What Form ST-125 Is For
Form ST-125 is a sales tax exemption certificate from New York State that farmers and commercial horse boarding operators can use if they meet specific requirements. It allows eligible buyers to purchase certain goods and services without paying sales and use tax when they make the purchase.
This form, officially called the Farmer's and Commercial Horse Boarding Operator's Exemption Certificate, shows that the purchases are directly related to running a farm or a business that boards horses. Sellers use the certificate to demonstrate that they are exempt from New York sales tax.
The New York State Department of Taxation and Finance issues the ST-125 form, which applies to tangible personal property and specific services used predominantly in farming operations or horse boarding activities. Predominantly means more than 50 percent of the item’s use.
When You’d Use Form ST-125
Form ST-125 is used when making qualifying purchases that would otherwise be subject to New York sales and use taxes. The certificate should be provided to the seller at or before the delivery of the property or performance of the service. If the certificate is not provided at checkout, it may still be accepted if given to the seller within 90 days of the transaction.
This rule applies to purchasing farm tools, animal feed, utilities, and building materials for farms. The form is not changed or filed after the fact. The buyer must request a refund using Form AU-11, not by resubmitting Form ST-125, if they have already paid sales tax on a qualifying purchase.
Key Rules or Details for 2018
Form ST-125 allows certain farmers and a commercial horse boarding operator in New York to exempt themselves from paying sales tax on purchases related to farm production or a commercial horse boarding operation. The New York State Department of Taxation and Finance expects the exemption to apply only when tangible personal property or services are used predominantly in eligible farming operations.
In 2018, commercial horse boarding operators must have a certificate of authority and put that number on the ST-125 form. However, many farmers who use the NYS ST-125 are exempt from registering for sales tax. New York State sales require buyers and use tax regulations to make sure that all entries are accurate and to keep documentation proving they fulfill the eligibility and predominant-use requirements.
Step-by-Step (High Level)
Step 1: Confirm Eligibility
Before claiming a sales tax exemption, the buyer should confirm that the commercial horse boarding business or farming operations comply with all legal requirements.
Step 2: Complete All Entries
All entries on the ST 125 form must be completed accurately, including purchaser information, seller information, and exemption category selection.
Step 3: Select Certificate Type
Whether the certificate applies to a single purchase or serves as a general certificate for future transactions with the same seller must be specified by the buyer.
Step 4: Sign the Certification
The form must be signed and dated. An electronic signature is acceptable if the seller accepts electronic resale and exemption documents.
Step 5: Provide the Certificate to the Seller
After the property is delivered, the seller must receive the completed certificate within ninety days. Using a PDF editor or cloud storage like Google Drive or Google Docs, buyers should keep copies.
Common Mistakes and How to Avoid Them
- Submitting an incomplete certificate: Please fill in all required fields, select the correct exemption box, and include a signature and date before submitting the certificate to the seller.
- Using the form for non-qualifying purchases: Use ST-125 only for property predominantly used in farm production or horse boarding, and treat office supplies and sales-promotion items as taxable.
- Trying to use ST-125 for motor fuel: Do not use ST-125 for gasoline, dyed diesel, or fuel used on public highways, and follow the applicable fuel tax process instead.
- Failing to maintain required records: Keep copies of exemption certificates and related purchase records so the exemption can be supported during review.
- Not meeting the three-year retention requirement: Retain certificates for at least three years for audit support, and ensure both buyer and seller records are organized and accessible.
What Happens After You File
After completion, Form ST-125 is not submitted to New York State. After completion, Form ST-125 is not submitted to New York State. The seller keeps the certificate as evidence that sales and use taxes were not collected, and the buyer must give it to the seller within ninety days of the property being delivered. The seller keeps the certificate as evidence that sales and use taxes were not collected, and the buyer must give it to the seller within ninety days of the property being delivered.
The seller is typically exempt from unpaid sales tax if they accept the certificate in good faith. During an audit, the buyer must be able to provide evidence of the exemption, though. Instead of altering Form ST-125, the buyer typically requests a refund through the appropriate tax forms process if sales tax was paid on a qualifying purchase.
FAQs
Do nonprofit organizations qualify to use Form ST-125?
Nonprofit organizations do not qualify to use Form ST-125 unless they independently meet the definition of a qualifying farmer or a commercial horse boarding operator under New York sales and use tax rules.
Can contractors use my Form ST-125 to buy materials?
Contractors generally may not use a property owner’s Form ST-125. Contractors must use their own exemption documentation, such as Form ST-120.1, when purchasing materials for qualifying farm buildings.
Does Form ST-125 expire?
Form ST-125 does not have a fixed expiration date. Blanket certificates remain valid until revoked or until the purchaser no longer meets eligibility requirements under New York State tax law.
Is Form ST-125 valid for electronic submission?
Yes. Sellers may accept electronic resale and exemption documents, including electronically signed Form ST-125, provided they agree to receive electronic documentation.
Can Form ST-125 be used outside New York State?
Only the New York sales and use tax is covered by Form ST-125. It cannot be used in other states or as a substitute for documents such as the Streamlined Sales and Use Tax Certificate of Exemption or Form E-595E.
What if a farming or horse boarding operation changes?
If the buyer's land, income, or business structure changes so that they no longer qualify, they should not be able to claim the exemption until they are once again eligible.
Is there a Spanish version of Form ST-125?
Some guidance materials reference Formulario ST-125, but the official exemption certificate is issued in English by the New York State Department of Taxation and Finance.
