Public works contracts Q&A for contractors

Q. Now that my job is done, how do I get my retainage from the project?

A. The public agency will file a Notice of Completion with the Department and you must submit a completed Reconciliation of Taxes to us. Once our public works staff reviews the form and verifies the proper taxes were paid, we will send a Certificate of Payment to the public agency and the contractor. The public agency is the one holding the retainage and must wait for releases from the Department of Revenue, the Employment Security Department and the Department of Labor & Industries (affidavit of wages paid) before they can release retainage.

Q. Can I file the Notice of Completion form?

A. No. The public agency submits the Notice of Completion after they determine substantial completion of the work has occurred.

Q. Can I get a blank Reconciliation of Taxes so the Department doesn't have to wait for the public agency to submit a Notice of Completion?

A. No. The Reconciliation of Taxes is prepared by the Department after receipt of the Notice of Completion from the public agency. You will be sent a copy of the Notice of Completion along with the Department's Reconciliation of Taxes for completion.

Q. How do I fill out the Reconciliation of Taxes?

A. DOR has recently moved from a paper based system to an online based system. You will receive a letter ID, instructions, and a copy of the Notice of Completion via your My DOR account. You will need to fill out the reconciliation online and submit it electronically. If you have questions, see contact information below.

Q. Am I required to fill out the Reconciliation of Taxes?

A. Yes, all reconciliations must be completed and returned within 30 days.

Q. Can I get my Certificate of Payment without paying the amount owed?

A. No. All taxes due must be paid before we can issue a Certificate of Payment. If you are unable to pay all taxes due, we can file a lien against the retainage. When retainage is received we will apply it to outstanding amounts due.

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

A. Approximately two weeks after we receive the completed Reconciliation of Taxes. We review the reported amounts and ensure the total taxes related to the project have been paid to the Department and then sign and return the Certificate of Payment.

Q. What if I do not agree with the project dollar amounts listed on the Notice of Completion?

A. Contact the public agency. If the public agency revises the contract amounts, they must submit a revised Notice of Completion to the Department.

Q. Can I pay electronically?

A. Yes, you can pay electronically through My DOR. Paying electronically will be part of the process of completing your electronic Public Works Reconciliation. Several payment options will be available, for instructions please see pages 2-3 of the Public Works Recon Notification letter you received via My DOR.

Q. Do I need to report Use Tax for my road construction or government contracting jobs?

A. Yes. Public road contractors (both prime and subcontractors) are consumers of the materials they incorporate as an ingredient or component of a road. Public road contractors must pay retail sales or use tax on all materials they place in, or on, the road as well as on equipment and supply purchases. This applies to material whether they are purchased, provided by others, or manufactured/extracted by the contractor. (WAC 458-20-171 and WAC 458-20-17001)

Q. How do I report use tax on my Public Road Construction or Government Contracting jobs?

A. If sales tax was not paid on materials at the time of purchase, report the taxable amount on your excise tax returns under the State and Local Use tax classification. If you did not report use tax on your returns, you can report and pay on the Reconciliation of Taxes.

Q. What happens if our business cannot pay the amounts due on the project?

A. A balance due assessment invoice will be issued for the outstanding amount and a lien will be filed against the retainage and/or bonded amounts.

Q. Why do I need to pay taxes on the retainage?

A. All taxes must be paid on the full contract price. We cannot issue a Certificate of Payment until we verify that all taxes have been paid on the project.

Q. What if I have more questions?

A. Call our Public Works staff at (360) 704-5650 or PWC@dor.wa.gov.