In today’s mobile society, it is easy to forget that each state regulates contractors differently. Here in Georgia, for example, out-of-state contractors (and sub-contractors) who work on Georgia construction projects with a contract price greater than $10,000.00 must register with the Commissioner of Revenue. (See, O.C.G.A. § 48-13-30 through O.C.G.A. 48-13-38). What do these “nonresident” contractors need to register for? A Sales and Use Tax Certificate of Registration.
In addition to the act of registering, each nonresident contractor shall report to the department of revenue’s commission any tax liability which the contractor may have. Furthermore, this code section may require the foreign contractor to file a bond with sufficient sureties that all taxes which may accrue to the State of Georgia (and its political subdivisions) will be paid on demand. Also, the Georgia Code requires that the registration and bond be in place before beginning performance of any contract with a value greater than $10,000.00. It also requires that the nonresident contractor appoint the Georgia Secretary of State as their representative in the State of Georgia to accept service of process.
If a foreign contractor begins to perform work in Georgia in and fails to register with the commission, then they may be subjected to several penalties including the following: (i) an injunction may issue preventing the work until the nonresident contractor or subcontractor complies with the Georgia statutes, (ii) a nonresident contractor may be prohibited from filing an action to recover payment for performance on the contract in Georgia courts, and (iii) they may be charged with a criminal misdemeanor.
Each year, we get several questions from out-of-state contractors who failed to register with the commissioner prior to performing the work regarding whether or not they can file a mechanics lien. While the Act does not specifically state the unregistered contractor cannot file a mechanics lien, it may leave room for a challenge. Fortunately, there has been some case law that allows a construction lien to be enforced in Georgia so long as the unregistered contractor registers with the commission before filing suit (better late than never), but we do not recommend taking this risk. If you are coming into Georgia from another state to work on a Georgia construction project, and your contract is valued more than $10,000, please register with the state.