Are portable, bolted-together steel-frame shelter buildings (and their foundations) taxable as tangible personal property in New York, or exempt as a real-property capital improvement or farm-use equipment?

Plain-English summary

Cover-All Shelter Systems sells "cover-all shelters" -- steel truss-arch frames covered with a polyethylene skin, ranging upward from 20x20 feet, used for storing hay and equipment, housing livestock, riding arenas, and various commercial/industrial uses. The frames bolt onto either a wood-post foundation (posts driven into the ground, set in concrete, then covered with dirt) or a poured concrete foundation. The company asked six related questions about how New York sales and use tax applies to different combinations of selling, installing, and financing these buildings.

The Department's central finding: the shelters themselves are not capital improvements, even though they're engineered to last and can be substantial in size. New York's capital-improvement test has three parts -- adds value, becomes a permanent part of the property (removal would cause material damage), and is intended to be permanent -- and these shelters fail the second part. Because the frame is bolted rather than welded or otherwise permanently fixed, and the company itself describes the buildings as designed to be portable, they can be unbolted and removed the same way they were installed, without material damage to the building or the land. Under established case law, mere bolting doesn't create the permanence a capital improvement requires. So the shelters stay taxable tangible personal property, both as a sale and as an installation -- unless a specific exemption applies, most notably New York's farming exemption for buildings used directly and predominantly to store hay/grain for, or house, productive farm animals (a farmer must furnish Form ST-125 within 90 days). Notably, this exemption does NOT cover a shelter used as a riding arena or horse stable, since housing animals for riding isn't "production of tangible personal property for sale."

The foundation gets a different answer because it's judged separately under the same three-part test. Foundations that require ground excavation, poured concrete footings, or buried posts set in concrete -- and that can't be removed without substantial demolition -- generally do satisfy all three prongs and qualify as a genuine capital improvement, even while the bolted-on shelter sitting on top of it remains ordinary taxable property. The remaining questions each turn on which exemption certificate applies to which link in the sales chain: a Certificate of Capital Improvement (ST-124) for a customer's exempt foundation, a Contractor Exempt Purchase Certificate (ST-120.1) when a contractor buys the shelter tax-free for resale/installation to its own customer, a Resale Certificate (ST-120) for sales to a dealer, and the Farmer's Exemption Certificate (ST-125) for qualifying farm buyers -- each must be furnished within 90 days of the relevant sale or installation.

What this means for you

Manufacturers and sellers of prefabricated or portable buildings

Bolted, engineered-for-portability construction is a red flag against capital-improvement status, no matter how large or costly the structure is or how long removal would actually take. If you want your product treated as real property (and thus exempt), the connection to the ground needs to create genuine permanence -- not just a secure, disassemblable bolt joint.

Farmers and agricultural buyers

A shelter used to house productive farm animals or store their feed is exempt with a timely Form ST-125 -- but the exemption is tied to actual production-for-sale farming use, so a riding arena or horse stable for recreational or boarding purposes doesn't qualify, even on the same farm.

Contractors and general contractors handling foundation work

Even where the building above ground stays fully taxable, the foundation work below it can independently qualify as an exempt capital improvement if it involves real excavation and permanent concrete work -- worth separating the invoice and certificate paperwork for the two pieces of the job.

Common questions

Q: Does a bolted connection ever count as a "capital improvement"?
A: Not on its own -- New York case law treats mere bolting as insufficient permanence, regardless of how sturdy or expensive the installation is, especially when the manufacturer itself markets the product as portable.

Q: Can a farmer buy one of these shelters completely tax-free?
A: Only if it's used directly and predominantly (over 50% of the time) to house productive farm animals or store their feed, and only with a timely Form ST-125 -- a riding arena or general storage building doesn't qualify.

