Learn more about sales tax bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Sales Tax Bonds?
A sales tax bond is a type of surety bond known as a financial guarantee bond. Financial guarantee bonds ensure that the bond purchaser makes good on a financial obligation. A sales tax surety bond guarantees that a merchant or other entity collecting sales tax from consumers remits the proper sales tax amount to the taxing authority.
Who Needs Them?
Sales taxes may be levied by states and municipalities. Retailers and other kinds of businesses that are required to collect sales tax from their customers serve as a conduit between the customer and the taxing authority. They are responsible for collecting the proper amount of tax from each customer and passing along the total amount they collect every month.
In some cases, a sales tax bond is only required from a company that has been late in filing sales taxes with the state or local taxing authority. Other states and municipalities may require all businesses that collect sales tax from consumers to purchase this bond from the time they first start operating.
How Do They Work?
The state or local government requiring the bond is the obligee.
The business purchasing the bond is the principal.
The company underwriting and issuing the bond is the surety.
If the principal fails to file an income tax payment with the obligee, the obligee can file a claim against the bond. The surety will pay a valid claim faster than the state could take legal action against the principal to collect the payment that’s due. The surety will then recover the claim amount directly from the principal.
What Do They Cost?
The amount of the bond is usually based on the average monthly sales tax amount collected by the principal. The principal pays a small percentage of that bond amount as the annual premium for the bond.
Use our convenient online system to apply for a sales tax surety bond today.
"Since 2001, I have jumped through hoops every 2-years come bond renewal time. With Absolute Surety and their user-friendly online application form, it was all done in MINUTES! Highly Recommended!!!"
Sean McCabe, Orlando