Changes to the state law regulating contractors created “registration classes” and the requirement for a Connecticut Verification Bond for most non-resident general contractors. Conn. Gen. Stat. §12-430(7) as amended created two classes of nonresident contractors: verified and unverified. A nonresident general contractor (prime) under this scheme can become verified and thus eliminate the requirement to file a surety bond with the Department of Revenue Services, and a nonresident subcontractor may become verified and thereby eliminate the requirement that the prime contractor to “hold back” a portion of the amount owed the subcontractor.
A Connecticut non-resident contractor surety bond written in the amount of five percent (5%) of the project total is required to be posted with the Department by an unverified prime or general contractor for those projects valued at $250,000 or more. Any subcontractor or supplier doing business with the unverified prime or general contractor must request evidence that the contractor has indeed posted this surety bond. Proper verification of contractor bonding benefits those persons and entities doing business with an unverified contractor as it shields those parties from liability associated with the nonresident contractor’s tax withholding duties for sales or use tax on materials and consumables. For UNVERIFIED contractors the Connecticut verification bond must be issued using the Department’s form AU-964 Surety Bond and Release. A copy of the format can be accessed at http://www.ct.gov/drs/lib/drs/forms/2014forms/salesandusetax/contractor_bonds_-_2014/au-964.pdf The surety’s obligation is satisfied when the general contractor establishes that it has: Paid all taxes it owes in connection with the contract; Held back an amount equal to five percent (5%) of the payments being made by the contractor in connection with the contract to its unverified subcontractors; and, paid over amounts held back from unverified contractors to the extent that Department has issued certificates of compliance for full or partial release of such amounts, and remitted to Department any amounts held back that have not been authorized by DRS to be released to the unverified contractors.
A Connecticut verification bond for VERIFIED contractors must be issued using the Department’s form AU-961 Verification Bond. A copy of the form can be accessed at http://www.ct.gov/drs/lib/drs/forms/2014forms/salesandusetax/contractor_bonds_-_2014/au-961.pdf This status is available to contractors who have in addition to posting of this verification bond have filed a “Nonresident Contractor Request for Verified Contractor Status” along with other tax compliance evidence required by the Department. This obligation runs for two years, concurrent with the “verified” status granted by the Department. Like the surety bond for unverified contractors, the surety is released from its obligation only when the Department of Revenue is satisfied that all applicable taxes have been paid.
Applications, bond and supporting materials for verified and non-verified contractors should be sent to:
Department of Revenue Services
Connecticut Verification Bond & Application
25 Sigourney Street, Suite 2
Hartford, CT 06106-5032
Connecticut surety leader, Surety One, Inc. provides for the bonding needs of the construction and commercial contracting industries in all fifty states, Puerto Rico and U.S. Virgin Islands. Visit SuretyOne.com, call (800) 373-2804, or email Underwriting@SuretyOne.com for an Connecticut contractor verification bond application or information about any surety need.
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