Q: If the shelter is taxable, is the foundation automatically taxable too?
A: No -- the foundation is analyzed separately and, if it involves genuine excavation and permanent poured concrete or buried posts, can independently qualify as an exempt capital improvement even while the building above it stays taxable.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4)(i) (retail sale, contractor purchases)
• Tax Law § 1101(b)(9)(i) (definition of capital improvement)
• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1105(c)(3) (tax on installation services, capital-improvement and farming exceptions)
• Tax Law § 1110 (compensating use tax)
• Tax Law § 1115(a)(6) (farming exemption for tangible personal property)
• Tax Law § 1115(a)(17) (exemption for capital-improvement materials)
• Tax Law § 1132(c) (resale certificate timing)
• 20 NYCRR § 527.5(b)(4), § 527.7(b)(5) (installation and materials taxability for capital improvements)
• 20 NYCRR § 528.7 (farming exemption regulations)
• 20 NYCRR § 532.4, § 541.1(b), § 541.5(b) (exemption certificates; contractor sales)

Prior rulings and cases referenced:

• Apco Graphics, Inc., TSB-A-99(5)S (January 28, 1999)
• Clestra Hauserman, Inc., TSB-A-94(43)S (September 16, 1994)
• Matter of Charles R. Wood Enterprises, Inc. v. State Tax Commn., 67 A.D.2d 1042
• Matter of West Mountain Corp. v. Miner, 85 Misc. 2d 416
• Hudson River Estates, Inc., TSB-A-85(2)S (April 5, 1985)
• Peek 'n Peak Recreation, Inc., TSB-A-87(24)S (July 9, 1987)
• Multi-View Communications, Inc., TSB-A-86(12)S (April 30, 1986)
• Home Cable Concepts, Inc., TSB-A-94(5)S (March 7, 1994)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1999.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a99_50s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(50)S
Sales Tax
November 17, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S990201A

On February 1, 1999, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Cover-All Shelter Systems of New York, Inc., RR #1, Lucknow, Ontario, Canada N0G
2H0.
Petitioner, Cover-All Shelter Systems of New York, Inc., submits the following facts as the
basis for this Advisory Opinion.
Petitioner is a supplier of economic, alternative buildings called cover-all shelters. The
buildings serve a wide variety of applications including hay, straw, commodity and equipment storage;
sheep, swine, cattle and other livestock barns; riding arenas; and recycling, manufacturing,
warehousing and other commercial, industrial and institutional uses. Specific agricultural uses include
storing hay, grain and farm equipment, housing cattle, and serving as horse stables and riding arenas.
These buildings consist of tubular steel truss arches covered by a polyethylene cover. They
vary in size, with the minimum being 20 feet by 20 feet. Mounting and foundations vary, although
typically the buildings are mounted on the ground by bolting them into concrete foundations or on top
of wooden post foundations. They are engineered so that they may be used by customers as permanent
buildings, but their design also makes them portable.
In constructing the wood foundation, pressure-treated wooden posts (to which the shelters are
bolted) are driven into the ground. The pockets in which the posts are resting are filled with concrete
and the entire area is then covered with dirt. The construction of the concrete foundations, with or
without the addition of concrete sidewalls, may involve land excavation and the pouring of concrete
footings or floors.
Petitioner sets forth six questions, which are found in the opinion portion of this advisory
opinion, concerning the application of the New York State sales and use tax law to the sale and/or
installation of its cover-all shelters.
Applicable Law and Regulations
Section 1101(b)(4)(i) of the Tax Law defines retail sale, in part, as:
A sale of tangible personal property to any person for any purpose, other than
(A) for resale as such . . . Notwithstanding the preceding provisions of this
subparagraph, a sale of any tangible personal property to a contractor, subcontractor

