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Public works contracts Q & A for public agencies

Q. Who is a public agency for the purposes of the clearance process?

A. City, county, school districts, state agencies, housing authorities, etc.

Q. Who files the Notice of Completion form?

A. The public agency must file the form with the Department.

Q. How do I get a current copy of the Notice of Completion form?

A. The form is available online or by calling (360) 704-5650.

Q. Do I have to file a Notice of Completion on every public works job?

A. No, only for public works jobs that are $35,000 or more, before sales tax.

"Public work" means all work, construction, alteration, repair, or improvement other than ordinary maintenance, executed at the cost of the state or of any municipality, or which is by law a lien or charge on any property therein. RCW 39.04.010(4)

Q. Why does the Department perform the contract clearance function?

A. We review the Notice of Completion and completed Reconciliation of Taxes to ensure that all Business & Occupation (B&O) and sales/use taxes have been properly reported and paid, per RCW 60.28.011.

Q. What does the Department do with the Notice of Completion?

A. We review the scope of work and type of municipality to determine the taxability of the contract. The math is reviewed for accuracy.  A Reconciliation of Taxes is mailed to the general contractor. The contractor is encouraged to complete and return the form within 30 days to the Department.

If the income from the contract is properly reported, taxes have been paid by the general contractor and there are no other outstanding tax issues, we send a Certificate of Payment to the public agency and the general contractor. If taxes are not properly reported or paid, we will contact the contractor directly for payment. If payment is not received a lien on the retainage held by the public agency will be filed.

Q. How long does it take to get the Certificate of Payment from the Department?

A. Generally, we mail via the DOR portal a Reconciliation of Taxes and a copy of the Notice of Completion to the contractor. The contractor is encouraged to return the completed Reconciliation of Taxes within 30 days so we can verify the taxes for the project have been reported and paid. We process reconciliations in the order they are received, processing times can vary.  If you have questions, please contact pwc@dor.wa.gov.

Q. When should the Notice of Completion be submitted to the Department?

A. After completion of all the work on the contract.

Q. Should I wait for all affidavits to be approved before I submit the Notice of Completion to the Department?

A. No. We do not require the affidavits. We can begin our review after completion of the work.

Q. Why are you asking for the address where the work took place (in the description box)?

A. We need to know where the work was done in order to verify that the correct sales tax rate(s) and location code(s) were used. This helps us send the local portion of the sales tax to the correct city or county.

Q. Do out-of-state businesses need a UBI number to do public works jobs?

A. Yes. Any company doing work in Washington must have an active UBI number. This is the number they use to report their state excise taxes to the Department of Revenue.

Q. When can the public agency release retainage?

A. In order to release retainage, the public agency must first receive approval to release retainage from the Department of Revenue, the Employment Security Department, and the Department of Labor & Industries.

Also note there are other considerations for the release of retainage. This Q&A does not address claims filed by subcontractors, suppliers, workers, etc.

Q. What is most likely to cause a delay?

A. The contractor has not returned their Reconciliation of Taxes to the Department to verify all B&O and sales/use taxes have been paid. If the reconciliation is not returned, we cannot proceed with the contract clearance.

Q. If the retainage is bonded, do we still need to complete the Notice of Completion?

A. Yes, bonded retainage doesn't change the process. We still need to verify that the taxes have been reported and paid. If there are taxes owing and the general contractor doesn't pay the Department, we will file a lien against the retainage bond.

Q. Can I find out if the contractor owes taxes before I award a job to them?

A. You can ask the general contractor to provide a Tax Status letter.

Q. What do I do if we have received a Notice and Order to Withhold and Deliver" (NOWD) for a contractor on one of our public works jobs?

A. Please contact us at (360) 704-5650. Do not pay retainage or sales tax on the NOWD without consulting the Department's public works staff.

Q. What if the bonding company calls requesting progress payments or about bankruptcy issues?

A. Please do not pay retainage or sales tax without consulting with us. Sales tax should never be remitted to a bonding company without approval of the Department.

Q. I have received a lien for retainage from the Department but I can't get a check back to you in 10 days. What do I do?

A. Please call the person who signed the Certificate of Lien.

Q. Does retainage need to be paid out in a certain order if I am paying a lien?

A. Yes. The order (RCW 60.28.040) is:

  • Labor & Industries (L&I) for prevailing wages.
  • Revenue for taxes owed on your job, or any other taxes owing.
  • Employment Security (ESD) or Labor & Industries for insurance premiums.
  • Subcontractors

Q. How does the Department collect from bonded retainage?

A. If the general contractor doesn't pay, we send a Certificate of Lien to the public agency. The public agency provides a copy of the lien to the bonding company.

Q. Who can I contact for more information?

A. You can email questions to us at PWC@dor.wa.gov or call (360) 704-5650.

Q. Where can I learn more about retainage requirements on federally funded road transportation projects?

A. Refer to: