§ 290.9705 — Surety Deposits Required for Construction Contracts
Plain-Language Summary
When hiring an out-of-state contractor for construction work in Minnesota worth more than $50,000, the person making payment must withhold 8% as a surety deposit. The withholding can be waived if the contractor posts a bond or has a three-year history of tax compliance in Minnesota.
290.9705 SURETY DEPOSITS REQUIRED FOR CONSTRUCTION CONTRACTS.
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Subdivision 1.Withholding of payments to out-of-state contractors.
(a) In this section, “person” means a person, corporation, or cooperative, the state of Minnesota and its political subdivisions, and a city, county, and school district in Minnesota.
(b) A person who in the regular course of business is hiring, contracting, or having a contract with a nonresident person or a corporation or cooperative created or organized outside Minnesota, to perform construction work in Minnesota, shall deduct and withhold eight percent of payments made to the contractor if the value of the contract exceeds $50,000. §
Subd. 2.
[Repealed, 1990 c 480 art 1 s 45] §
Subd. 3.Waiver of withholding.
The conditions in subdivision 1 may be waived by the commissioner if (1) the contractor gives the commissioner a cash surety or a bond, secured by an insurance company licensed by Minnesota, conditioned that the contractor will comply with all applicable provisions of this chapter and chapter 297A, or (2) the contractor has done construction work in Minnesota at any time during the three calendar years prior to entering the contract and has fully complied with all the provisions of this chapter and chapter 297A for the three prior years. §
Subd. 4.Deposits used as surety for compliance with income and sales tax provisions.
The amounts deposited with the commissioner under subdivision 1 are considered a surety to guarantee payment of income, franchise, withholding, and sales and use taxes of the contractor. The commissioner shall retain the money deposited until the commissioner determines the contractor’s liability for state income, franchise, sales and use taxes, and taxes withheld under section 290.92.
History:
1989 c 28 s 22; 1990 c 480 art 1 s 35; 1Sp2005 c 3 art 3 s 15; 2013 c 143 art 15 s 11; 2023 c 25 s 160; 2023 c 64 art 16 s 4
History: History: 1989 c 28 s 22; 1990 c 480 art 1 s 35; 1Sp2005 c 3 art 3 s 15; 2013 c 143 art 15 s 11; 2023 c 25 s 160; 2023 c 64 art 16 s 4