Exempt Use Certificate (Form ST-121)
Tax Bulletin ST-235 (TB-ST-235)Printer-Friendly Version (PDF) Issue Date: June 2, 2011
Manufacturers, certain service providers, and other types of businesses may use Form ST-121, Exempt Use Certificate, to purchase, rent, or lease certain tangible personal property or services exempt from sales tax. This bulletin explains:
- how to use the certificate,
- what kinds of property and services can be purchased exempt from sales tax using Form ST-121, and
- penalties that may be imposed for misuse of the certificate.
How to use Form ST-121
If you are the purchaser, fill out Form ST-121 and give it to the seller. You must complete all required entries and sign and date the form. The seller keeps the certificate and may then sell you certain property or services without charging sales tax. You must give the seller a properly completed Form ST-121 within 90 days after the delivery of the property or performance of the service. Sales tax exemption certificates may also be issued and accepted electronically. See TSB-M-07(1)S, Electronic Resale and Exemption Documents for Sales and Compensating Use Taxes.
You may use Form ST-121 as a single-purchase certificate, or as a blanket certificate covering the first and subsequent purchases of the same general type of property or service from the same seller.
Except as noted in this bulletin and in the instructions for Form ST-121, you must have a valid Certificate of Authority when you use Form ST-121 to make tax-free purchases.
For purposes of this bulletin:
- Predominantly means that the property or service is used more than 50% of the time directly for the purpose for which an exemption is claimed,
- Exclusively means that the property or service is used 100% of the time directly for the purpose for which an exemption is claimed, and
- Primarily means that the property or service is used 50% or more of the time directly for the purpose for which an exemption is claimed.
Exemptions related to production
Examples of tangible personal property and services related to production that you may purchase exempt from sales tax with Form ST-121 are listed and generally described in the chart below. Please see the instructions for Form ST-121 for additional details on each of these exemptions.
|Activity||Exemption applies to|
Production of tangible personal property or utilities
|Telecommunications or Internet access services||
Note: A Certificate of Authority is not required if you are engaged exclusively in providing Internet access services for sale.
|Utilities used to provide utility services||
|Utilities used to produce tangible personal property or a film||
|Utilities used to produce utilities||
Note: This exemption does not apply to the local sales and use tax imposed in New York City.
Exemption related to transfer stations and demolition facilities
Facilities regulated by the New York State Department of Environmental Conservation as either a transfer station or construction and demolition debris processing facility may purchase the service of waste removal exempt from tax as long as the waste is not generated by the facility.
Use Form ST-121 to purchase the following tangible personal property and services exempt from sales tax. Please see the instructions for Form ST-121 for additional details on each of these exemptions. (Note: You do not need a Certificate of Authority for the following exempt purchases, but if you have one, enter the number on Form ST-121 in Part 3.)
- tangible personal property used directly and predominantly in research and development;
- utilities used directly and exclusively in research and development;
- cartons, containers, and other wrapping and packaging materials and supplies that are transferred to purchasers of tangible personal property;
- certified enhanced emissions inspection equipment for testing and inspecting motor vehicles;
- commercial vessels (including certain property and services) primarily engaged in interstate or foreign commerce;
- commercial aircraft (including certain machinery and equipment) primarily engaged in intrastate, interstate, or foreign commerce, and flight simulators purchased by commercial airlines;
- commercial fishing vessels (including certain property);
- pollution control equipment;
- tangible personal property (including lubricants) installed on or used to maintain, service, or repair any aircraft when purchased by the person providing the service;
- machinery and equipment used directly and predominantly in loading, unloading, and handling cargo at a qualified marine terminal facility in New York City (Note: this exemption does not apply to the local sales tax in New York City);
- motor fuel or diesel motor fuel eligible to be taxed on a cents-per-gallon basis (see TSB-M-06(8)S, New Guidelines on the Sales of Motor Fuel and Diesel Motor Fuel Subject to the Cents-Per-Gallon Sales Tax);
- line access services purchased by an Internet Service Provider and used for transmission between its point of presence and the public Internet to connect its customers to the Internet (see TSB-M-07(2)S, Sales Tax Treatment of Telecommunications Services Purchased By an Internet Service Provider); or
- certain military decorations sold to an active member or a veteran of the United States military.
You may also use Form ST-121 to claim other exemptions from sales tax for tangible personal property or services that are not otherwise specified in this bulletin. To do so, describe the exempt use of the tangible personal property or service being purchased, and identify the applicable section of the Tax Law under which you are claiming the exemption, in the Other box on Form ST-121.
Misuse of this exemption certificate may subject you to serious civil and criminal sanctions in addition to the payment of any tax and interest due. These include:
- a penalty equal to 100% of the tax due,
- a $50 penalty for each fraudulent exemption certificate issued, and
- criminal felony prosecution, punishable by a substantial fine and a possible jail sentence, and revocation of your Certificate of Authority, if you are required to be registered for sales tax purposes.
Note: A Tax Bulletin is an informational document designed to provide general guidance in simplified language on a topic of interest to taxpayers. It is accurate as of the date issued. However, taxpayers should be aware that subsequent changes in the Tax Law or its interpretation may affect the accuracy of a Tax Bulletin. The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning.