Sales Tax Bonds

Who Is Required To Purchase a Sales Tax Bond?

Every state is a little different, but it's very common for businesses that collects an additional excise tax to purchase a sales tax bond. These additional taxes are commonly levied on:

• Cigarettes and tobacco products
• Nicotine products
• Marijuana sales
• Alcohol sales
• Fuel sales
• Waste and disposal sales

A very common type of sales tax bond we help customers with is the Texas mixed beverage gross receipts tax bond.

Other very common examples of businesses that are required to purchase a sales tax bond include:

Businesses that are making sales in a state for a short period of time before they leave. These are called transient businesses and are often required to purchase a sales tax bond before they can have a retail license issued.

Businesses that have been found guilty of paying no sales tax or incorrect amount of sales tax in the past. Typically to maintain or have their retail license issued again, these businesses will have to purchase a sales tax bond.

Why is a Sales Tax Bond Required?

A sales tax bond is a type of surety bond and its purpose is very simple.

This bond is the primary way your state agency holds you and other businesses responsible for collecting sales tax and paying it on the correct schedule (typically quarterly).

If a business is found guilty of paying the incorrect amount or no sales taxes, the state can make a claim against the bond for financial compensation. This often includes a suspension of the retail license until the matter is property handled.

The amount available for a claim is capped by the amount of the bond you're required to purchase.

What is the Sales Tax Bond Amount?

Sales tax bonds are one of few surety bonds that are unique for every business. The amount will be based on:

• Your previous years sales tax liability
• Your expected sales tax liability if you're a new business

Based on these figures and when you apply for your retail license, you will be told:

• If you need a purchase a sales tax bond
• The amount of the bond you must purchase

How Much Does a Sales Tax Surety Bond Cost?

Nearly all sales tax surety bonds are credit driven. This means the price of your bond will be determined by a surety. A surety is an insurance company that underwrites sales tax bonds.

While every surety calculates their rate using their own internal process, they all primarily use these factors for determining their rate:

• The personal credit of the owner or owners
• The history of being business
• The history of any claims against past surety bonds

Based on how they weigh these factors, the rate determined multiplied by your bond amount is the price you'll pay.

And this is how you can end up saving, potentially hundreds of dollars, when you purchase your bond.

Why Should You Get Pricing From Surety Bonds Direct?

Surety Bonds Direct is a specialized surety agency. This means we work with the highest A-rated sureties to find you the lowest possible rate.

The lowest rates means the lowest price.

The process is simple:

• Step 1 - Request a quote
• Step 2 - Our bond specialists will work with our network of sureties to collect rates
• Step 3 - We'll send you the lowest rate so you have it when you're ready to purchase

When you're ready to purchase, it's one payment for the entire bond term (12 months in most cases).

Example Bond Pricing

Let's use an example of $20,000 for the bond amount. Below in the take you see the typical rates ranging from really good to about average.

Notice how a one to two percentage points can make a big difference in the price you pay.

When you're ready to get your exact pricing, fill out our free online quote form or call a bond specialist at 1-800-608-9950.

How Long Does a Sales Tax Bond Last?

Sales tax bonds typically have a bond term or 12 months from date you purchase your bond.

Most tax bonds are usually required for a set time period. This may be one year, in our experience we've seen three years a lot.

Remember, the primary reason a sales tax bond is required is because:

• You're brand new to a business
• You've failed to pay the correct amount of taxes in past years

Once you prove your business is stable with a history of paying the correct amount of sales tax, you won't have to renew your bond going forward.

How Do You Renew Your Bond?

This is another reason why you should work with a specialized surety agency like surety bonds direct, we manage your bond for you.

As your bond expiration date approaches, 30 to 45 days in advance, your bond specialist will reach out to you to find out if you need to renew your bond.

If you do need to renew, they will have renewal pricing ready to go.

Once you pay your renewal premium, your bond remains active for another year.

When you no longer need your bond, you can let it expire.

Get Your Sales Tax Bond Pricing Today

Since you require a sales tax surety bond, get your pricing today.

It costs you nothing to have a bond specialist find you the lowest rate and once you get your pricing, there's no obligation or purchase.

You only purchase when you like the price and when you're ready.

Fill out our free online quote form or call a bond specialist at 1-800-608-9950.