Minnesota Nonresident Contractor Surety Deposit Bond
What it is & who requires it
Out-of-state construction contractors taking Minnesota work, and just as importantly the Minnesota parties who hire them — the withholding duty falls on the payer, and the payer here includes the state itself, its political subdivisions, and every Minnesota city, county and school district. The default is automatic: eight percent of every payment to a nonresident contractor is deducted and held once the contract value crosses the statutory threshold, and the money sits with the commissioner as security for the contractor’s income, franchise, withholding and sales and use taxes until the commissioner has determined the liability. The bond is what stops that. It is worth pricing against the withholding rather than in isolation, because the comparison is not bond premium against nothing, it is bond premium against eight percent of the contract held for as long as the department takes to close the file. Two things to check before assuming you need it. The threshold is on contract value, so a series of small contracts sits outside it. And a contractor with a three-year Minnesota track record and clean compliance can ask for the waiver on that basis alone.
Obligee: Minnesota Department of Revenue. Citation: Minn. Stat. § 290.9705, subd. 1 (surety deposits required for construction contracts — a person hiring or contracting with a nonresident person, or a corporation or cooperative created or organized outside Minnesota, to perform construction work in Minnesota shall deduct and withhold eight percent of payments made to the contractor where the value of the contract exceeds the threshold stated in the subdivision); § 290.9705, subd. 3 (waiver of withholding — the conditions may be waived by the commissioner if the contractor gives the commissioner a cash surety or a bond secured by an insurance company licensed by Minnesota, conditioned on compliance with this chapter and chapter 297A, or if the contractor has done construction work in Minnesota at any time during the three calendar years prior to entering the contract and has fully complied for the three prior years); § 290.9705, subd. 4 (amounts deposited are a surety guaranteeing payment of income, franchise, withholding and sales and use taxes, retained until the commissioner determines the liability); Minn. Stat. § 290.92 (withholding); Minn. Stat. ch. 297A (sales and use tax).
Bond amount
Set by the obligee — the exact amount is confirmed automatically when you start your bond in our portal, or call 317-942-0549.
How to get it
This bond is individually underwritten, so it is not issued instantly. Request a quote and a licensed producer follows up to walk you through it.
Request a bond quote
Tell us about the bond and the project. A licensed producer follows up — these bonds are individually underwritten, so they are not issued instantly.
Term & renewal
Term: Conditioned that the contractor will comply with all applicable provisions of the income and franchise tax chapter and the sales and use tax chapter, and held against the tax liability arising from the Minnesota work rather than against a license period.
Renewal: Not a license bond and not renewed on a cycle. The obligation attaches to contracts above the statutory threshold, and the alternative history route becomes available once the contractor has three prior calendar years of Minnesota work and full compliance behind it — so this is an instrument a company posts on the way in and stops needing on the way through.
Filing
Given to the commissioner of revenue in support of a waiver request rather than filed with a licensing board, and the statute leaves the form and the amount to the commissioner. No figure renders, for two independent reasons that both go the same way. The section states no sum anywhere. And it writes two codified alternatives beside the bond: a cash surety, which is a deposit rather than an instrument, and a three-year compliance history, which is a credential and costs nothing at all. Note the surety wording the statute uses — a bond secured by an insurance company licensed by Minnesota — which is looser than the corporate surety language the trade bond chapters use. Note also that the amounts withheld under the default route are themselves treated by the statute as a surety, and are retained until the commissioner determines the contractor’s liability for income, franchise, sales and use taxes and withheld taxes, so the money does not come back on completion of the job.
Source
This bond requirement is corroborated by multiple public sources; Minnesota Department of Revenue sets the exact amount, which we confirm when you start your bond.
Related Minnesota bonds
Frequently asked questions
- Who requires the Minnesota Nonresident Contractor Surety Deposit Bond?
- It’s required by Minnesota Department of Revenue (Minn. Stat. § 290.9705, subd. 1 (surety deposits required for construction contracts — a person hiring or contracting with a nonresident person, or a corporation or cooperative created or organized outside Minnesota, to perform construction work in Minnesota shall deduct and withhold eight percent of payments made to the contractor where the value of the contract exceeds the threshold stated in the subdivision); § 290.9705, subd. 3 (waiver of withholding — the conditions may be waived by the commissioner if the contractor gives the commissioner a cash surety or a bond secured by an insurance company licensed by Minnesota, conditioned on compliance with this chapter and chapter 297A, or if the contractor has done construction work in Minnesota at any time during the three calendar years prior to entering the contract and has fully complied for the three prior years); § 290.9705, subd. 4 (amounts deposited are a surety guaranteeing payment of income, franchise, withholding and sales and use taxes, retained until the commissioner determines the liability); Minn. Stat. § 290.92 (withholding); Minn. Stat. ch. 297A (sales and use tax)). Out-of-state construction contractors taking Minnesota work, and just as importantly the Minnesota parties who hire them — the withholding duty falls on the payer, and the payer here includes the state itself, its political subdivisions, and every Minnesota city, county and school district. The default is automatic: eight percent of every payment to a nonresident contractor is deducted and held once the contract value crosses the statutory threshold, and the money sits with the commissioner as security for the contractor’s income, franchise, withholding and sales and use taxes until the commissioner has determined the liability. The bond is what stops that. It is worth pricing against the withholding rather than in isolation, because the comparison is not bond premium against nothing, it is bond premium against eight percent of the contract held for as long as the department takes to close the file. Two things to check before assuming you need it. The threshold is on contract value, so a series of small contracts sits outside it. And a contractor with a three-year Minnesota track record and clean compliance can ask for the waiver on that basis alone.
- How much is the Minnesota Nonresident Contractor Surety Deposit Bond?
- Set by the obligee — the exact amount is confirmed automatically when you start your bond in our portal, or call 317-942-0549.
- How do I get the Minnesota Nonresident Contractor Surety Deposit Bond?
- This bond is individually underwritten, so it is not issued instantly. Request a quote and a licensed producer follows up to walk you through it.
- What is the term?
- Conditioned that the contractor will comply with all applicable provisions of the income and franchise tax chapter and the sales and use tax chapter, and held against the tax liability arising from the Minnesota work rather than against a license period. Renewal: Not a license bond and not renewed on a cycle. The obligation attaches to contracts above the statutory threshold, and the alternative history route becomes available once the contractor has three prior calendar years of Minnesota work and full compliance behind it — so this is an instrument a company posts on the way in and stops needing on the way through.
- Is this bond insurance for me?
- No. It protects the obligee and the public — not you. If a valid claim is paid, you repay the surety.
- How is this requirement verified?
- This bond requirement is corroborated by multiple public sources. The obligee sets the exact amount, which we confirm automatically when you start your bond in the portal or with a producer.
