Washington – Public Works Contracts

SALT Report 1150 РThe Washington Department of Revenue has issued an Exise Tax Advisory regarding the application of B&O tax, retail sales tax, and retainages from public works contracts.

The ETA explains retainage, when retail sales tax is due on the amount of the retainage, whether sales tax is subject to retainage, and an exclusion from contract retainage.

B&O and retail sales taxes are due at the time the contractor receives a progress payment, including any amount retained by the public body.  Retail sales tax is not subject to retainage, and the public body must pay the full amount of retail sales tax to the contractor.

As of July 22, 2011, public improvement contracts involving construction, alteration, or repair of a highway, road, or street funded in whole or part by federal transportation funds are excluded from retainage requirements.

For Further Information:

Washington Department of Revenue Excise Tax Advisory No. 3024.2011