What is a Sales and Use Tax Surety Bond?
This bond, also known as general sales tax bonds, is required by your local state government for businesses that are involved in retail sales, or that rent goods or leases. The bond protects the government and makes sure that it will receive its taxes by the retail business.
Sales Tax Bond Cost
To get a Sales and Use Tax Bond, just click on the Apply Online image below. Choose your state and then the type of bond you need.
See our License and Permit Bond page for more.
Who Needs to Obtain a Sales Tax Bond?
A sales tax bond is typically required for businesses that collect sales taxes from their customers. This includes retailers, wholesalers, and manufacturers who sell taxable products or services. The specific requirements for obtaining a sales tax bond vary by state, but generally, businesses that need to collect and remit sales taxes to the state or local government are required to post a bond.
Some common examples of businesses that may need to obtain a sales tax bond include:
- Retailers who sell taxable products, such as clothing, electronics, or furniture
- Wholesalers who sell taxable products to retailers or other businesses
- Manufacturers who produce taxable products, such as food, beverages, or tobacco products
- Businesses that provide taxable services, such as telecommunications or transportation services
It’s essential to check with your state or local tax authority to determine if your business needs a sales tax bond. This ensures that you are compliant with local regulations and helps avoid any potential penalties for failing to remit sales taxes.
Sales Tax Bond Cost and Bond Amount
The cost of a sales tax bond, also known as the bond premium, is typically a percentage of the bond amount. The bond amount is determined by the state or local government and is usually based on the business’s yearly sales tax liability or sales receipts.
The bond premium is usually a small percentage of the bond amount, ranging from 1% to 5% per year. For example, if the bond amount is $10,000, the bond premium might be $500 per year.
The bond amount and premium can vary depending on the state, the type of business, and the business’s creditworthiness. Businesses with good credit may qualify for lower bond premiums, while businesses with poor credit may be required to pay higher premiums. It’s important to understand these factors to budget accordingly for your sales tax bond.
How Sales Tax Bonds Work
A sales tax bond is a type of financial guarantee bond that ensures a business will collect and remit sales taxes to the state or local government. The bond is typically issued by a surety bond provider and is usually required by the state or local government as a condition of doing business.
Here’s how a sales tax bond works:
- The business applies for a sales tax bond through a surety bond provider.
- The surety bond provider reviews the business’s creditworthiness and determines the bond amount and premium.
- The business pays the bond premium and receives the bond.
- The bond is filed with the state or local government, which verifies the bond and ensures that the business is compliant with sales tax regulations.
- If the business fails to collect and remit sales taxes, the state or local government can file a claim against the bond.
- The surety bond provider investigates the claim and pays the state or local government up to the full bond amount if the claim is valid.
- The business is then required to reimburse the surety bond provider for the amount paid out.
Sales tax bonds provide a financial guarantee that businesses will comply with sales tax regulations and remit sales taxes to the state or local government. They are an essential component of many businesses’ operations and help to ensure compliance with tax laws.