The AGC of Washington recently contacted Ashbaugh Beal on behalf of an AGC member who for months had been wrestling with the City of Seattle over how the City withheld retainage on its projects. In most instances, Washington law limits retainage on public works projects to a maximum of 5% “of the moneys earned by the contractor.”
The City had a longstanding practice of applying the 5% after first adding sales tax. In Seattle sales tax tops out at a whopping 9.5%, making the City’s policy of determining retainage based on contract value-plus-sales tax an unnecessary over-withholding of funds, essentially adding a half-percentage point to the cost of doing business with the City.
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