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or repairman for use or consumption in erecting structures or buildings, or building on,
or otherwise adding to, altering, improving, maintaining, servicing or repairing real
property, property or land . . . is deemed to be a retail sale regardless of whether the
tangible personal property is to be resold as such before it is so used or consumed. . . .
Section 1101(b)(9)(i) of the Tax Law defines the term “capital improvement” to mean:
An addition or alteration to real property which:
(A) Substantially adds to the value of the real property, or appreciably prolongs
the useful life of the real property; and
(B) Becomes part of the real property or is permanently affixed to the real
property so that removal would cause material damage to the property or article itself;
and
(C) Is intended to become a permanent installation.
Section 1105(a) of the Tax Law imposes sales tax on the receipts from every retail sale of
tangible personal property, except as otherwise provided.
Section 1105(c) of the Tax Law imposes a tax on the receipts from every sale, except for
resale, of the following services:
*

*

*

(3) Installing tangible personal property, excluding a mobile home, or
maintaining, servicing or repairing tangible personal property, including a mobile
home, not held for sale in the regular course of business, whether or not the services
are performed directly or by means of coin-operated equipment or by any other means,
and whether or not any tangible personal property is transferred in conjunction
therewith, except:
*

*

*

(iii) for installing property which, when installed, will constitute an addition
or capital improvement to real property, property or land, as the terms real property,
property or land are defined in the real property tax law as such term capital
improvement is defined in paragraph nine of subdivision (b) of section eleven hundred
one of this chapter. . . .

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*

*

*

(vi) such services rendered on or after September first, nineteen hundred
eighty-two with respect to tangible personal property for use or consumption directly
and predominantly in the production for sale of tangible personal property by farming,
as such tangible personal property is specified in paragraph six of subdivision (a) of
section eleven hundred fifteen of this article. The exemption provided by this
subparagraph (vi) shall not apply to the taxes imposed pursuant to section eleven
hundred seven of this article.
Section 1110 of the Tax Law provides, in part:
(a) Except to the extent that property or services have already been or will be
subject to the sales tax under this article, there is hereby imposed on every person a use
tax for the use within this state on and after June first, nineteen hundred seventy-one
except as otherwise exempted under this article, (A) of any tangible personal property
purchased at retail, (B) of any tangible personal property . . . manufactured, processed
or assembled by the user, (i) if items of the same kind of tangible personal property are
offered for sale by him in the regular course of business or (ii) if items are used as such
or incorporated into a structure, building or real property by a contractor, subcontractor
or repairman in erecting structures or buildings, or building on, or otherwise adding to,
altering, improving, maintaining, servicing or repairing real property . . . if items of the
same kind are not offered for sale as such by such contractor, subcontractor or
repairman or other user in the regular course of business. . . .
(b) For purposes of clause (A) of subdivision (a) of this section, the tax shall
be at the rate of four percent of the consideration given or contracted to be given for
such property, or for the use of such property, including any charges for shipping or
delivery. . . .
(c) For purposes of subclause (i) of clause (B) of subdivision (a) of this section,
the tax shall be at the rate of four percent of the price at which items of the same kind
of tangible personal property are offered for sale by the user, and the mere storage,
keeping, retention or withdrawal from storage of tangible personal property by the
person who manufactured, processed or assembled such property shall not be deemed
a taxable use by him.
(d) For purposes of subclause (ii) of clause (B) of subdivision (a) of this
section, the tax shall be at the rate of four percent of the consideration given or
contracted to be given for the tangible personal property manufactured, processed or

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assembled into the tangible personal property the use of which is subject to tax,
including any charges for shipping or delivery. . . .
Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating use
tax imposed under section eleven hundred ten:
*

*

*

(6) Tangible personal property, except property incorporated in a building or
structure . . . for use or consumption directly and predominantly in the production for
sale of tangible personal property by farming, including stock, dairy , poultry, fruit, fur
bearing animal, graping and truck farming. The term farming shall also include
ranching, operating nurseries, greenhouses, vineyard trellises or other similar structures
used primarily for the raising of agricultural, horticultural, vinicultural, viticultural or
floricultural commodities, and operating orchards. In addition, tangible personal
property for use in erecting, adding to, altering or improving a silo used in farming to
make and store silage on a farm, provided such tangible personal property is to become
an integral component part of such silo.
*

