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Introduction
In Washington State, a Wholesale Cigarette Dealer is a business or individual licensed to purchase cigarettes in bulk for resale to retailers or other wholesalers. These dealers serve a vital role in the supply chain by distributing taxed and legally authorized tobacco products across the state.
As part of the licensing process, wholesale dealers must furnish a surety bond, which serves as a financial guarantee that they will meet all tax and regulatory obligations. The bond protects the state against potential losses resulting from non-compliance or fraudulent activities by the dealer.
Explanation: Washington Wholesale Cigarette Dealer Bond
A Washington Wholesale Cigarette Dealer Bond is a type of surety bond required by the Washington State Department of Revenue for individuals or businesses engaged in the wholesale distribution of cigarettes within the state. This bond ensures compliance with state cigarette tax laws, as outlined in Chapter 82.24 of the Revised Code of Washington (RCW).
Purpose of the Bond
The bond serves as a financial guarantee that the bonded dealer will:
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Pay all taxes, fees, and penalties owed to the state related to the distribution of cigarettes.
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Comply with all applicable laws and regulations governing cigarette sales in Washington.
If the dealer fails to fulfill these obligations, the surety company that issued the bond may be required to cover the financial damages, up to the bond amount. The dealer is then responsible for reimbursing the surety.
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Who Needs This Bond?
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Any business that imports, distributes, or sells cigarettes at the wholesale level in Washington.
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This includes in-state wholesalers and out-of-state wholesalers selling to Washington retailers.
Bond Amount
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The bond amount is determined by the Department of Revenue based on the dealer’s estimated monthly tax liability, with a minimum requirement of $5,000.
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Higher volumes of sales may require a larger bond.
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The primary types of bonds applicable to wholesale cigarette dealers in Washington are:
- Proper Performance Surety Bond: This bond ensures that the wholesale cigarette dealer will comply with all provisions of Chapter 82.24 of the Revised Code of Washington (RCW), which governs cigarette taxation.
- Deferred Purchase Bond: This bond allows licensed wholesalers to defer payment for cigarette tax stamps for up to 30 days, rather than paying at the time of purchase.
- Unstamped Cigarette Bond: This bond permits licensed wholesalers to possess unstamped cigarettes for longer than 72 hours, typically for sales to authorized entities such as federal agencies, Indian tribes, or other wholesalers.
Step-by-Step Guide to Obtaining a Wholesale Cigarette Dealer Bond in Washington
To legally operate as a wholesale cigarette dealer in Washington State, you must secure a Wholesale Cigarette Dealer Bond as part of your licensing process. Below is a detailed step-by-step guide to help you obtain this bond:
Step 1: Determine Bond Requirement
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Contact the Washington State Department of Revenue (DOR) or consult your licensing paperwork to confirm the exact bond amount required.
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Typically, the bond amount depends on factors like the volume of cigarette sales and compliance history.
Step 2: Gather Business Information
Prepare the following details for your bond application:
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Legal business name and any trade names
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Physical and mailing address
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Business ownership details (LLC, Corporation, etc.)
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Federal Employer Identification Number (FEIN)
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Washington UBI (Unified Business Identifier)
Step 3: Choose a Licensed Surety Bond Provider
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Trusted providers like Swiftbonds specialize in cigarette tax bonds and offer online quotes.
Step 4: Complete the Bond Application
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Fill out an application either online or through a agent.
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You may need to provide financial statements or undergo a soft credit check, especially for higher bond amounts.
Step 5: Pay the Bond Premium
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Once approved, pay the annual bond premium. This cost is a small percentage of the total bond amount (typically 1% to 5%, depending on creditworthiness).
Step 6: Receive and Submit the Bond
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You will receive the original signed bond from the surety.
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Submit the original bond form to the Washington State Department of Revenue – Special Programs Division as part of your licensing packet.
Step 7: Renew the Bond Annually
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The bond must be kept active and renewed each year to maintain your wholesale cigarette license.
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Be sure to track renewal dates to avoid any lapse in coverage or license suspension.
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Conclusion
Securing this bond is not only a legal requirement but also a key step toward obtaining and maintaining a valid wholesale cigarette license in Washington. Wholesale dealers should work with a licensed surety provider to obtain the bond efficiently and remain in good standing with regulatory authorities.
Frequently Asked Questions (FAQs)
What happens if I don’t obtain the bond?
You cannot legally operate as a wholesale cigarette dealer in Washington without this bond. Operating without it may result in license denial, fines, or legal action.
Can the bond be canceled?
Yes, but the surety company must provide the Washington Department of Revenue with advance notice (typically 30 days) before cancellation takes effect.
Where do I submit proof of the bond?
Proof of the bond (usually a bond form or certificate) must be submitted to the Washington State Department of Revenue along with your wholesale cigarette license application.
Can I get this bond with bad credit?
Yes, but your premium may be higher. Some sureties specialize in high-risk bonding and may still offer options with collateral or higher rates.
Is the bond transferrable between business locations or owners?
No. The bond is specific to the licensed entity and location. If you change ownership or business structure, you may need a new bond.
Does the bond cover both cigarettes and other tobacco products?
No. This bond only covers wholesale cigarette transactions. If your business also handles other tobacco products, additional licensing and bonds may be required under RCW 82.26.
What happens if a claim is filed against my bond?
If the state files a valid claim for unpaid taxes or violations, the surety will investigate. If the claim is paid out, you are responsible for reimbursing the surety for the full claim amount.
What are common reasons for bond claims?
Common violations include underreporting cigarette sales, failing to pay excise taxes, or operating without the proper licensing.
Are electronic bonds accepted by the state?
Yes, Washington may accept electronic bonding (e-bonds) submitted directly by authorized sureties, though requirements can vary. Always confirm with the Department of Revenue.
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