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