Sales and Use Tax (Bond of Seller) Bond - Statewide in California

Brief Summary

There is no fixed price tag on this bond. CDTFA sets the amount for your account from your estimated tax liability, up to $50,000, and you post it only after the department demands security. A surety bond on form CDTFA-445 lets you meet that demand without tying up cash for the three compliant years section 6701 requires before release.

The California Department of Tax and Fee Administration can require security from any person subject to the Sales and Use Tax Law under Revenue and Taxation Code section 6701. The amount may not exceed twice the estimated average quarterly liability for quarterly filers, three times the estimated average monthly liability for monthly filers, or $50,000, whichever is less. A surety bond on form CDTFA-445, Bond of Seller, is one accepted way to post it.

We can help with all California bonds!

How to Apply for a Sales and Use Tax (Bond of Seller) Bond:

• Read the CDTFA-598 notice of security requirements for the exact amount CDTFA has set for your account.
• Give the surety your seller's permit number and the legal name exactly as it appears on the permit.
• Have the surety execute form CDTFA-445 in the demanded amount, signed by the principal and the attorney in fact under an unrevoked power of attorney.
• Deliver the executed bond to CDTFA as the security notice directs.
• Keep filing every return and paying on time, since release comes only after three years of full compliance.

Detailed Information About the California Sales and Use Tax (Bond of Seller) Bond:

The amount is set for your account

Applicants often hunt for a standard amount. There is none. Section 6701 lets CDTFA fix the security amount whenever it deems it necessary to ensure compliance, and caps it at the lesser of twice the estimated average quarterly liability for quarterly filers, three times the estimated average monthly liability for monthly filers, or $50,000. CDTFA's compliance manual adds a minimum security policy of $2,000 unless a statute sets something else. The figure you need is the one on your notice of security requirements, form CDTFA-598.

Higher multiples after a revocation hearing

A seller who has been given a notice of hearing under section 6070 to show cause why the permit should not be revoked, or whose permit has been revoked, faces higher multiples: three times the average quarterly liability or five times the average monthly liability. The $50,000 ceiling still applies.

The bond form

The prescribed form is CDTFA-445, titled Bond of Seller Executed Pursuant to Demand for Security Under the California Sales and Use Tax Law. The principal and surety are bound to the People of the State of California, and the bond guarantees payment of amounts required to be collected, including interest and penalty, under the Sales and Use Tax Laws or Ordinances. It is written as continuous and runs with the permit and each renewal period. CDTFA's manual requires the surety to be authorized to conduct business in California and notes that surety bonds are reviewed annually for renewal.

Getting it released

Section 6701 provides that security is released after a three year period in which the seller has filed all returns and paid all tax to the state. The surety may cancel under the Code of Civil Procedure provisions cited on the form, and CDTFA uses form CDTFA-1152 when it exonerates a bond.

Eligibility and Requirements for a California Sales and Use Tax (Bond of Seller) Bond:

• Surety authorized to conduct business in California.
• People of the State of California as obligee on form CDTFA-445.
• Bond amount equal to the CDTFA demand, which cannot exceed $50,000 under section 6701.
• Principal name matching the seller's permit.
• Annual renewal review by CDTFA for sales and use tax bonds.

California Sales and Use Tax (Bond of Seller) Bond FAQs:

Official and Additional Resources for the California Sales and Use Tax (Bond of Seller) Bond: