A certificate of capital improvement is the document supplied by the owner to the CM/GC to certify that the work being performed is an improvement to the real value of the property, and as such, no sales tax is due on the labor portion of the work. The
CM/GC must have a certificate of capital improvement on file for each project, in order to avoid paying sales tax to the governing authorities for the value of the labor work performed on the project. In addition, some projects can also be eligible to forgo sales tax on the material portion of the work by being given a special tax number by their local economic development authority, which empowers them as the agent for the governing authority and grants them a sales tax total exemption. This application and status must be obtained prior to purchasing any materials for the project, and is difficult to apply retroactively. Exhibit 20-3 is a sample of a certificate of capital improvement. Not every state issues a Certificate of Capital Improvement and thus the CM/GC will have to check the state they are working in to determine if a reduction in sales tax is offered.
To be completed by both owner of real property and contractor, and retained by contractor. Read instructions on back of this certificate. Do not send this form to the Division of Taxation.
State of New Jersey DIVISION OF TAXATION
CERTIFICATE OF EXEMPT CAPITAL IMPROVEMENT
MAY BE ISSUED ONLY BY THE OWNER OF THE REAL PROPERTY MAY NOT BE ISSUED FOR THE PURCHASE OF MATERIALS
A registered New Jersey contractor must collect the tax on the amount charged for labor and services under the contract unless the owner gives him a properly completed Certificate of Exempt Capital Improvement.
(Name of Contractor)
(Address of Contractor)
(Contractor's New Jersey Certificate of Authority Number)
THE FOLLOWING INFORMATION MUST BE FURNISHED:
The nature of the contract is as follows (describe the exempt capital improvement to be made):_
The address or location where work is to be performed:
TOTAL AMOUNT OF CONTRACT $__________________________
The undersigned hereby certifies that he is not required to pay sales and use tax with respect to charges for installation of tangible personal property, because the performance of the contract will result in an exempt capital improvement to real property. The undersigned purchaser hereby affirms (under the penalties for perjury and false swearing) that all of the information shown in this Certificate is true.
I certify that all sales and use tax due has been or will be paid by the undersigned on purchases of materials incorporated or consumed in the performance of the contract described herein.
(Signature of Contractor)
PROPERTY OWNER'S SIGNATURE
(Name of owner of real property)
(Address of owner of real property)
(Signature of owner, partner, officer of corporation, etc.)
Any person making representations on this certificate which are willfully false may be subject to such penalties as may be provided for by law.
REPRODUCTION OF CERTIFICATE OF EXEMPT CAPITAL IMPROVEMENT FORMS: Private reproduction of both sides of the Exempt Capital Improvement Certificates may be made without the prior permission of the Division of Taxation.
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