*

*

(17) Tangible personal property sold by a contractor, subcontractor or
repairman to a person other than an organization described in subdivision (a) of section
eleven hundred sixteen, for whom he is adding to, or improving real property, property
or land by a capital improvement, or for whom he is about to do any of the foregoing,
if such tangible personal property is to become an integral component part of such
structure, building or real property; provided, however, that if such sale is made
pursuant to a contract irrevocably entered into before September first, nineteen hundred
sixty-nine, no exemption shall exist under this paragraph.
Section 527.5(b)(4) of the Sales and Use Tax Regulations provides:
Tax is not imposed on the charge for installation of tangible personal property
which, when installed, will be an addition or capital improvement to real property. . . .
Section 527.7(b)(5) of the Sales and Use Tax Regulations provides:

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Any contractor who is making a capital improvement must pay a tax on the cost
of materials to him, as he is the ultimate consumer of the tangible personal property.
Section 528.7 of the Sales and Use Tax Regulations provides, in part:
(a) Exemption. (1)
(i) All tangible personal property for use or consumption directly and
predominantly in the production for sale of tangible personal property by farming, with
the exception of property which will be incorporated into a building or structure is
exempt from the sales and compensating use tax.
*

*

*

(2) Effective September 1, 1982, the services of installing, maintaining,
servicing and repairing the tangible personal property specified as exempt in paragraph
(1) of this subdivision are exempt from the New York State and local sales and
compensating use taxes. However, this exemption does not apply to the sales and
compensating use taxes imposed in New York City under section 1107 of the Tax Law.
...
*

*

*

(4) Tangible personal property and services eligible for exemption may be
purchased without payment of tax upon the issuance to the vendor of a timely filed and
properly completed Farmer’s Exemption Certificate. . . .
Section 541.1(b) of the Sales and Use Tax Regulations provides, in part:
The principal distinguishing feature of a sale to a contractor, as compared to
a sale to other vendors who purchase tangible personal property for resale, is that the
sale of tangible personal property to a contractor for use or consumption in
construction is a retail sale and subject to sales and use tax, regardless of whether
tangible personal property is to be resold as such or incorporated into real property as
a capital improvement or repair. . . .
Opinion
The following are the questions presented by Petitioner concerning its activities and the
appropriate answers:

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1.

Q. Are these shelters considered real property or tangible personal property pursuant
to the New York State sales and use tax law?
A.
An exclusion from the imposition of sales tax is provided in Section 1105(c)(3)(iii) of
the Tax Law for an installation of tangible personal property which, when installed, will
constitute a capital improvement to real property, property or land. In order for the installation
to constitute a capital improvement, it must meet all three criteria of a capital improvement as
described in Section 1101(b)(9) of the Tax Law and Section 527.7(a)(3) of the Sales and Use
Tax Regulations (see Apco Graphics, Inc., Adv Op Comm T&F, January 28, 1999,
TSB-A-99(5)S; Clestra Hauserman, Inc., Adv Op Comm T&F, September 16, 1994,
TSB-A-94(43)S). In Petitioner’s case, if the shelters in question satisfy the definitional
requirements of the term “capital improvement” at the time of installation, then they
necessarily become real property and will remain such for purposes of applying the definition
of “tangible personal property.” See Section 526.8(c)(1) of the Sales and Use Tax Regulations.
The shelters consist of tubular steel truss arches covered by a polyethylene cover. In
constructing the shelters, the frame is assembled using bolts rather than permanent welds. The
shelters vary in size, with the minimum being 20 feet by 20 feet. Although engineered to be
permanent, the shelters are designed to be portable.
The shelters are not capital improvements because they fail to satisfy the second prong of the
statutory test in that they do not become part of the real property nor are they permanently
affixed to the real property so that their removal would cause damage to the property or to the
shelters themselves. The primary method of affixing the shelters to the real property is bolting.
This connection can be disassembled by removing the bolts and the shelters can be removed
by simply reversing the procedure used to install them. The mere bolting of equipment to real
property does not, in and of itself, create the degree of permanence necessary to establish that
a particular installation is a capital improvement (see Matter of Charles R. Wood Enterprises,
Inc., v. State Tax Commn., 67 AD 2d 1042; Matter of West Mountain Corp. v. Miner, 85 Misc
2d 416). Furthermore, Petitioner states that the shelters are designed to be portable. Structures
which can be removed without material damage and transported as an entity or in separate
sections lack the degree of permanence necessary to establish that a particular installation is
a capital improvement (see Hudson River Estates, Inc., Adv Op Comm T&F, April 5, 1985,
TSB-A-85(2)S). Accordingly, the shelters, when installed, do not qualify as capital
improvements and their sale and installation are subject to sales and compensating use tax
unless they qualify for a specific exemption. For example, the shelters would be exempt if they
are used directly and predominantly in farming to produce goods for sale. See Section
1105(c)(3)(vi) of the Tax Law and Section 528.7 of the Sales and Use Tax Regulations.

