Form ST-119.1, the New York exempt organization purchase certificate, is what you give a vendor so they don’t charge sales tax on a qualifying purchase for your organization. Fill in the vendor’s name and address, your organization’s name and address exactly as they appear on your ST-119, your six-digit exempt organization number, and a signature and date from a responsible officer or authorized agent. Mark whether it covers a single purchase or serves as a blanket certificate, hand it to the vendor at the register, and pay with organization funds.
Before You Can Use the Form
The ST-119.1 only works if your organization already holds an active Form ST-119, Exempt Organization Certificate, issued by the New York Department of Taxation and Finance. The six-digit number printed on that ST-119 is what makes the ST-119.1 valid, and it is not the same as your federal EIN.
The department mails blank copies of the ST-119.1 along with the ST-119 when it approves your application. The form is not available for download on the department’s website. If you run out, contact the department’s sales tax information center to request more.
One boundary worth noting: New York State agencies, federal agencies, and their instrumentalities don’t use the ST-119.1 at all. Government entities make exempt purchases with governmental purchase orders or other appropriate exemption documents.
What Goes on the Form
New York regulations spell out five elements that make a completed certificate valid. The form is short, but a missing or mismatched entry gives the vendor a reason to reject it and collect tax anyway.
- Vendor information. The name and address of the store, supplier, or service provider you’re buying from.
- Organization name and address. Enter these exactly as they appear on your ST-119. A mismatch is the most common reason a vendor refuses the form.
- Exempt organization certificate number. The six-digit number from your ST-119, not your federal employer identification number.
- Signature. A responsible officer of the organization, or an authorized employee or agent, must sign.
- Date. The date the certificate is completed.
You also mark whether the certificate is for a single purchase or is a blanket certificate for that vendor.
Single Purchase or Blanket Certificate
A single-purchase certificate covers one transaction. You fill out a new form each time you buy from that vendor. This is the right choice for one-off purchases where you don’t expect to return.
A blanket certificate covers all qualifying purchases from the same vendor going forward. A New York blanket certificate has no set expiration; it stays in effect as long as you keep making exempt purchases from that vendor. If your address, exempt organization number, or any other information on the certificate changes, you have to give the vendor an updated certificate. The vendor can also ask for an updated blanket certificate at any time.
Getting the Certificate to the Vendor
Present the completed ST-119.1 to the seller at the time of purchase whenever you can. If you can’t provide it at the point of sale, you have up to 90 days from the date of the purchase to deliver it. Miss that window and both you and the vendor can be held liable for the unpaid tax.
Vendors are expected to use reasonable ordinary due care in deciding whether to accept a certificate. Under New York regulations, a vendor accepts a certificate “in good faith” when the vendor has no knowledge that it’s false or fraudulently presented. A vendor who exercises reasonable care won’t have knowledge of fraud imputed to them just because the purchaser later turns out to have been ineligible. But a vendor who accepts a certificate it knows to be improper, or who fails to obtain one at all, isn’t relieved of liability for the uncollected tax. That is why some vendors are picky about how the form is filled out.
Even when a vendor didn’t receive a timely, properly completed certificate, the department may give the vendor a chance during an audit to submit other documentation showing the transaction was not taxable. If the purchaser has already paid the tax, that satisfies the vendor’s liability for the transaction.
Making Sure the Purchase Actually Qualifies
Two conditions have to be met for a purchase to be exempt. First, the item or service must be used to carry out the organization’s exempt purpose: office supplies for a charity’s operations, educational materials for a school, worship supplies for a religious organization. Second, the organization has to be both the purchaser of record and the direct payer of record.
Being the direct payer of record means the organization’s own funds go directly to the vendor. Acceptable payment methods include a check drawn on the organization’s account, a debit or credit card in the organization’s name, or cash from the organization’s funds. Payment has to flow from the organization to the vendor without passing through a personal account first.
When an employee or agent makes the purchase on the organization’s behalf, both the organization’s name and the individual’s name should appear on the bill or invoice. That’s how auditors verify the purchase was genuinely for the organization.
Purchases That Don’t Qualify
Personal purchases by employees, officers, or members are never exempt, no matter how closely the person is tied to the organization. An employee cannot hand over the ST-119.1 at a store to skip sales tax on personal items.
The bigger trap is reimbursement. An employee who uses a personal credit card or personal check to buy something for the organization and gets reimbursed later has made a taxable purchase, because the organization wasn’t the direct payer of record. This is the mistake organizations make most often, and a reimbursement receipt submitted after the fact doesn’t fix it. If you need an employee to pick something up, send them with an organizational credit card or a check drawn on the organization’s account.
Penalties for Misuse
New York imposes civil and criminal penalties for misusing an exemption certificate. The civil side is a $50 fine for each fraudulent certificate issued, plus a penalty equal to 100 percent of the tax that would have been due had the certificate not been misused. On a $10,000 purchase in New York City, that runs to $50 plus $887.50, close to double the tax the purchaser tried to avoid.
Criminal exposure goes further. Under Tax Law Sections 1801 through 1807, issuing a certificate that contains false information, omits material information, or is fraudulent can bring fines and jail time. Those provisions reach anyone who issues a certificate they don’t believe to be true and correct as to any material matter.
The department can also revoke the underlying ST-119 outright. Grounds for revocation include any misuse of the exemption, a misleading or deceptive application, or changing the organization’s purposes, activities, or structure without notifying the department. Once the certificate is revoked, the organization loses the ability to make tax-exempt purchases and has to begin collecting and remitting sales tax on any taxable sales it makes. Responsible persons within the organization can be held personally liable for any outstanding sales tax the organization owes.
Records to Keep
Both the organization and the vendor have to keep a copy of every ST-119.1. New York regulations require these records for at least three years from the due date of the return to which they relate, or the date the return was filed, whichever comes later. If a period is open under an audit extension or a pending proceeding, keep the records longer than three years, until the matter is resolved.
Vendors also have to keep a way of linking each exempt sale to the certificate on file. During an audit, the burden of showing a properly completed certificate was received falls on the vendor, and the burden of showing the certificate itself is valid rests with the purchaser who issued it. Files sorted by vendor name on the buyer side, and by customer name on the seller side, make audits routine and prevent arguments about transactions that happened years earlier.