Sales Tax Bonds

What is a Sales Tax Bond?

Sales tax bonds provide a financial guarantee that a business entity or individual will pay all anticipated sales taxes to the appropriate government agency. The bond also requires you to report your earnings accurately at the appropriate times (annually, quarterly, etc.) If you fail to report or pay taxes appropriately, the government agency can make a claim on your bond to recover unpaid taxes.

The size of bond you’ll need will be based on the gross receipts or the projected sales taxes that you’ll likely pay at the end of the year. Some businesses that frequently need sales tax bonds include:

  • sports promoters
  • liquor stores
  • medical marijuana dispensaries

Before applying for a sales tax bond, you should check with your local state, county and city government agencies to verify bonding requirements. Each sales tax bond that’s issued is a legal contract that binds three entities together.

  • The principal is the business owner or working professional who purchases the bond as a way to guarantee proper tax payments in the future.
  • The obligee is the government agency that requires the bond to ensure taxes are paid appropriately.
  • The surety is the insurance company that backs the bond with a financial guarantee.

Once you’re ready to apply, download the application below to get started:

License/Permit/Misc Bond Application