Sales And Use Tax Bonds

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What you need to know about Sales And Use Tax Bonds

Popular Sales And Use Tax Bonds

What is a sales tax bond?

Sales tax bonds are legally binding agreements between three parties: business owners and professionals required to collect sales tax on their goods or services, the government agency responsible for regulating local sales tax activity, and a surety company.

The government agency is the Obligee and establishes the obligations that the business owner or professional (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the business owner or professional.

Why do you need a sales tax bond?

Sales tax bonds are required in some states for retailers and other types of businesses that provide taxable goods or services. The government agency that typically requires sales tax bonds is the Department of Revenue.

When the surety company issues the bond, they provide the government agency a guarantee that they will receive payment for financial losses resulting from a business failing to pay their required taxes in a timely manner.

If the business or professional fails to remit the appropriate amount of sales tax on time, the surety will pay out any losses up to the bond amount. The business is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.

How much does a sales tax bond cost?

Sales tax surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.

Premium rates for sales tax bonds typically cost 5% of the total bond amount. During the application process, the surety company evaluates your credit score, financial strength, and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a sales tax bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.

Below are the lowest premiums EZ Surety has issued for sales tax surety bonds in popular states.

  • EZ Surety has issued sales tax bonds in the State of Alabama for premiums as low as $438.
  • EZ Surety has issued sales tax bonds in the State of Georgia for premiums as low as $750.
  • EZ Surety has issued sales tax bonds in the State of Mississippi for premiums as low as $100.