Form Sde - Exemption From Surety Deposits For Non-Minnesota Contractors Page 2
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2Form SDE Instructions
How to Apply
Unless the non-Minnesota construction con-
• The contractor gives the department a
tractor is approved for exemption, any person
cash surety. A cash surety is evidence of
To apply for an exemption from Minnesota
or business that hires or contracts with the
a savings account, deposit or certificate
surety deposits, file Form SDE before you
contractor must withhold 8 percent of their
of deposit in, or issued by, a state bank,
start the project.
compensation as a Minnesota surety deposit.
national bank or savings and loan as-
Mail this form and any required attach-
sociation doing business in Minnesota.
The withholding amount is deposited with
ments to the address on the front.
Interest and dividends earned on the
the department and is used as a surety to
principal amount may be retained by the
guarantee that the contractor has fulfilled the
If You’re Approved
contractor.
requirements for withholding, sales and use,
If we approve the exemption, we will sign
franchise and income taxes.
• The contractor is performing work for a
the bottom of the form and return it to you.
government agency and has a payment
Make a copy for your records and give the
For additional information regarding the 8
and performance bond.
original to the business for whom you are
percent withholding, see Fact Sheet 12, Surety
doing the work.
Deposits for Non-Minnesota Construction
• The contractor has done construction
Contractors.
work in Minnesota during the past three
If You’re Not Approved
calendar years and has fully complied
Purpose of Form SDE
with Minnesota laws regarding withhold-
If we determine you’re not eligible for
ing, sales and use, franchise and income
exemption, 8 percent of each payment made
If you are a non-Minnesota construction
taxes.
to you must be withheld by the business for
contractor and you want to apply for an
whom you are doing the work and depos-
exemption from the surety deposit (see “Ex-
If a non-Minnesota contractor is hired or
ited with the Department of Revenue.
emption Requirements” below), complete
contracted to perform construction work
and file Form SDE with the department
in Minnesota, the person or business who
To apply for a refund, complete Form SDR,
before you start the project.
is paying the contractor must withhold
Refund of Surety Deposits for Non-Minnesota
8 percent of the payment as a Minnesota
Contractors. When the project is complete,
If approved, give the original, signed Form
surety deposit.
and we determine that you have complied
SDE to the person or business for whom
with Minnesota income, withholding and
you are doing the work to show you are
Unless the contractor has received exemp-
sales tax laws, you’ll receive a refund plus
exempt from the 8 percent surety deposit.
tion from surety deposits, payments made
interest.
to the contractor are subject to 8 percent
Surety Deposit Law
withholding, if:
Use of Information
If you hire or contract with a non-Minneso-
• the construction work was performed in
All information on this form is required
ta contractor to perform construction work
Minnesota; and
except for your phone number.
in Minnesota, you must withhold 8 percent
• the total amount paid to the non-Minne-
(.08) of their compensation as a Minnesota
All information, except your Minnesota tax
sota construction contractor during the
surety deposit. Payments are subject to 8
ID number, is private by state law. It cannot
year exceeds $50,000.
percent withholding only if the work was
be given to others without your permis-
performed in Minnesota and the total pay-
sion, except to the Internal Revenue Service,
Who can apply?
ments during the year exceed $50,000. If the
other states that guarantee the same privacy,
total payments exceed $50,000 in a calen-
A non-Minnesota contractor can apply for
the contract owner or bonding company
dar year, all of the payments, even the first
an exemption if your contract exceeds or
and certain government agencies as pro-
$50,000, are subject to withholding.
is expected to exceed $50,000 or multiple
vided by law.
contracts have exceeded $50,000 cumulative
Exemption Requirements
per calendar year for work done in Min-
Information and Assistance
nesota.
A non-Minnesota construction contrac-
Additional forms and information, includ-
tor may qualify for an exemption from
Before You Start
ing fact sheets and frequently asked ques-
the surety deposit if one of the following
tions, are available on our website.
requirements are met:
You must have a Minnesota tax ID number
from the Department of Revenue to request
Website:
The contractor gives the department a
•
an exemption from surety deposit.
Email: withholding.tax@state.mn.us
bond that is secured by an insurance
If you don’t have a Minnesota ID number,
Phone: 651-282 9999 or 1-800-657-3594.
company licensed in Minnesota and
you may apply online at
(
Call 711 for Minnesota Relay)
TTY:
is equal to 8 percent of the contract.
mn.us or by calling our Business Registra-
The bond remains in effect until the
We’ll provide information in other formats
tion Office at 651-282-5225 or 1-800-657-
contractor satisfies all tax liabilities. You
upon request to persons with disabilities.
3605.
may choose to complete Form SDB,
Non-Minnesota Contractor’s Bond, to
submit to the department.
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