12 CSR 10-2.017 - Transient Employer Financial Assurance Instrument for Employer's Withholding Tax
PUBLISHER'S NOTE: The secretary of state has determined that publication of the entire text of the material that is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. This material as incorporated by reference in this rule shall be maintained by the agency at its headquarters and shall be made available to the public for inspection and copying at no more than the actual cost of reproduction. This note applies only to the reference material. The entire text of the rule is printed here.
(1) Out-of-State Transient Employer Defined.
"Transient employer" has the same meaning as used in section
285.230, RSMo.
(2) Every transient employer shall file with
the director of revenue a financial assurance instrument including but not
limited to a cash bond, surety bond, or an irrevocable letter of credit, which
has the same meaning as used in section 400.5103, RSMo.
(3) Types of Financial Assurance Instruments.
Financial assurance instruments which may be posted to secure payments of taxes
by out-of-state transient employers shall be in the form of a surety bond, cash
bond, an irrevocable letter of credit issued by any state or federal financial
institution, an assignment of certificate of deposit, or any other financial
assurance instrument which is deemed acceptable by the director of revenue.
Other financial assurance instruments will be reviewed for approval on a
case-by-case basis.
(A) A surety bond shall
be issued by an insurance company licensed for bonding in Missouri on behalf of
the applicant on the Surety Bond Form 331. The form shall bear the seal of the
insurance company, the effective date, and it shall be accompanied by a power
of attorney letter or form if signed by the attorney-in-fact. Surety bond form
shall also contain the signature of the applicant.
(B) A cash bond shall be paid to the director
of revenue in the form of a cashier's check, money order, or certified check
and be accompanied by a Cash Bond Form 332.
(C) An irrevocable letter of credit issued by
any state or federal financial institution may be submitted to the Department
of Revenue on a Irrevocable Letter of Credit Form 2879.
1. The letter of credit shall be irrevocable
and the beneficiary shall be the Department of Revenue. Payment shall be made
immediately upon presentment of a demand for payment signed by the director of
revenue or a designated representative.
2. All letters of credit shall conform to the
Department of Revenue's required format in the Irrevocable Letter of Credit
Form 2879. The letter of credit must include an authorization for release of
confidential information allowing the director of revenue or a designee to
release confidential tax information to the issuing bank.
3. A demand for payment upon a letter of
credit shall be presented for payment only for the reason that bond proceeds
are needed to satisfy any delinquencies or claims as provided for in section
285.230, RSMo.
4. Letters of credit shall have a term of one
(1) year and shall be automatically renewable on an annual basis for an
additional one (1) year. A letter of credit may be canceled by the issuer sixty
(60) days after written notice is delivered to the Department of Revenue. Upon
the notice of cancellation, the transient employer shall be required to file a
new financial assurance instrument on or before the expiration of the
sixty-(60-) day period. If the required financial assurance instrument is not
received within that time period, the employer commits the crime of failure to
file a financial assurance instrument if the employer knowingly fails to
comply.
5. If a transient employer
ceases business or desires to substitute a financial assurance instrument for
their letter of credit, the director of revenue shall retain the letter of
credit for a period of ninety (90) days or until the director of revenue is
satisfied that no claims exist against the letter of credit.
6. A transient employer shall be required to
increase the amount of the letter of credit or provide an additional financial
assurance instrument in any situation where the employer would be required to
increase or provide an additional financial assurance instrument as provided
for in section 285.230, RSMo. An increase to
the amount of the letter of credit shall be deemed the submission of an
additional financial assurance instrument for the amount of the
increase.
(D) An
assignment of certificate of deposit may be submitted to the Department of
Revenue using Form 4172. The certificate of deposit must be issued by a state
or federally chartered financial institution.
(4) Amount of Financial Assurance Instrument.
The amount of the financial assurance instrument shall be determined by the
director of revenue. This financial assurance instrument shall not be less than
the average estimated quarterly withholding tax liability of the taxpayer, but
in no case less than five thousand dollars ($5,000) nor more than twenty-five
thousand dollars ($25,000).
(A) Example 1: Mr.
Kansas Contractor has been awarded a contract to renovate a building in Kansas
City, Missouri. Mr. Kansas Contractor has employed ten (10) Missouri residents
to assist in the renovation. The employees are being paid four hundred dollars
($400) in wages per week. The average estimated quarterly withholding tax
liability of Mr. Kansas Contractor is less than five thousand dollars ($5000).
Mr. Kansas Contractor is required to post the minimum five thousand dollar
($5,000) financial assurance instrument.
