Effective August 1, 1998, this legislation will eliminate the requirement that all materials becoming a part of a project for which an abatement has been granted must be purchased by, billed to, and paid for by the private user in order to qualify for a sales and use tax abatement granted pursuant to Chapter 9B of Title 40.  On and after August 1, 1998, contractors and subcontractors may purchase qualifying property in their own name, have the purchase billed to them, and pay for the purchase with their own funds without incurring liability for state or local sales and use tax to the same extent as the private user who has been granted the abatement.

Our Sales & Use Tax Rules (i.e. 810-6-4-.22, 810-6-4-.24, 810-6-4-.24.01, and 810-6-4-.25) addressing abatements will be amended to require each contractor and subcontractor who wishes to make tax-exempt purchases pursuant to Act No. 98-600 to apply for and obtain a Sales & Use Tax Certificate of Exemption for an Industrial or Research Enterprise Project (Form STE-2) by completing and submitting the Application for Sales & Use Tax Certificate of Exemption for an Industrial or Research Enterprise Project (Form ST:EX-A2). A contractor or subcontractor who obtains a form STE-2 will be subject to the same requirements, responsibilities, and duties placed upon a private user who obtains an exemption certificate including the requirement that the certificate holder pay taxes on nonqualifying purchases made with the exemption certificate and the requirement that the certificate holder report and pay educational local taxes which cannot be abated. The certificate of exemption (Form STE-2) will only be issued to a contractor or subcontractor who has been awarded a contract in conjunction with a project for which an abatement has been granted. Form STE-2 will be "project-specific" requiring multiple certificates if a contractor is making purchases in conjunction with more than one project for which abatements have been granted.

The exemption provided for in Act No. 98-600 will apply to all qualifying purchases made by contractors and subcontractors on and after August 1, 1998, regardless of when the abatement for the project was granted or when the project commenced.