Connecticut Seal

Substitute Senate Bill No. 1137

Public Act No. 03-147

AN ACT CONCERNING SALES TAX BOND REQUIREMENTS FOR NONRESIDENT CONTRACTORS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (7) of section 12-430 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003, and applicable to contracts entered into on or after July 1, 2003):

[(7) (a) (i) When a nonresident contractor enters into a contract with a person other than a direct payment permit holder, as the term is used in section 12-409a, pursuant to which, or in the carrying out of which, tangible personal property will be consumed or used in this state, such nonresident contractor shall deposit with the Commissioner of Revenue Services at the commencement of such contract a sum equivalent to five per cent of the total amount to be paid under the contract or shall furnish the Commissioner of Revenue Services with a guarantee bond satisfactory to said commissioner in a sum equivalent to five per cent of such total amount, to secure payment of the taxes payable with respect to tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes, and shall obtain a certificate from the Commissioner of Revenue Services that the requirements of this subsection have been met.

(ii) When a nonresident contractor enters into a contract with a direct payment permit holder pursuant to which, or in the carrying out of which, tangible personal property will be consumed or used in this state, such nonresident contractor shall deposit with the Commissioner of Revenue Services at the commencement of such contract a sum equivalent to two per cent of the total amount to be paid under the contract or shall furnish the Commissioner of Revenue Services with a guarantee bond satisfactory to said commissioner in a sum equivalent to two per cent of such total amount, to secure payment of the taxes payable with respect to tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes, and shall obtain a certificate from the Commissioner of Revenue Services that the requirements of this subsection have been met.

(b) (i) Any person other than a direct payment permit holder dealing with a nonresident contractor without first obtaining a copy of such certificate from said commissioner shall no later than ninety days after the commencement of such contract or, if the contract is to be completed in less than ninety days, no later than forty-five days after the commencement of such contract deduct five per cent of all amounts payable to such nonresident contractor and pay it over to said commissioner on behalf of or as agent for such nonresident contractor or shall furnish said commissioner with a guarantee bond satisfactory to said commissioner in a sum equivalent to five per cent of such total amount, to secure payment of the taxes payable with respect to such tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes.

(ii) Any direct payment permit holder dealing with a nonresident contractor without first obtaining a copy of such certificate from said commissioner shall no later than ninety days after the commencement of such contract or, if the contract is to be completed in less than ninety days, no later than forty-five days after the commencement of such contract deduct two per cent of all amounts payable to such nonresident contractor and pay it over to said commissioner on behalf of or as agent for such nonresident contractor or shall furnish said commissioner with a guarantee bond satisfactory to said commissioner in a sum equivalent to two per cent of such total amount, to secure payment of the taxes payable with respect to such tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes.

(c) If any person dealing with such nonresident contractor fails to comply with subdivision (b) of this subsection, such person shall be personally liable for payment of the taxes imposed by this chapter with respect to such tangible personal property consumed or used pursuant to or in carrying out such contract or any other state taxes. ]

(7) (A) As used in this section, "nonresident contractor" means a contractor who does not maintain a regular place of business in this state and "regular place of business" means any bona fide office, factory, warehouse or other space in this state at which a contractor is doing business in its own name in a regular and systematic manner, and which place is continuously maintained, occupied, and used by the contractor in carrying on its business through its employees regularly in attendance, except that "regular place of business" does not include a place of business for a statutory agent for service of process or a temporary office at the site of construction.

(B) Any person doing business with a nonresident contractor shall withhold payment in an amount of five per cent of the contract price and remit such amount as a deposit to the Commissioner of Revenue Services not later than thirty days after the completion of the contract.

(C) A nonresident contractor shall request, in writing, that the Commissioner of Revenue Services audit the records of such contractor for a project for which a deposit was made under subparagraph (B) of this subdivision. The commissioner shall, after receipt of such request, issue to the nonresident contractor a certificate of no tax due or a certificate of tax due from the nonresident contractor. Upon issuance of a certificate of no tax due, the commissioner shall return such deposit to the nonresident contractor. Upon issuance of a certificate of taxes due, the commissioner may pay to the nonresident contractor out of the deposit any excess over the amount of taxes set forth in the certificate together with the interest and penalties then assessed.

(D) When a person doing business with the nonresident contractor deposits with the Commissioner of Revenue Services the amount set forth in subparagraph (B) of this subdivision, the commissioner shall issue such person a receipt for such amount. Upon the issuance of such receipt, the person doing business with the nonresident contractor shall not be liable for any claim of the nonresident contractor for such amount or for any claim of the commissioner for any taxes arising from the activities of the nonresident contractor on the project for which the deposit was made.

[(d)] (E) When a nonresident contractor enters into a contract with the state, said contractor shall provide the Labor Department with evidence demonstrating compliance with the provisions of chapters 567 and 568, the prevailing wage requirements of chapter 557 and any other provisions of the general statutes related to conditions of employment.

Approved June 26, 2003