A Sales Tax surety bond is a bond required by many state governments for any business in that jurisdiction that does retail sales, leases and rents goods, or provides other taxable services. It is not a license to purchase goods sales tax free; rather it is a license to collect and remit sales tax to a state or local government. It is typically required by each location of a business within that jurisdiction. It assures that the business will remit the sales taxes due on time as well as serves as proof of financial responsibility and credibility of that business. Because failure to pay the taxes on time can result in a claim these bonds are considered financial guarantee surety bonds. While they are often easier to place than other strict financial guarantee surety bonds, good credit is an essential requirement for surety companies to write sales tax surety bonds. If the credit of the business owners is not up to surety standards, they can be more difficult to place and may require collateral. These are also known as Sales and Use Tax surety bonds in Texas, Georgia, Florida, or in California as a BOE Sales Tax surety bond.
A miscellaneous sales tax bond ensures merchants selling goods or services will pay any required taxes to the government. Some common examples of sales tax bonds include cigarette tax bonds, fuel tax bonds and liquor tax bonds.
Some States may require this bond to guarantee that you or your business will pay the anticipated state sales taxes. A sales tax bond is considered a financial guarantee surety bond.
The surety bond amount is usually calculated by the gross receipts or the projected sales taxes that you may be paying at the end of the year. Each state has their own sales tax bond form. A sales tax bond form is usually supplied to the client by the obilgee. The Sales tax bond can actually benefit the company by not tying up their working capital with a security deposit held by the State for several years.
How is the bond amount calculated?
It is generally based on the business’s dollar amount of sales and its location. You need to determine this with the specific government department requiring the bond of you; many of which now have calculators on their websites to help you determine the bond Sales Tax Surety Bond.
How much will a sales tax bond cost?
It is a percentage of the bond amount. Prices vary significantly depending on the risk to the surety and the specific bond requirement. It is also based on the applicant or business owner credit history and financial strength. Rates for a sales tax surety bond could range from 1% to 15% of the requested bond amount.