FOR ALL YOUR SURETY BOND NEEDS.
These surety bonds are general for all states.
A sales tax bond is a surety bond that a state or local tax agency may require from a business that collects sales tax. It backs the business’s obligation to report and remit that tax as the law requires. Single Source Surety writes sales tax bonds nationwide, using the bond form and amount your agency specifies. Rules vary by state, so the requirement in your agency’s notice is the starting point.
A sales tax bond is a surety bond for businesses that collect sales tax and hold it until it is remitted. The bond gives the tax agency a source of recovery if the business fails to report or remit sales tax under the bond’s terms. It does not replace filing returns or paying tax.
Agencies may call it a sales tax bond, a sales and use tax bond, a bond of seller or simply security. The name matters less than the form and amount the agency asks for, and those come from the agency, not the surety.
No single rule applies to every business in every state. Each state revenue department, and in some places a city or county, decides when a sales tax bond is required. Some agencies ask new permit applicants for security. Others ask only after late returns, unpaid tax or a revoked permit.
Businesses that may be asked for a sales tax bond include:
If you have received a notice or demand for security, keep it. It names the agency, the bond amount and usually the form you need.
A sales tax bond involves three parties. The business is the principal, the tax agency is the obligee, and the surety company issues the bond. If the principal fails a covered sales tax obligation and the agency makes a valid claim, the surety may pay, and the principal must repay the surety.
Because the principal is expected to repay any claim the surety pays, a sales tax bond is not insurance for the business. It protects the taxing authority. Read more about what happens when a claim is filed on a surety bond.
Requirements differ in who must post a bond, how the amount is set, how long the bond lasts and how it is filed. A few examples:
For any other state, check that state’s department of revenue or taxation for the current form, amount and filing method. A requirement in one state does not carry over to another.
The agency sets or approves the bond amount, often based on the business’s expected or past tax liability. The premium is the price you pay for the bond, and it is a separate figure from the bond amount. Single Source Surety prices each bond from the agency’s actual requirement and underwriting.
Factors that affect the premium include:
Credit challenges do not always rule out a bond. See surety bonds with bad credit for how underwriting handles it.
For the full checklist, including documents to gather and common filing mistakes, read how to apply for a sales tax bond.
No. The permit lets the business collect sales tax. The bond is a separate obligation the agency may require before or after issuing the permit.
No. You still file returns and pay tax. If the surety pays a valid claim, the business must repay the surety.
Not necessarily. Each state sets its own rules. Check with the revenue department in every state where you are registered.
It depends on the agency. Some bonds have a set term and renewal; others stay in force until the agency releases them.
Some agencies accept other forms of security, such as a cash deposit. Ask the agency which options it allows.
Have your agency notice, bond form and filing instructions ready, then request a sales tax bond quote or start your bond application. Including those documents helps the bond match your agency’s requirement the first time.
This page is general information, not tax or legal advice. Sales tax bond requirements are set by each state or local agency; the agency’s current rules and forms control.
