Form ST-123: IDA Agent or Project Operator Exempt Purchase Certificate Explained

Form ST-123, issued by the New York State Department of Taxation and Finance, is the IDA Agent or Project Operator Exempt Purchase Certificate. It’s used by companies and individuals designated as agents of an Industrial Development Agency (IDA), or by operators of IDA-sponsored projects, to buy goods and services exempt from New York State and local sales tax when those purchases relate directly to an approved IDA project. This version of the form applies to projects beginning on or after June 1, 2014, which is when New York tightened the rules around IDA sales tax benefits and added stricter recordkeeping and reporting requirements.

IDAs exist to encourage economic development across New York by offering financial incentives, including sales tax exemptions, to businesses that invest in construction, renovation, or equipment purchases tied to qualifying projects. When a business is appointed as an agent of an IDA — or when a project operator is acting under an IDA agreement — Form ST-123 is the document that lets vendors know the purchase is exempt from sales tax because it falls under that IDA project.

Who Needs to Use Form ST-123

This form is specifically for:

• Businesses formally appointed as an agent of an IDA for a particular project
• Project operators who have been authorized to make exempt purchases on behalf of an IDA-sponsored project
• Contractors or subcontractors purchasing materials or services for use in an IDA project, when properly authorized as agents

It’s not meant for general contractors working outside an IDA arrangement. If you’re a contractor dealing with capital improvements unrelated to an IDA project, you’d typically be looking at a different exemption document, such as the Certificate of Capital Improvement (Form ST-124), which serves a different purpose entirely.

When Form ST-123 Is Used

The certificate is presented to a vendor or seller at the time of purchase. Instead of paying sales tax upfront, the agent or operator gives the completed ST-123 to the seller, who then keeps it on file to justify not charging tax on that transaction. This applies to tangible personal property, services, and in some cases the leasing of equipment, as long as everything ties back to the specific IDA project named on the certificate.

Because the exemption is tied to a specific project and a specific IDA agreement, the form requires details like the project number, the name of the IDA, and a description of the property or services being purchased. Sellers should verify that the certificate matches an active, valid IDA agreement before accepting it in place of collecting tax.

How to Get and Fill Out Form ST-123

The form is available directly from the New York State Department of Taxation and Finance as a fillable PDF, meaning you can enter your information digitally before printing it for signature and submission to the vendor. You’ll need to provide the IDA’s name, the project number, a description of the exempt purchase, and certification details confirming your status as an authorized agent or operator.

Accuracy matters here. Since the state introduced stricter oversight for IDA transactions starting in 2014, agents and operators are also expected to keep thorough records of their exempt purchases. Many of these same businesses will later need to file Form ST-340, the annual report documenting all sales and use tax exemptions claimed under the IDA arrangement during the year. Keeping your ST-123 certificates organized as you go makes that annual reporting process considerably easier.

If your work also involves contractor certifications under an IDA project, it’s worth reviewing Form ST-220-TD as well, since contractor certification and exempt purchase documentation often go hand in hand on these projects.

Before submitting anything, double-check the project number and IDA name against your official agreement. Errors here are one of the most common reasons vendors reject an exemption certificate or the state later questions a claimed exemption during an audit.