Sales Tax Surety Bond is not a federal surety bond but rather a State surety bond. Is a promise that the merchant will pay sales tax to the oblige (in most cases the state government tax department) from all purchases of their good and services. A sales tax bond is considered a financial guarantee surety bond. Failure to pay the required taxes to the oblige or incorrect reporting can result in a bond claim.
Gross Receipts Sales Tax Bond or the projected sales taxes that you may be paying at the end of the year usually calculate the sales tax surety bond amount. Each state has its own sales tax form. A sales tax bond form is usually supplied to you by the oblige. In some states, they require a sales tax bond are California, Arizona, and Texas.
Unlike most financial guarantee bonds. Sales tax bonds are still being underwritten without collateral by bonding companies.
High-risk programs are available for those who cannot obtain a standard preferred rate through the traditional surety bond program. These high risk or bad credit surety bond programs have higher rates than a standard preferred market due to increased risk in claims. Rates for a high-risk program can run from 3% to 15% of the bond amount.
How much does a sales tax bond cost?
The sales tax bond amount that you need will vary depending on your annual sales and also depend on state regulations in your area. Across the U.S., different bonds have a diverse amount of requirements set by the appropriate agencies that regulate different trades.
In most states, your sales tax bond amount depends on an estimate of your yearly sales tax liability, or on your sales receipts. In some cases, the bond is based on the monthly sales tax you need to pay. Your actual sales tax bond cost is only a fraction of the bond amount that you need to post. This percentage is set after your surety examines your business and personal finances, such as your personal credit score and business stats. The better your financial situation is, the smaller your bond premium will be. The average cost for a sales tax bond is between 1% -5% of the bond amount needed.
Who needs to obtain a sales tax bond?
A variety of businesses across the U.S. are required to obtain a sales tax bond in order to operate legally. It’s up to your local and state governments to set the exact cases when bonds are required, as well as the bond amount. Typically, you would need a sales tax surety bond if you are selling– or in some cases producing and storing– alcohol, cigarettes and tobacco products, marijuana, and fuel. General sales tax bonds are also required in some cases.