property or taxable services having a
  value in excess of three hundred thousand dollars. Once registered, such
  contractor, affiliate of the contractor, subcontractor or  affiliate  of
  the subcontractor shall be a vendor and shall comply with and be subject
  to  the  provisions  of  articles  twenty-eight  and twenty-nine of this
  chapter.
    4. The department shall create and  maintain  an  electronic  database
  containing   information   regarding   persons   registered   with   the
  commissioner  under  sections  eleven  hundred  thirty-four  and  twelve
  hundred  fifty-three  of  this chapter and persons whose certificates of
  authority  issued  under  or  pursuant  to  such  provisions  have  been
  suspended, revoked or not renewed. Such database shall be made available
  to  covered  agencies for query as to the sales and compensating use tax
  registration status  of  contractors  and  their  affiliates  and  their
  subcontractors and their affiliates.
    5. The provisions of this section shall not apply to a contract if:
    (a) the covered agency determines in writing that
    (1)  the  contract  is necessary to address an "emergency," within the
  meaning of article eleven of the state finance law, and  the  contractor
  is the only person capable of fulfilling the contract;
    (2)  the  contract  is  necessary to ensure the provision of essential
  services, and the contractor is the only person  capable  of  fulfilling
  the contract; or
    (3)  the contract is necessary to ensure the public health, safety and
  welfare, and the contractor is the only person capable of fulfilling the
  contract; and
    (b) the state comptroller or, in cases in which the state  comptroller
  is  not  required  to  approve  the  contract, such other agency or unit
  thereof responsible for approval of the contract, in writing:
    (1) concurs, with the determination of the covered agency that one  or
  more  of  the  conditions specified in paragraph (a) of this subdivision
  apply; and
    (2) explains, the reasons supporting such determination.

Last modified: September 7, 2006