Sales Tax Bond: what do you need to know?
Some states require that a business purchases a sales tax bond in order to ensure that the owner will pay the proper sales taxes each year. Not sure if your state is one that needs you to have a sales tax bond? Contact us today, and one of our licensed bond agents will be able to give you the information you need regarding sales tax bonds in your state.
How does a sales tax bond work?
A sales tax bond, like other surety bonds, is a contract between three parties:
- Principal: The principal of a bond is the business owner who purchases the sales tax bond.
- Obligee: The obligee is the agency requiring the sales tax bond from a business owner as a guarantee that sales taxes will be paid as necessary.
- Surety: The surety is the underwriter of the sales tax bond and will pay a claim to the obligee if the principal fails to meet their tax payment obligation.
If a business owner does not pay the required sales taxes each year, or any other misconduct is found, then the government agency may file a claim against the bond. Payment up to the total amount of the bond will be paid if it is determined that the claim is legitimate. The business owner, or principal, will then have to reimburse the surety company for the total amount of the payout on the claim.
What is the cost of a sales tax bond?
How much you will need to pay for a sales tax bond will depend on several factors, including state requirements for the size of the bond and estimates of projected sales taxes for the year. Our agents can quickly get you a free quote for a sales tax bond. Take time to request your free quote today and let us guide you through the surety bond process from start to finish.