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What is the contract clearance process?

RCW 60.28 mandates that the Department of Revenue certifies that all excise taxes have been paid in full before a public agency releases retainage withheld on public works contracts over $35,000.

When a public works project over $35,000 is completed, the public agency submits a Notice of Completion to the Department of Revenue.

Once the Department receives a Notice of Completion:

  • A Reconciliation of Taxes and a copy of the Notice of Completion are sent to the general contractor.
  • The contractor completes the Reconciliation of Taxes which details how they reported their income from the project and calculates any additional tax or credit due.
    Or
  • An auditor may be assigned to assist in reviewing the reported project information and completing the reconciliation.

When all excise taxes due on the contract have been paid, a Certificate of Payment is issued by the Department to the public agency with a copy to the contractor. This notifies the public agency that state excise, sales and/or use taxes reported on the project have been paid and the Department is releasing their interest in the retainage.

See our Questions and Answers for more information:

 

More information

Construction industry tax guide

MRSC.org

Forms and Instructions

Notice of Completion for Public Agencies

Reconciliation of Taxes Instructions for Contractors

References

RCW 60.28

ETA 3024

WAC 458-20-170

458-20-17001

458-20-171