Alcohol Tax Bond - Statewide in Alabama

Brief Summary

If you are opening a store that will sell beer, wine or tobacco in Alabama, the Department of Revenue will not issue your sales tax license until a $25,000 surety bond is on file. It is a one time, two year requirement under Code of Ala. 40-23-6, not a permanent cost, and it is far cheaper than the alternative of parking $25,000 in certified funds with the Department. Most retailers are quoted the same day and the executed bond goes straight into the My Alabama Taxes license application.

Alabama requires any retailer applying for an initial sales tax license to sell beer, wine or tobacco products on or after January 1, 2020, or renewing an expired or cancelled license for those products, to post a one time $25,000 surety bond for two years with the Department of Revenue. The bond is conditioned on collecting and remitting sales tax and is payable to the Commissioner of Revenue under Code of Ala. 40-23-6(b). A retailer who falls out of compliance can be ordered to post a larger bond.

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How to Apply for a Alcohol Tax Bond:

• Confirm whether you are a new applicant, a renewal of an expired or cancelled license, or responding to a noncompliance notice, since that sets the amount.
• Check with the Sales and Use Tax Division whether the related party or controlled group waiver applies before ordering the bond.
• Have the legal entity name, FEIN and store address exactly as they appear on the My Alabama Taxes license application.
• Order the $25,000 bond or the amount stated on the Department notice. The surety completes form S&U BOND.
• Sign the form as principal and submit the original to the Department of Revenue Sales and Use Tax Division with the license application, or within 30 days of a noncompliance notice.
• Keep the bond in force for the full two year term and keep sales tax filings current so the Department does not demand a larger bond.

Detailed Information About the Alabama Alcohol Tax Bond:

This is a sales tax bond, not an ABC Board bond

The bond on this page is required by the Alabama Department of Revenue, not the Alcoholic Beverage Control Board. It attaches to the sales tax license, and it was created by the 2019 amendments to Code of Ala. 40-23-6 that took effect January 1, 2020. Retailers who sell products covered by the wholesale to retail accountability program in Section 40-23-260, meaning beer, wine and tobacco, must post it when they apply for a new sales tax license or renew one that expired or was cancelled. Your ABC license is a separate matter with its own requirements.

Amount, term and release

The standard bond is $25,000. It is a one time requirement that runs for two years from issuance. Retailers who stay compliant are not asked for a replacement bond when the two years end. The Department also accepts certified funds in the same amount deposited with the Department instead of a surety bond. The surety must be a corporate surety company qualified to do business in Alabama, and the bond is payable to the Commissioner of Revenue and his or her successors.

When the amount goes up

Any licensed retailer, not only beer, wine and tobacco sellers, who becomes noncompliant in collecting and remitting sales tax can be required to post a bond equal to the actual sales tax liability for the three months before the noncompliance, with a $25,000 floor. The Department gives the retailer 30 days to file the bond or file a notice of appeal. If your bond request comes from a noncompliance notice rather than a new license application, the required amount is on that notice and may be well above $25,000.

Who can skip it

The Department may waive the bond when the applicant and a current license holder are related parties under Section 40-23-190(c), members of the same controlled group under 26 U.S.C. 1563, or similar business entities, as long as the current license holder has stayed compliant for the previous two years. A new location opened by an existing compliant operator is the common case. Ask the Department about the waiver before buying the bond.

Form and filing

The Department publishes the form as the Sales Tax Surety Bond for New Taxpayers Selling Beer, Wine and Tobacco Products, form S&U BOND, on its forms page. The surety completes and signs it, the retailer signs as principal, and the original is submitted to the Sales and Use Tax Division with the license application. Alabama sales tax licenses renew annually between November 1 and December 31 at no charge, and the annual renewal does not by itself trigger a new bond.

Eligibility and Requirements for a Alabama Alcohol Tax Bond:

• Bond amount of $25,000 for a new or reinstated beer, wine or tobacco retailer, or the three month tax liability with a $25,000 floor for a noncompliant retailer.
• Corporate surety company qualified to do business in Alabama.
• Payable to the Commissioner of Revenue of the State of Alabama and successors in office.
• Conditioned on collection and remittance of all sales tax due under Chapter 23 of Title 40 and the Department's rules.
• Two year term from the date of issuance, one time only for compliant retailers.
• Form S&U BOND, the Department's prescribed sales tax surety bond form.

Alabama Alcohol Tax Bond FAQs:

Official and Additional Resources for the Alabama Alcohol Tax Bond: