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Expert Surety Bonds Since 2004
Need assistance? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Expert Surety Bonds Since 2004
Most Alabama retailers never post this bond. The ones who do are new sellers of beer, wine or tobacco, and for them it is the last step before the Department of Revenue approves the sales tax license. A $25,000 bond on form S&U:BOND covers the two year compliance window the statute requires, after which the obligation falls away for good.
Alabama requires a $25,000 sales tax surety bond from any person who applies on or after January 1, 2020 for an initial sales tax license, or to renew an expired or cancelled one, and who will sell beer, wine or tobacco products at retail. The bond is filed with the Alabama Department of Revenue on form S&U:BOND and runs two years under Code of Ala. 40-23-6. Retailers who do not sell those products do not post it.
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The scope is narrower than most retailers assume. Code of Ala. 40-23-6 requires a one time surety bond from a person applying on or after January 1, 2020 for an initial sales tax license, or for the renewal of an expired or cancelled license, who is in the business of selling at retail beer, wine or tobacco products. The Department of Revenue's own FAQ puts it plainly: taxpayers who will not be selling beer, wine and tobacco products are not required to obtain the surety bond. A clothing store, a contractor or a restaurant with no alcohol or tobacco sales registers for its sales tax license with no bond.
The bond is $25,000 and must be maintained for two years. After two years of continuous compliance, meaning the licensee collects and timely remits sales tax, section 40-23-6(d) exempts the licensee from the bond requirement going forward. In place of the surety bond an applicant may deposit certified funds in the same amount with the department, which ties up $25,000 of cash for two years instead of paying an annual premium.
Section 40-23-6(b) directs the department to waive the bond where the new applicant and a current licensee are related parties or members of a controlled group and the current licensee has been compliant over the previous two years. A second location opened under common ownership with a clean existing license is the usual case. Ask the department for the waiver before buying the bond.
Subsection (c) reaches licensed retailers selling anything, not just beer, wine and tobacco, who become non-compliant in collecting or remitting sales tax. The department mails a notice, and within 30 days the licensee must file a bond, deposit certified funds or file a notice of appeal. That bond is sized at the actual sales tax liability for the three months immediately preceding the non-compliant period, but never less than $25,000, and it uses form S&U:BOND (NC). Miss the 30 days and the department may cancel the license, and a cancelled license is not renewed until the bond is provided.
The department's instructions require the surety to be licensed and authorized in Alabama, the bond to be numbered and sealed by the surety, and a power of attorney dated the same day as the bond to be attached. The legal name of the principal must match the sales tax registration exactly, and the effective date must fall within 90 days of the business start date. Mail the bond to the Alabama Department of Revenue, Sales and Use Tax Division, P.O. Box 327720, Montgomery, AL 36132-7710. The license is not approved until the bond is received.
No. Code of Ala. 40-23-6 ties the initial license bond to retailers of beer, wine or tobacco products, and the Department of Revenue's FAQ confirms that taxpayers not selling those products are not required to obtain it. The only way another retailer ends up bonded is by becoming non-compliant with sales tax collection or remittance.
Yes. The bond is a one time requirement maintained for two years. Under 40-23-6(d), after two years of continuous compliance the licensee is exempt from the bond as long as it keeps collecting and timely remitting sales tax.
Probably not. Section 40-23-6(b) requires the department to waive the bond where the applicant and a current licensee are related parties or members of a controlled group and the existing licensee has been compliant for the previous two years. Request the waiver from the department before buying the bond.
Yes. The statute allows certified funds in the amount of the bond to be deposited with the department in place of a surety bond. Most applicants choose the bond because the premium is a fraction of $25,000 and the cash stays in the business.
That is the version for non-compliant taxpayers under 40-23-6(c). When a licensed retailer falls behind on collecting or remitting sales tax, the department mails a notice and the retailer has 30 days to post a bond equal to the actual sales tax liability for the three months before the non-compliance, with a floor of $25,000, or deposit certified funds, or appeal. Failing to act lets the department cancel the license.
The premium is a percentage of the $25,000 amount set by the surety after a credit review, paid for the two year term. Stronger credit earns a lower rate. The quote is shown before you buy.
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