Rule 560-12-2-.26 - Contractors(1) Any person who contracts to furnish tangible personal property and perform services thereunder in constructing, altering, repairing or improving real property in this State is deemed to be the consumer of all tangible personal property used or consumed in performing such contract and shall pay the tax thereon at the time of purchase, use, storage or consumption in this State, whichever occurs first.(2)General or Prime Contractor Defined. (a) A general or prime contractor shall include but not be limited to any person, partnership, limited liability partnership, corporation or limited liability company who shall contract with the owner, lessee or other person having authority to enter into a contract involving the premises or property as designated by said contract, to perform services and/or furnish materials for the construction, alteration, or improvement of any real property or project.(b) A general or prime contractor shall also include any person, partnership, limited liability partnership, corporation or limited liability company who owns or leases real estate for the purpose of developing said real estate other than for his or her own occupancy, and in the development thereof, contracts, alters, or makes improvements thereon.(c) A general or prime contractor shall also include any person, partnership, limited liability partnership, corporation or limited liability company who owns or leases real estate and in the development, alteration, or improvement thereof, or construction thereon, contracts with another person, partnership, or corporation to furnish tangible personal property and perform services.(3)Subcontractor Defined. A subcontractor shall include any person, partnership, limited liability partnership, corporation or limited liability company who contracts with the prime or general contractor to perform all or any part of the contract of the prime or general contractor or who shall contract with a subcontractor who has contracted to perform any part of the contract entered into by the prime or general contractor.(4)Sales and Use Tax Registration and Filing Requirements. (a) Every contractor or subcontractor improving real property in this State shall file an application for a Certificate of Registration (CRF-002) as a contractor prior to his first construction activity in this State.(b) Sales and use tax returns shall be made by general or prime contractors and by subcontractors on a monthly basis, unless otherwise authorized, for such taxes owed by each respectively. The returns are to be made on Form ST-3 as prescribed by the commissioner.(c) Every general or prime contractor and every subcontractor shall have 20 days from the last day of the reporting period in which to file their sales and use tax returns and remit the tax to the commissioner, as is provided in these Rules and Regulations.(5)Initial General or Prime Contractor Notice. Each general or prime contractor shall within thirty (30) days after the execution of a contract with a subcontractor whose aggregate contract(s) amount(s) on any single project is equal to or exceeds $250,000 file with the commissioner a notice, Form S & U T 214-1, that identifies each applicable subcontractor and contract amount. If a general or prime contractor has filed a notice (Form S & U T 214-1) as a result of a previous contract entered during the calendar year and is subsequently provided a notice (Form S & U T 214-5) from the commissioner concerning the subcontractor, then the general or prime shall be relieved from submitting any additional notices (Form S & U T 214-1) on any future contracts with such subcontractors during that calendar year.(6)Withholding and Remittance Requirements. (a) Each general or prime contractor whose aggregate contract(s) amount(s) on any single project is equal to or exceeds $250,000 with a single subcontractor is required to withhold 2% of the payments due the subcontractor, arising out of such contract(s), unless said contractor has filed an approved surety bond with the commissioner in accordance with the Act.(b) Upon receipt of the written report from the subcontractor showing the amount of work completed on the contract and that all sales and use taxes due the State have been paid by the subcontractor, the Department of Revenue, Sales and Use Tax Division, shall send a written notice (Form S & U T 214-6) to the general or prime contractor and subcontractor. The general or prime contractor shall be authorized to pay the subcontractor all amounts withheld for the payment of sales and use tax during the period covered on the written notice (Form S & U T 214-6).(c) Each general or prime contractor shall send a written notice (Form S & U T 214-7) to the commissioner identifying the total amount withheld after such amount has been held for a period of 60 days following the subcontractor's sales and use tax return reporting period.(d) General or prime contractors must remit retainage withheld from payments to subcontractors upon notice of demand for payment (Form S & U T 214-8).(7)Sales and Use Tax Surety Bond. (a) In lieu of the retention of the two percent (2%) by the general or prime contractor of the amounts due the subcontractor, the subcontractor may provide an annual or continuous surety bond (Forms S & U T 214-3 or Form S & U T 214-3C) approved by the commissioner as to form, sufficiency, value, amount, stability, and other features necessary to provide a guarantee of payment of tax due under the Act.(b) The bond shall be made to the Department of Revenue, Sales and Use Tax Division, by the subcontractor on the application (Form S & U T 214-2). The annual surety bond shall cover a calendar year and shall expire on December 31 of each year, and a new bond, if needed, shall be filed with the commissioner. The continuous bond shall continue without interruption until notification has been received from the surety company that the subcontractor has not renewed the bond or that the bond has been cancelled.(c) Each subcontractor who shall desire to make a bond in accordance with O.C.G.A. § 48-8-63 shall be required to have as surety on said bond a surety corporation authorized to do business in the State of Georgia. The amount of the bond shall be based on the following schedule: 1. Subcontractors whose anticipated annual gross receipts from subcontracting in Georgia for the year is less than $250,000 shall not be required to have a bond;2. Anticipated annual gross receipts $250,000 to $500,000 - Bond in sum of $5,000.3. Anticipated annual gross receipts $500,000 to $750,000 - Bond in sum of $20,000.4. Anticipated annual gross receipts $750,000 to $1,000,000 - Bond in sum of $30,000.5. Anticipated annual gross receipts over $1,000,000 - Bond in sum of $50,000.(d) At any time while the bond is in force, the commissioner may within his discretion increase or decrease the amount of an individual bond or establish a new schedule for all bonds.(e) The amount of bond required of a new subcontracting business with no prior history of business in Georgia shall be determined at the commissioner's discretion.(f) When a subcontractor's bond is filed and approved by the commissioner, the Department of Revenue, Sales and Use Tax Division, shall promptly prepare a certificate (Form S & U T 214-4) and forward the original of such certificate as notice to the subcontractor. Upon the subcontractor's written request the Department of Revenue, Sales and Use Tax Division, shall send a notice of the subcontractor's surety bond approval (Form S & U T 214-5) to each general or prime contractor in order to be relieved from withholding the two percent (2%) retainage. The subcontractor's bond approval notice (Form S & U T 214-5) issued on a subcontractor's continuous surety bond shall be valid until the Department of Revenue, Sales and Use Tax Division, notifies the general or prime contractor and subcontractor that the bond has not been renewed or that the bond has been cancelled.(g) In the absence of the subcontractor's surety bond approval notice (Form S & U T 214-5) to the general or prime contractor, the contractor must withhold the two percent (2%) retainage of the subcontractor's receipts due on any given project that equals or exceeds $250,000.(8)Foreign and Non-Resident Contractors. A foreign or nonresident subcontractor applicant shall be required to submit a sales and use tax bond to authorize release from withholding provisions of the Act in addition to the foreign and non-resident bonding requirements provided for under O.C.G.A. § 48-13-32 (See Revenue Rule 560-12-2-.43 entitled Foreign and Non-Resident Contractors and Subcontractors. Amended).Ga. Comp. R. & Regs. R. 560-12-2-.26
O.C.G.A. Secs. 48-2-12, 48-8-2, 48-8-63, 48-13-32.
Original Rule entitled "Contractors" adopted. F. and eff. June 30, 1965.Amended: F. Jan. 13, 1975; eff. Feb. 2, 1975.Amended: F. May 12, 1976; eff. June 1, 1976.Amended: F. June 17, 1994; eff. July 7, 1994.Repealed: New Rule of same title adopted. F. Nov. 16, 2001; eff. Dec. 6, 2001.