CHAPTER 244

AN ACT TO AMEND TITLE 30, DELAWARE CODE, RELATING TO STATE TAXES BY REQUIRING FOREIGN PERSONS OR FIRMS TO POST BONDS SECURING THE PAYMENT OF TAXES WITHHELD FROM EMPLOYEES OR DUE TO THE STATE.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Chapter 3, Title 30, Delaware Code, is amended by adding thereto a new subchapter to read:

SUBCHAPTER V. GENERAL REGULATIONS

§ 375. Furnishing of bonds by foreign persons or firms

(a) All nonresident persons or firms, whether incorporated or not, engaging in construction contracting in this state as contractor or subcontractor and not otherwise regularly engaged in business in this state, shall file a surety bond with the State Tax Department, payable to the State of Delaware, to guarantee the payment of income taxes, required unemployment compensation contributions, and income taxes withheld from wages of employees, together with any penalties and interest thereon. The department shall approve the form and contents of the bond. The amount of the bond shall be 3 per cent of the contract or subcontract price on all contracts of $50,000 or more, or 3 per cent of contractor's or subcontractor's estimated cost-and-profit under a cost-plus contract of $50,000 or more. When the aggregate of 2 or more contracts in one calendar year is $50,000 or more, the amount of the bond or bonds shall be 3 per cent of the aggregate amount of such contracts. Such surety bond must be filed within 30 days after construction is begun in this state by any such contractor or subcontractor on any contract the price of which is $50,000 or more (or the estimated cost-and-profit of which is $50,000 or more), or within 30 days after construction is begun in this state on any contract for less than $50,000, when the amount of such contract, when aggregated with any other contracts, construction on which was begun in this state in the same calendar year, equals or exceeds $50,000. If the Department concludes that no bond is necessary to protect the tax revenues of the state, the requirements under this subsection may be waived by the State Tax Commissioner, or his designated departmental representative. The bond shall remain in force until the liability thereunder is released by the commissioner or his designated departmental representative.

(b) A construction contractor required to file a surety bond pursuant to this section may, in lieu of such requirement, but subject to approval by the Tax Department, deposit with the State Treasurer an amount of cash equal to the face of the bond that would otherwise be required. If an offer to deposit is made, the Tax Department shall issue a certificate to the State Treasurer authorizing him to accept payment of such moneys and to give his receipt therefor. A copy of such certificate shall be mailed to the contractor who shall, within the time fixed by the department, pay such amount to said Treasurer. A copy of the receipt of the State Treasurer shall be filed with the department. Upon final determination by the Department of such contractor's liability for state income taxes, required unemployment compensation contributions and income taxes withheld from wages of employees, interest and penalties, by reason of such contract or contracts, the Department shall certify to the State Treasurer the amount of taxes, penalties and interest as finally determined, shall instruct him as to the proper distribution of such amount, and shall state the amount, if any, to be refunded to such contractor. The State Treasurer shall make the payments directed by such certificate within 30 days after receipt thereof. Amounts refunded to the contractor shall be without interest.

(c) All persons or firms subject to the provisions of this subsection shall notify the State Tax Department of the completion of a construction project in this state within 30 days after such completion.

(d) Any person who fails or refuses to comply with the provisions of this section shall be fined not more than $5,000.

Section 2. § 1198, Title 30, Delaware Code, enacted by Chapter 110, Volume 55, Laws of Delaware, is repealed.

Approved December 21, 1965.