2.

Q. Is the foundation (wood or concrete) considered real property or tangible personal
property pursuant to New York State sales and use tax law?

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A. If the foundation meets all three criteria of a capital improvement as described in Section
1101(b)(9) of the Tax Law and Section 527.7(a)(3) of the Sales and Use Tax Regulations at
the time it is installed, then the foundation constitutes real property, not tangible personal
property. If the foundation does not qualify as a capital improvement at the time it is installed,
then it would remain tangible personal property.
Petitioner has provided a limited description of some typical, but not all, mounting procedures
for the shelters. In constructing the wood foundation, pressure-treated wooden posts (to which
the shelters are bolted) are driven into the ground. The pockets in which the posts are resting
are filled with concrete and the entire area is then covered with dirt. The construction of
concrete foundations, with or without the addition of concrete sidewalls, may involve land
excavation and the pouring of concrete footings or floors.
New York State Department of Taxation and Finance Publication 862(5/98), Sales and Use
Tax Classifications of Capital Improvements and Repairs to Real Property, at page 6, states
that the construction of a foundation is a capital improvement to real property. Moreover,
foundational supports which require ground excavation into which concrete footings are sunk
or concrete slabs are poured, and which cannot be removed without substantial demolition and
dismantling, meet each of the criteria for qualification as capital improvements to real property
(see Peek ‘n Peak Recreation, Inc., Adv Op Comm T&F, July 9, 1987, TSB-A-87(24)S;
Multi-View Communications, Inc., Adv Op State Tax Commn., April 30, 1986,
TSB-A-86(12)S; Home Cable Concepts, Inc., Adv Op Comm T&F, March 7, 1994,
TSB-A-94(5)S).
Accordingly, since the installations of both the wood and the concrete foundations described
by Petitioner substantially add to the value of the real property, are permanently affixed to the
real property so that removal would cause material damage to the property or to the articles
themselves, and are intended to become permanent installations, such installations constitute
capital improvements as defined in Section 1101(b)(9)(i) of the Tax Law. However, if by
using other installation methods these three criteria are not met, a foundation would not qualify
as a capital improvement and would remain tangible personal property.
3.

Q. Can a farmer purchase a shelter (either installed or uninstalled) exempt from sales
or use tax for purposes of housing productive farm animals and/or storing hay or grain
for productive farm animals?
A. A sales and use tax exemption is provided with respect to all tangible personal property
purchased for use or consumption directly and predominantly in the production of tangible
personal property for sale by farming, except tangible personal property incorporated into a
building or structure. See Section 1115(a)(6) of the Tax Law and Sections 528.7(c) and (d)
of the Sales and Use Tax Regulations. The installation of such property is also excluded from

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the imposition of sales or compensating use tax, except where performed in the City of New York.
See Section 1105(c)(3)(vi) of the Tax Law and Section 528.7(a)(2) of the Sales and Use Tax
Regulations.
New York State Department of Taxation and Finance Publication 844 (5/96), entitled New
York State and Local Sales Tax Information for Farmers, at page 5, states that taxability of the
tangible personal property is determined according to use and method of installation
(permanent vs. nonpermanent), and that property which is either portable in nature or is
installed to be removable without substantial damage to the property (e.g., attached via
removable bolts, etc.) will generally be recognized as nonpermanent. Farming includes
breeding, raising and feeding productive farm animals and farm production begins with, in the
case of animals, the beginning of the life cycle. See Sections 528.7(b) and (c) of the Sales and
Use Tax Regulations. Accordingly, since the shelters in question are designed to be portable
and can easily be removed after installation without damage to the shelter or the realty, a
farmer’s purchase of a shelter, either uninstalled or installed outside of New York City, that
is used directly and predominantly (more than 50% of the time) to house and/or store hay or
grain for productive farm animals is exempt from sales and compensating use taxes (see Sales
Tax Information for Farmers, supra). In order to claim this exemption, the farmer must
present Petitioner with a properly completed Form ST-125, Farmer’s Exemption Certificate,
within ninety days of the purchase.
It is noted, however, that shelters which are not used directly and predominantly in farming to
produce goods for sale, such as a stable, or arena, for riding horses, do not qualify for this
exemption (see Sales Tax Information for Farmers, supra).
4.

Q. If a farmer purchases a shelter installed, how does New York State sales and use tax
apply to the cost of the foundation?
A. The installation of the foundation, as described in Question # 2 above, may result in a
capital improvement to real property. Any contractor who is making a capital improvement
to real property must pay a tax on the cost of materials to him, as he is the ultimate consumer
of the tangible personal property. See Section 527.7(b)(5) of the Sales and Use Tax
Regulations. If the foundation qualifies as a capital improvement, Petitioner will not be
required to collect sales tax on the charges to the farmer for the foundation, provided the
farmer furnishes Petitioner with a properly completed Form ST-124, Capital Improvement
Certificate. However, Petitioner is required to pay sales tax on its purchases within New York
of the materials used or consumed to construct the foundation in accordance with Section
541.1(b) of the Sales and Use Tax Regulations. Petitioner is also required to pay compensating
use tax on the cost of materials purchased outside of New York State that are used in New
York to construct the foundation.

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If the foundation, as described in Question #2 above, remains tangible personal property,
charges by Petitioner for the installation of the foundation (except where performed in the City
of New York), as well as charges for the foundation itself, are exempt from sales tax, provided
the foundation is used directly and predominantly in farming to produce goods for sale and
Petitioner receives a properly completed Form ST-125, Farmer’s Exemption Certificate, within
ninety days of the rendition of the service. See Section 1105(c)(3)(vi) of the Tax Law and
Section 528.7(a)(2) of the Sales and Use Tax Regulations.
5.

Q. How does New York State sales and use tax apply to the cost of repairing these
shelters? Is the treatment the same for farmers?
A. Pursuant to Section 1105(c)(3) of the Tax Law, the services of maintaining, servicing or
repairing tangible personal property are subject to sales tax. However, these services are
exempt from tax, except the local tax imposed by the City of New York, if rendered with
respect to tangible personal property exempt under Section 1115(a)(6) of the Tax Law. When
the shelters qualify for the farmer’s exemption under Section 1115(a)(6) of the Tax Law (see
Question # 3 above), charges to farmers for the service of repairing the shelters outside of New
York City are exempt from tax.

6.

Q. How does New York State sales and use tax apply to the following sales of
Petitioner’s shelters?
a)

Sales to a customer as a building kit to be erected by him or someone that
he hires.

