2 Percent Withholding Repealed
After June 30, 2012, businesses are no longer required to withhold 2 percent from payments made to individual construction contractors. This withholding requirement was repealed under 2012 Minnesota Laws, Chapter 295, Article 2, Section 13 (c).
Filing The Return
The state Withholding Tax return will be updated to reflect this law change for the third-quarter filing period (July 1 - Sept. 30, 2012). From that point on, report any withholding from payments to individual construction contractors in the "Tax Withheld" field of the return.
To file a Withholding Tax return, log in to e-Services. For filing instructions and other information, click the "Help" or "FAQ" links on the login page.
Voluntary Withholding
While the 2 percent withholding requirement no longer applies, individual construction contractors may ask to have state income tax withheld from wages or payments they receive. The payer may agree to this withholding, but isn't required to do so. For more information, see
Voluntary Withholding.
Note
Prior to the July 1 - Sept. 30, 2012 filing period, 2 percent individual construction contractor withholding was reported in e-Services on a quarterly basis. There is a check box on these quarterly returns to indicate the 2 percent withholding.
