Current through Register Vol. 50, No. 9, September 20, 2024
A.
General. This Section provides the procedures that must be followed by
nonresident contractors who do business in this state as required by
R.S.
47:9 and
R.S.
47:306(D). This Section also
provides the procedures that must be followed by state and local agencies
charged with the responsibility for granting permits and/or licenses for the
lawful commencement of construction contracts in this state as required by
R.S.
47:337.18(C). This Section
also provides the necessary definitions.
B. Definitions. For the purposes of this
Section, the following terms are defined.
Contractor-any dealer, as defined in this
Chapter, who enters into contracts for the construction, renovation, or repair
of immovable properties, such as buildings, houses, roads, levees, pipelines,
and industrial facilities. It also includes subcontractors who enter into
similar agreements with a general or prime contractor. The term
contractor shall not include businesses that fabricate or
construct property that is sold to another person as tangible personal
property, even though the property may be subsequently incorporated into the
construction of an immovable. The term contractor shall
include any project owner who obtains any permit, license, or certificate
necessary for the lawful commencement of any construction contract.
Nonresident Contractor-any contractor who
does not meet any of the following criteria for resident status.
a. For an individual proprietorship, resident
status requires having maintained permanent domicile in Louisiana for at least
one year prior to bidding on work.
b. For a corporation, resident status
requires having operated a permanent business facility in Louisiana for at
least one year prior to bidding on work; or having at least 50 percent of its
outstanding and issued common stock owned by individuals who have maintained
their domicile in Louisiana for at least one year prior to bidding on
work.
c. For partnerships and other
legal entities, resident status requires at least 50 percent ownership by
individuals or corporations who themselves qualify as
residents.
Resident Contractor-all contractors that are
not nonresident contractors.
C.
Contracts to be Registered with Secretary and Central Collector
1. Prior to obtaining a building permit
necessary for the lawful commencement of any contract in Louisiana, a
nonresident contractor shall register each contract that exceeds $3,000 in
total price or compensation with the secretary of the Department of Revenue and
with the central sales and use tax collector for the parish in which the
project is located. The secretary shall provide the necessary forms for the
contractors to register each contract. The forms will require the nonresident
contractor to give a complete description of each project, pertinent tax
registration data, and a list of anticipated subcontractors. A fee of $10 per
contract shall be paid to the secretary at the time of registration. As
required by the secretary, the contractor shall furnish a surety bond for each
contract or a blanket surety bond for all contracts. The bond shall be:
a. 2 1/2 percent of the gross contract amount
or $1,000, whichever is greater, if income tax withholdings remitted to the
department include such payments deducted from non-employee compensation (e.g.,
independent contractors); or
b. 5
percent of the gross contract amount or $1,000, whichever is greater, if income
tax is not withheld from non-employee compensation paid by the non-resident
contractor.
2. Upon
satisfactory completion of the registration and surety bond requirements, the
secretary shall issue the contractor a certificate of compliance with which to
obtain any building permits necessary for lawful commencement.
3. Nonresident subcontractors will be held to
the same requirements of registration, payment of a $10 fee, and furnishing a
surety bond, even though they may not need to secure any permits.
D. Payments to be Withheld from
Subcontractors.
R.S.
47:9(B)(3) makes each
contractor subject to this provision responsible for all of its subcontractors'
compliance with all state and local tax laws. A contractor shall inform each of
its subcontractors of their tax registration, contract registration, and surety
bond requirements, and shall withhold a sufficient amount from payments made
under their contracts to ensure compliance. Upon discovering any unpaid tax
liability by a subcontractor, the secretary will first attempt to collect the
unpaid taxes from the subcontractor or his surety. However, if the secretary's
efforts are unsuccessful, the contractor and his surety have ultimate
responsibility for the payment of any subcontractor's unpaid tax
liabilities.
E. Contract
Completion; Cancellation of Surety Bond. Within 30 days after completion of
each contract, the contractor shall submit to the secretary a completion report
summarizing the costs incurred; the taxes paid to other states, to the state of
Louisiana, and to local taxing authorities; and other such information that may
be required by the secretary. After reviewing the report and verifying the tax
payment amounts reported, the secretary shall refer the summary to the central
sales and use tax collector for the parish in which the project is located to
determine whether there are any unpaid local tax liabilities. If no unpaid
state or local tax liabilities are discovered, the contractor's surety bond may
be canceled for that contract. The surety bond will be held by the Department
of Revenue and Taxation and used, if necessary, in the future if sales taxes
are later found to be due on that contract.
F. Compliance by Permitting Agencies;
Withheld Funds Authorized
1.R.S.
47:9(B)(4) and
R.S.
47:306(D)(2)(a) place
specific responsibilities with state or local agencies that issue permits,
licenses, or certificates necessary for the lawful commencement of any
construction contract. State agencies, including but not limited to the office
of the state fire marshal, and agencies of local governing authorities,
including but not limited to parish and municipal building inspectors, shall
not issue any building permit, license, or certificate until the applicant has
submitted documentation verifying that the contract has been properly
registered and the required surety bond has been posted. Proper documentation
to be obtained from the Secretary of the Department of Revenue and Taxation is
as follows.
a. Resident contractors must
obtain a certificate of resident status.
b. Nonresident contractors must obtain a
certificate of compliance.
c.
Individuals seeking a permit for work to be performed on their residence must
submit an affidavit as documentation of residency.
2. The secretary is authorized by
R.S.
47:337.19(B) to evaluate and
monitor parish and municipal permitting agencies to ensure compliance with
these provisions.
a. When the secretary
discovers that a parish or municipal permitting office has issued a permit to a
nonresident contractor without verifying compliance with the
provisions of this regulation, he shall notify that permitting office, the
parish collector, and the governing authority of the parish of the violation by
registered mail.
b. The affected
parties will be allowed 60 days to respond to the department's notification. If
the affected parties contact the department after receiving notification, the
department will work with them to reconcile the situation. If the situation is
resolved, no further action will be taken.
c. If an agreement cannot be reached or if
the department does not receive a response after 60 days, the secretary will
notify the state treasurer of the violation by registered mail. A copy of this
notification will be sent to the permitting office, the parish collector, and
the governing authority of the parish.
d. The state treasurer, within 90 days of
notification, shall request a hearing on the suspected violation with the House
Committee on Ways and Means. The date, time, and location of this meeting will
be furnished by the state treasurer to the permitting office, the parish
collector, the governing authority of the parish, and the secretary of the
Department of Revenue by registered mail. Following the hearing, the state
treasurer shall take action as directed by the committee, including the
withholding of state funds as authorized by
R.S.
47:337.19(C).
AUTHORITY NOTE:
Promulgated in accordance with
R.S.
47:9,
R.S.
47:306,
R.S.
47:337.2,
R.S.
47:337.18,
R.S.
47:337.19, and
R.S.
47:1511.