A. When Petitioner sells a shelter as a building kit to a customer, uninstalled, and such
customer will install the shelter or hire a third-party contractor to perform the installation,
Petitioner is considered to be selling the customer tangible personal property which is subject
to sales and compensating use taxes unless the shelter is for use directly and predominantly in
the production of tangible personal property for sale by farming. In that case, sales tax is not
due on the sale of the shelter as a building kit, provided Petitioner receives a properly
completed Form ST-125, Farmer’s Exemption Certificate, within ninety days of the sale.
b)

Sales to a customer as a building to be erected by Petitioner’s employees.

A. Pursuant to Section 1105(c)(3) of the Tax Law, the installation of tangible personal
property is subject to sales tax. Section 1105(c)(3)(vi) of the Tax Law provides an exemption
from state and local sales taxes (except local tax imposed by the City of New York) for the
purchase of the service of installing tangible personal property used directly and predominantly
in the production of tangible personal property for sale by farming. Petitioner’s shelters, as
described in Question # 3 above, qualify as such tangible personal property since they are

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portable in nature and can easily be removed without damage to the shelter or the realty.
Accordingly, charges by Petitioner for the installation of the shelters, as well as charges for the
shelters themselves, are subject to sales tax unless they are used directly and predominantly in
the production for sale of tangible personal property by farming, and Petitioner receives a
properly completed Form ST-125, Farmer’s Exemption Certificate, within ninety days of the
rendition of the service. Petitioner can purchase shelter materials exempt from tax by
presenting Form ST-120.1, Contractor Exempt Purchase Certificate, to its supplier.
Likewise, Petitioner is not required to collect sales tax on the charges to its customer for the
sale or installation of a foundation which qualifies as a capital improvement, as described in
Question # 2 above, provided the customer furnishes Petitioner with a properly completed
Form ST-124, Capital Improvement Certificate, within ninety days after completion of the
installation. Petitioner, as contractor, would be subject to sales or compensating use tax on its
purchase or use of materials used in making such installations as capital improvements. See
Section 541.1(b) of the Sales and Use Tax Regulations.
c.

Sales to a customer where Petitioner engages a sub-contractor to erect the
building.

A. In this case, Petitioner is acting in the capacity of a prime contractor. If Petitioner’s sub­
contractor is performing a capital improvement for Petitioner, i.e., the installation of a
qualifying foundation, Petitioner is not required to pay sales tax on the charges for the
installation, provided it supplies a copy of Form ST-124, Certificate of Capital Improvement,
to the subcontractor which was issued to Petitioner by the customer. See Section 541.5(b)(4)
of the Sales and Use Tax Regulations. However, the subcontractor is required to pay sales or
use tax on its purchase or use of materials which are used in installing the foundation.
Installation of the shelters is taxable under Section 1105(c)(3) of the Tax Law unless the
shelters are for use directly and predominantly in the production of tangible personal property
for sale by farming. Petitioner may purchase such installation for resale to its customer if
Petitioner supplies the subcontractor with a properly completed Form ST-120.1, Contractor
Exempt Purchase Certificate, within ninety days after completion of the installation.
d.

Sales to a dealer for resale to its customer.

A. Petitioner must collect the State and local sales or compensating use tax on all shelter sales
delivered to dealers within New York State, unless Petitioner receives a properly completed
Form ST-120, Resale Certificate, within ninety days of the date of delivery. See Section
1132(c) of the Tax Law and Section 532.4 of the Sales and Use Tax Regulations.
e.

Sales to a contractor for resale and installation to its customer.

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A. See d. above, except in the case of a contractor, a properly completed Form ST-120.1,
Contractor Exempt Purchase Certificate, should be furnished to Petitioner in order to make
an exempt purchase.

DATED: November 17, 1999

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions are limited to the
facts set forth therein.