(B) Example 2: Mrs. Illinois Drywaller
accepts a contract to drywall several new apartment complexes in St. Louis,
Missouri. Mrs. Illinois Drywaller hires numerous Missouri resident drywallers
to assist in the work. Mrs. Illinois Drywaller's Missouri monthly withholding
is two thousand three hundred dollars ($2,300). Mrs. Illinois Drywaller is
required to post a financial assurance instrument in the amount of six thousand
nine hundred dollars ($6,900). The six thousand nine hundred dollars ($6,900)
is the approximate amount of withholding for these employees for one (1)
calendar quarter.
(5)
General Financial Assurance Instrument Examples. The following are general
examples illustrating the out-of-state transient employer financial assurance
instrument requirement:
(A) Example 1: Mr.
Jones, an out-of-state contractor, has been awarded a contract to perform work
in Missouri. He must obtain and file an application for a Missouri Employer's
Withholding Tax Identification Number. Furthermore, he does not meet the
criteria to be exempt from the financial assurance instrument requirement. Mr.
Jones, therefore, must submit a financial assurance instrument with the
application before he can obtain his Missouri Withholding Tax Identification
Number;
(B) Example 2: Mrs. Davis
is an out-of-state contractor whose principal place of business is in a county
of another state which borders Missouri. Mrs. Davis is a transient employer and
must file an application for a Missouri Employer's Withholding Tax
Identification Number. Mrs. Davis has not been under contract to perform work
in Missouri for at least sixty (60) days each year for the past two (2)
calendar years and, therefore, must submit a financial assurance instrument
with the Missouri Tax Registration Application; and
(C) Example 3: Mr. Smith, an out-of-state
contractor, has been awarded a contract to perform work in Missouri. Mr. Smith
is a transient employer and must file an application for a Missouri Employer's
Withholding Tax Identification Number. Mr. Smith does meet all the criteria for
exemption from the financial assurance instrument requirement. Therefore, he is
not required to file a financial assurance instrument with the application but
must notify the Department of Revenue of his exemption status.
(6) Replacing or Applying for
Return of Financial Assurance Instrument.
(A)
If a cash bond is replaced by a different type of financial assurance
instrument, the cash bond will be refunded to the taxpayer, provided all taxes
due are paid and the taxpayer files a request for refund on the forms provided
by the Department of Revenue.
(B)
If a surety bond is replaced by a different type of financial assurance
instrument, the surety bond will be canceled, provided the issuing insurance
company provides the Department of Revenue with a written notice sixty (60)
days prior to the cancellation date. This cancellation shall not affect any
liability incurred or accrued prior to the termination of the sixty-(60-) day
period.
(C) If an irrevocable
letter of credit is replaced by a different type of financial assurance
instrument, the irrevocable letter of credit will be returned to the issuing
financial institution, provided the financial institution provides the
Department of Revenue with a written notice sixty (60) days prior to the
cancellation date. Cancellation shall not affect any liability incurred or
accrued prior to the termination of the sixty-(60-) day period.
(D) If an assignment of certificate of
deposit is replaced by a different type of financial assurance instrument, the
taxpayer may file a request with the Department of Revenue asking to assign and
transfer the certificate of deposit back to the taxpayer. If the taxpayer has
filed such a request and all of the taxpayer's taxes due are paid, the
Department of Revenue will assign and transfer the certificate of deposit back
to the taxpayer. The taxpayer must pay, and will solely be responsible for any
fees, penalties, charges, or liability arising from any assignment and transfer
of the certificate of deposit to or from the taxpayer.
(7) Exemptions from the Out-of-State
Transient Employer Financial Assurance Instrument Requirement. Employers
meeting all the criteria in section 285.230.2, RSMo, are not required to file a
transient employer withholding tax financial assurance instrument.
(8) Certification of Workers' Compensation
Insurance. Every transient employer shall certify to the director of revenue
that the employer has sufficient Workers' Compensation insurance either through
a self-insurance program or policy of workers' compensation insurance issued by
an approved workers' compensation carrier. A transient employer shall provide
the Department of Revenue with a copy of its Workers' Compensation insurance
policy to be verified consistent with section 285.234.1(2), RSMo.
(9) The forms Surety Bond Form 331, Cash Bond
Form 332, Irrevocable Letter of Credit Form 2879, and the Assignment of
Certificate of Deposit Form 4172 are incorporated by reference and made a part
of this rule as published by Missouri Department of Revenue, and available at
www.dor.mo.gov or Harry S Truman
State Office Building, 301 W. High Street, Jefferson City, MO 65101, dated June
1, 2023. This rule does not incorporate any subsequent amendments or
additions.
Notes
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