| Bulletin Category: | Procurement & Contracting | ||
| Bulletin Number: | G-222a | ||
| Date Issued: | 11/13/06 | Date Last Updated: | 05/06/08 |
| Bulletin Name: | Sales and Compensating Use Tax Documentation | ||
Purpose:
Background:
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This bulletin identifies the documentation that must be submitted to the Office of the State Comptroller's (OSC) Bureau of Contracts to satisfy Tax Law Section 5-a, which was added to the Tax Law under Part N of Chapter 60 of the Laws of 2004, and amended under Part L of Chapter 62 of the Laws of 2006. The 2006 amendments to Tax Law Section 5-a resulted in different rules to be applied, and new and different forms to be used relative to procurements initiated on or after January 1, 2005, where the contract award occurs on or after April 26, 2006. The state contracting requirements imposed by the enactment of Tax Law Section 5-a in 2004 were identified in OSC Bulletin G-222. This bulletin, G-222a was originally released as a supplement to Bulletin G-222 and was intended to address the revised requirements which resulted from the 2006 amendments to Tax Law Section 5-a. At that time it was necessary to keep both bulletins active, because the provisions of Tax Law Section 5-a that were in effect prior to April 26, 2006 continued to apply for all procurements initiated on or after January 1, 2005, but awarded before April 26, 2006. However, since sufficient time has passed to allow all contracts awarded prior to April 26, 2006 to become effective Bulletin G-222 is now retired, and is superseded in full by this Bulletin G-222a. NOTE: Contracting agencies should visit the Department of Taxation and Finance's website at http://www.tax.state.ny.us to obtain the following resources which provide specifics as to the law's requirements:
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Amended Tax Law Section 5-a |
This revised law imposes upon certain contractors with regard to contracts awarded pursuant to State Finance Law Article XI, the obligation to certify to DTF that the contractor, and, to the best of the contractor's knowledge, any affiliates and subcontractors, are registered to collect state sales and compensating use tax, or that the contractor and, to the best of the contractor's knowledge, any affiliates and subcontractors, did not have sales within New York State of tangible personal property or taxable services in excess of $300,000 during the immediately preceding four consecutive sales tax quarters. The contractor must also certify in writing to the procuring agency that the requisite certification has been made to DTF, or that the certification is not required to be filed, and that the certification is correct and complete. The certification to the procuring agency must be included in the procurement record. The law provides that before a qualifying contract may take effect, the contractor must be in compliance with the certification requirements of the law. Furthermore, for contracts already in effect, and which provide for a renewal, the contractor must certify, prior to the commencement date of the renewal term, that the contractor has filed with DTF the certification, as required by Tax Law Section 5-a and that the certification is correct and complete.
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Applicability of Tax Law Section 5-a |
Tax Law Section 5-a applies to all contracts in excess of $100,000 for the purchase by a covered agency of commodities or services, awarded pursuant to Article XI of the State Finance Law. For purposes of determining whether or not a contract value exceeds $100,000, such that the provisions of Tax Law section 5-a would apply, the total cumulative value of the contract, including the original contract award value, and any amendments, extensions, or renewals, as they occur, must be considered. Once the total cumulative value of a contract exceeds $100,000, the law applies regardless of the transactional value of any contract, amendment, extension, or renewal, with one unusual exception that would occur if said amendment, extension, or renewal should result in a reduction in the total contract value to an amount not exceeding $100,000. The law applies to centralized contracts, including centralized backdrop contracts, in excess of $100,000, as well as agency-awarded backdrop contracts in excess of $100,000 but does not include a purchase by a covered agency of commodities or services with a value in excess of $100,000 based upon a formal mini-bid solicitation pursuant to an OGS centralized or agency-awarded backdrop contract. The law does not apply to grants, intergovernmental agreements, or purchases of commodities or services from a preferred source. The law provides that there should not be any aggregation of multiple purchases from the same contractor for purposes of determining whether the threshold of greater than $100,000 has been met.1
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Effective Date of Tax Law Section 5-a |
Tax Law Section 5-a became effective on August 20, 2004, but only impacts procurements initiated on or after January 1, 2005. The amendment to the law was passed on April 26, 2006, and takes effect as of that date. As a result, the provisions of the amended law are applicable to contracts (as defined in the previous section of this bulletin) resulting from procurements initiated on or after January 1, 2005 and awarded, amended, extended, or assigned on or after April 26, 2006.
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Contractor Certification Forms |
Pursuant to Tax Law Section 5-a, contractors will be required to complete, sign, under penalty of perjury, and file with DTF Contractor Certification Form ST-220-TD. Agencies should direct state contractors to the DTF websites listed below for more information on Publication 223 and ST-220-TD:
A second certification form (ST-220-CA) is required to be provided by the contractor to the procuring agency before a contract may take effect. This certification to the procuring agency, also made under penalty of perjury, states that the requisite (ST-220-TD) certification has been made to DTF and, to the best of the contractor's knowledge, that the requisite (ST-220-TD) certification is correct and complete. In addition, for all covered contracts that were effective and binding as of April 26, 2006, and which provide for extension or renewal, the contractor must, no later than the day prior to the commencement date of the applicable renewal term, provide certification (ST-220-CA) to the contracting agency that the requisite (ST 220-TD) certification has been made to DTF. State contractors can access form ST-220-CA at the DTF website listed below: NOTE: The certification provisions of Tax Law Section 5-a do not apply to a contract that the procuring covered agency and the State Comptroller find is necessary to address an emergency situation (an "emergency" within the meaning of State Finance Law Article XI, or to ensure the public health, safety, or welfare). In such instance, both the procuring covered agency and the Comptroller must agree in writing to waive the certification requirements. The contracting agency should request OSC's concurrence on their exemption determination, in writing to OSC, which request shall explain the reasons supporting such determination.
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Contracting Agency Submissions to OSC |
Where the contractor is obligated to make certification to the procuring agency, in accordance with Tax Law Section 5-a, procuring agencies must include a copy of ST-220-CA in all contract packages submitted to OSC for approval.
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Resources for More Information |
Questions regarding scope and applicability of Tax Law Section 5-a should be directed to: Department of Taxation and Finance Questions regarding the submission to OSC of required documentation should be directed to the OSC Bureau of Contracts at the telephone number listed below: Bureau of Contracts:
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1 This is in contrast to the situation where an underlying contract is later amended, extended, or renewed, and the cumulative value of these becomes the determinative dollar amount for purposes of determining applicability of the law. Tax Law 5-a, as amended, applies to amendments, renewals, and extensions of otherwise covered contracts, already in effect prior to the effective date of the amended law, where such contracts are amended, renewed, or extended on or after April 26, 2006.
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