What is a Cigarette Tax Bond?
Cigarette tax bonds are a subset of license bonds, in particular, a sales tax bond. Some people also call these financial guarantee bonds as a local municipality will require them for businesses that sell cigarettes or other tobacco products. The bonds are required in order to guarantee that the business will pay the required sales taxes to the local government.
These bonds are issued by proprietors that sell cigarettes. These bonds are required by the state before you are issued a license to sell cigarettes and they guarantee that the taxes will be paid to the state.
Cigarette Tax Surety Bond
To get a Cigarette Tax Bond, just click on the Apply Online image below. Choose your state and then the type of bond you need.
California Cigarette and Tobacco Tax Bond
California has a requirement for every seller of cigarette and tobacco products to obtain a bond prior to being licensed. Click the Apply Online button above to get started.
Idaho Cigarette Tax Bond
Idaho is another state that has a strong requirement for a cigarette tax bond.
North Carolina Tobacco Products Tax Bond
A surety bond is a tri-party agreement, which are the Obligor/Principal, the Obligee and the Surety. The Obligee is the party that requires you to get the bond. In this case, the Obligee is the government. Your company is the Obligor and the Surety is the third party that guarantees your payment. We work with a variety of A-rated surety bond providers to get you the best bond at the best price.
The rationale behind a cigarette tax surety bond is tot protect the payment of taxes on the sale of any cigarette and tobacco products. When a merchant does not remit the proper sales tax on these products, the government can then look to the surety to pay the required taxes up to the face amount of the bond. If the surety pays, then the surety will look to your company for repayment.
Most states require just a single bond, but some require separate surety bonds for each of tobacco sales and cigarette sales.
Cigarette Tax Bond FAQs
Who Has to Get a Cigarette Tax Surety Bond?
Businesses that distribute or sell cigarettes and other tobacco products must have these bonds in many states. In additional, wholesalers, importers and even manufacturers are required to post these cigarette tax surety bonds. The tobacco surety bond ensures that taxes are paid and other legal requirements are met for cigarette and tobacco sales.
Do all States Require a Cigarette Tax Bond?
No. Not all states require a bond and each state has slightly different rules for the amount of the bond. The names are often different as well. The name varies, such as a “Cigarette and Tobacco Products Tax Bond” for sellers and for importers and manufacturers you need a “Tobacco Manufacturer and Importer Bond.”
What is the Cost for a Cigarette and Tobacco Products Bond?
The cost depends on the local rules. Most states don't require a fixed amount, but it is instead based on the estimated amount of yearly sales. This amount will determine the premium, which is a percentage of those sales. The premium can further be affected by the business financials and your personal credit history and financial net worth. A good rule of thumb is that the cost will be between 1-3% of the bond amount.
Can I Get a Cigarette and Tobacco Products bond with Bad Credit?
Certainly. We have relationships with many surety carriers, some of which will write the bond even if you have bad credit. We typically try and get this written without any collateral being posted, but as a last resort, sometimes our sureties will ask for collateral. Over time, this condition can be eliminated as you build your relationship with the surety.
How do I get a Cigarette and Tobacco Products Surety Bond?
Click our Online Application button above to get started on a no-cost bond quote. Thanks so much for looking at us.
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See our License and Permit Bond page for more.Click here for more on bonds.