If you are currently in the business of or are planning to operate an alcohol vending business in the United States, acquiring an Alcohol Tax Bond is imperative to the success of your business.

Although the requirements for alcohol vendors may vary from state to state, Alcohol Tax Bonds serve a universal purpose in ensuring local businesses complete payments of taxes and fees in relation to alcohol distribution in the state in which they operate.

If you are in the market for an Alcohol Tax Bond, the following is the essential information you need to ensure you are on the right track.

Alcohol Tax Bonds: What Purpose Do They Serve and Do I Need One?

 Simply put; Alcohol Tax Bonds protect the obligee, which in this case would be government agencies requiring the bond, from a lapse in payment or falsified information from alcohol vending businesses.

These bonds also serve as a safety net to vendors and wholesale companies in the event that they may find themselves in tax trouble, as the bonds can be used to compensate damages until the company is able to reimburse the funds.

Although what is required from state to state will vary, most states do require an alcohol tax bond for alcohol distributing businesses to legally operate in the U.S.

So how much will these bonds cost alcohol vendors? As with most other bonds, Alcohol Sales Bonds are paid for on an annual basis. The credit history as well as personal business financial statements of the company applying for the bond are considered before an applicant is approved.

Unfortunately, Alcohol Sales Bonds tend to have a higher rate when compared to other bonds due to the fact that these bonds represent a strict financial guarantee to government agencies.

Typically, companies that have a strong credit history will pay anywhere from 1-3% of the bond amount, while companies with lower credit scores can pay up to 15% of the bond premium.

Alcohol Tax Bonds: A Closer Look

Golden Ale Brewery in Los Angeles opened in October of 2015 and has quickly become one of the most popular destinations for craft beer enthusiasts in the area.

After a steady change in management, a new bookkeeper was hired to oversee the finances of the popular brewery. Unfortunately, after three years at the company, the bookkeeper falsified tax documents, misrepresenting tax amounts for the sales of alcohol in hopes of pocketing money that would otherwise be used for tax compensation.

After a lengthy audit, the state of California placed a claim against the brewery’s Alcohol Tax Bond, which compensated the thousands of dollars that were owed to the State of California.

Golden Ale Brewery was held liable to meet all financial compliances set forth by the binding contract between themselves and the bond issuer.

With over 25 years in the bonding and insurance industries, we have the resources you need for a quick turn around on the bonds you need. Contact our experienced team today: 800-333-7800.

Greg Rynerson, CPCU

Greg Rynerson, CPCU

Backed by 30 years of experience, I spent my career in the surety bond and insurance industries. Throughout the course of my professional life, I've been proud to execute bonds at the state and federal level for various clients.

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