Nonresident Contractor's Tax Bond - Statewide in Oklahoma

Brief Summary

Out of state contractors often learn about this bond when the project owner asks for proof of it, and by then work is supposed to start. Oklahoma requires the bond before you begin any contract over $100,000, and skipping it can cost a fine of up to 10% of your total bid. Pricing is based on the bond amount, which is tied to the tax on your contract, so you are bonding a calculated figure rather than a flat state amount.

Under 68 O.S. 1703, every nonresident contractor, subcontractors included, must file a surety bond with the Oklahoma Tax Commission before starting work on a contract over $100,000. The penal sum is at least three times the tax liability incurred or to be incurred under that contract, payable to the State of Oklahoma. The bond guarantees compliance with Oklahoma state and local tax laws, the Employment Security Act and the Workers' Compensation Act.

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How to Apply for a Nonresident Contractor's Tax Bond:

• Confirm you are a nonresident contractor under 68 O.S. 1701 and that the contract exceeds $100,000.
• Estimate the Oklahoma tax liability on the contract and set the bond at no less than three times that figure.
• Complete the bond application with the contract price, location and scope of work.
• Pay the premium and receive the executed bond payable to the State of Oklahoma.
• File the bond with the Oklahoma Tax Commission and give proof of it to the entity administering the contract before work begins.
• Mail the Section 1702 start notice before work starts and the Section 1705 completion notice when the job is done.

Detailed Information About the Oklahoma Nonresident Contractor's Tax Bond:

The amount is a formula, not a flat figure

There is no single bond amount for this requirement. Section 1703 of Title 68 sets the penal sum at not less than three times the tax liability incurred or to be incurred under the contract. A larger job with a larger Oklahoma tax exposure means a larger bond, so each contract over the threshold is bonded on its own numbers.

Who has to file

The bond applies to every nonresident contractor, including those working as subcontractors, before actually commencing work on a contract in excess of $100,000. Section 1701 defines a nonresident contractor as one who maintains a principal place of business outside Oklahoma, or a multi state employer who does not keep a permanent work force of three or more employees in the state.

The Tax Commission may waive the bond after investigation if it finds the contractor has and will continue to have property in Oklahoma, has regularly engaged in business in the state and has enough financial responsibility to cover its obligations. Cash or negotiable obligations of the United States, the State of Oklahoma or its subdivisions may be deposited instead of a surety bond.

Notices that go with the bond

Section 1702 requires written notice by certified mail to the Tax Commission and the other agencies named in the statute, including the county assessor, before work begins. The notice gives the approximate contract price, the job location, the approximate start date, a description of the work and a list of subcontractors with the amount of each subcontract. Section 1704 also requires proof of the executed bond to be given to the agency or entity administering the contract before work starts. Failing to provide the information or the proof of bond can bring a Tax Commission fine of up to 10% of the contractor's total bid.

When the exposure ends

When the job is finished, Section 1705 requires a completion notice by certified mail. The mailing date is treated as the completion date, and no action can be brought on the bond more than one year after that notice is mailed.

Eligibility and Requirements for a Oklahoma Nonresident Contractor's Tax Bond:

• Bond penal sum of at least three times the tax liability on the contract.
• Obligee: State of Oklahoma, filed with the Oklahoma Tax Commission.
• Conditioned on compliance with Oklahoma state and local tax laws, the Oklahoma Employment Security Act and the Oklahoma Workers' Compensation Act.
• Applies to subcontractors as well as prime contractors.
• Cash or negotiable government obligations accepted in place of a surety bond.
• Contract documents and financial information for the surety's review.

Oklahoma Nonresident Contractor's Tax Bond FAQs:

Official and Additional Resources for the Oklahoma Nonresident Contractor's Tax Bond: