Surety Bond Insights: Key Updates from June 2020June 2020

Who Needs a Washington Liquor License?

Washington liquor licenses are broadly categorized as retail and non-retail. Those applying for a non-retail license must first obtain a federal permit from the Treasury Department�s Alcohol and Tobacco Tax and Trade Bureau (TTB).

What Are the Licensing Requirements?

In the state of Washington, a liquor license takes the form of an endorsement to a business license. This is true for both retail and non-retail liquor licenses.

Business licenses are issued by the Washington State Department of Revenue (DOR) Business Licensing Service. The endorsement is in the form of an addendum from the Washington State Liquor and Cannabis Board (WSLCB).

To initiate the licensing process, submit an application for a business license to DOR, and pay the $75 nonrefundable license fee. DOR will forward your application to WSLCB, and you will be contacted by the liquor license investigator assigned to your case.

At this point, you will also be asked to gather and submit any other documents needed in order for your application to be processed. If you�re seeking a non-retail license, remember that you will need to obtain a federal TTB permit, which involves purchasing a federal TTB bond.

The WSLCB will notify the local jurisdiction that they have 20 days in which to approve or object your liquor license application. In certain cases, there is also a requirement to post a public notice and accept public comments for a specified period of time.

You�ll receive written notification when WSLCB has approved your application, and the endorsed business license will follow.

Why is a Surety Bond Required?

If you�re applying for a non-retail alcohol license in Washington, you�ll need a TTB surety bond that meets the requirements of the federal Alcohol and Tobacco Tax and Trade Bureau (the �obligee� in the surety bond agreement). The required bond amount varies by license type and other factors.

A TTB bond is a guarantee from the bonded individual (the �principal�) to conduct business in accordance with certain laws and to pay all applicable federal taxes.

How Does It Work?

The terms of a TTB bond identify what the principal must do to avoid claims being filed against the bond. If the principal violates the terms of the bond and the federal government files a claim, the surety company (referred to simply as the �surety�) will typically go ahead and pay it. However, the principal bears full legal responsibility for paying claims and must reimburse the surety.

What Does It Cost?

TTB surety bonds are sold on an annual premium basis that is a small percentage of the required bond amount. That percentage�the premium rate�is determined by the surety, based largely on the principal�s personal credit score.

With a good credit score, your premium rate should be in the range of 1% to 3%. However, with a poor credit score, you could be assigned a premium rate as high as 10% to 15%.

Get Bonded Today

Our team of experienced professionals will help you get the TTB surety bond you�ll need in order to obtain a Washington liquor license.

Learn how to get a New York liquor license, and request a quote for the bond you might need from Single Source Insurance today.

Who Needs a New York Liquor License?

If you import, manufacture, distribute, or sell alcohol in New York, you�ll need to be licensed by the New York State Liquor Authority. There are four broad categories of licenses:

• On-premises sales
• Off-premises sales
• Manufacturing
• Wholesale
• There are many different types of licenses within these categories, each with their own application requirements. This article addresses the process for obtaining an on-premises license.

What Does the Licensing Process Involve?

To apply for an on-premises license, you will need to complete the following steps:

• Complete the online application and submit it along with all required documentation.
• Prove your identity and eligibility for a license (e.g., proof of citizenship, photo ID, fingerprinting authorization, etc.)
• Prove that the business qualifies as a restaurant, hotel, tavern, catering establishment, or other permitted venue (e.g., photos and diagrams of the premises, lease/deed, menu, etc.)
• Prove that you have met basic business requirements (e.g., proof of Worker’s Compensation and Disability insurance, certificate of authority, certificate of occupancy, etc.)
• Obtain a $1,000 New York Liquor Retailer Penal bond

Why is a Surety Bond Required?

The penal bond is your guarantee that as a liquor retailer, you will do business in a completely lawful and ethical manner. It protects the state of New York against a financial loss resulting from your actions and business decisions.

How Does It Work?

A New York Liquor Retailer Penal bond agreement is a legally binding contract between the following entities:

• The New York State Liquor Authority (the �obligee� requiring the bond)
• The license applicant (the �principal� purchasing the bond)
• The surety bond company underwriting and issuing the bond (the �surety�)

If you violate the terms of the surety bond agreement, the state can file a claim against your bond. �The surety will most likely pay the claim on your behalf if you come up with the money. But you must then reimburse the surety, because as the principal, you�re solely responsible for paying claims.

What Does It Cost?

To purchase the penal bond, you will pay an annual premium that is a small percentage of the required bond amount, which the obligee has established at $1,000.� The surety will assign you a premium rate that�s based largely on your credit score.

With a good credit score, your premium rate could be as low as 1% to 3%. But with poor credit, you could pay as much as 10% to 15% of the required $1,000 bond amount.

Get Bonded Today

If you need a New York Liquor Retailer Penal Bond, our surety bond experts will help you get one at a competitive rate.

Who Needs a Michigan Liquor License?

Michigan�s alcohol licensing laws are complicated, and so is the process for obtaining one. The state has a quota system that sets the maximum number of licenses that can be issued in a given municipality based on the size of its population. There are also many different types of licenses depending on the activities a business will engage in and what specific alcoholic beverages are being manufactured, distributed, or sold.

What Does the Licensing Process Involve?

Michigan�s alcoholic beverage industry is regulated by the Department of Licensing and Regulatory Affairs (LARA), specifically through the Michigan Liquor Control Commission (MLCC). The licensing process, however, begins with obtaining approval at the local level, often in the form of a local resolution.

Fingerprinting and a background investigation are both required. The MLCC district office will also do an inspection of the proposed premises. When all documentation has been received by the licensing staff, MLCC will review the application and approve or deny it. When applying for certain types of Michigan alcohol licenses, a surety bond must be purchased and submitted with the other required documents.

Why is a Surety Bond Required?

The surety bond that must be purchased in conjunction with obtaining a Michigan alcohol license ensures the proper payment of taxes to the state. Michigan�s alcohol bonding requirements are in addition to the federal bond mandated by the Treasury Department�s Alcohol and Tobacco Tax and Trade Bureau.

How Does It Work?

The terms of a surety bond agreement detail what the bonded individual (known as the �principal�) must do to remain in compliance and avoid claims. For alcohol tax bonds, that means remitting tax payments to the state on time and in full.� Failure to do so entitles the state (the �obligee� in the surety bond agreement) to file a claim against the bond to recover the amount due.

What Does It Cost?

The annual premium for any surety bond is a small percentage of the required bond amount (the penal amount). That penal amount is set by the state based on projected sales (for a new licensee) or previous year�s sales records (for a renewal).

The surety assigns the principal a premium rate based largely on the principal�s personal credit score. Surety companies consider a person�s credit score to be a good indicator of how easy or difficult it may be to collect reimbursement from the principal for any claims paid in advance on the principal�s behalf.

With a good credit score, your premium rate should be in the range of 1% to 3%. However, with a poor credit score, you could be assigned a premium rate as high as 10% to 15%.

Get Bonded Today

Reach out to us today about the alcohol bond you may need in order to obtain or renew your Michigan liquor license.

Who Needs a Georgia Liquor License?

If you plan to be involved in any aspect of the alcoholic beverage industry in Georgia, the question is not whether you will need a liquor license, but rather which license you will need. Buying, selling, and distributing alcohol all require different types of licenses. Plus, there are also different licenses for different types of alcoholic beverages.

What Does the Licensing Process Involve?

To sell alcohol legally in Georgia, you must have a local alcohol license, a Georgia alcohol license, and a Federal Basic permit. Once your local license application is approved, the Georgia Department of Revenue (DOR) will issue a state alcohol license without further investigation. DOR issues alcohol licenses to manufacturers, wholesale distributors, retailers, and special events sponsors.

The local license comes first. It is also the most expensive of the licenses you may need�it can cost a few thousand dollars compared to the $400 you�ll pay for your state license. When you request an application packet from the municipal government, you�ll find that it includes the form to apply for a state license from DOR.

Although the requirements for obtaining a liquor license in Georgia vary by jurisdiction, they still require you to complete a few key steps:

-������ Prove residence in the specific county or municipality

-������ Prove U.S. citizenship or permanent residency

-������ Complete fingerprinting and a background check

-������ Submit completed forms and required documentation

-������ Pay a fee

-������ In some cases, purchase an alcohol surety bond

Why Is a Surety Bond Required?

Many Georgia liquor licenses carry a requirement to purchase a tax liability surety bond. For example, Georgia alcohol retailers must purchase a $2,500 alcohol tax bond.

This type of bond ensures that the licensee will make all required tax payments to the state of Georgia. Some of these bonds also serve as performance bonds, which guarantee that the licensee will operate in a lawful and ethical manner.

How Does It Work?

Every Georgia alcohol surety bond is a legal contract among three parties:

-������ The Georgia Department of Revenue is the �obligee� requiring the bond

-������ The licensee is the �principal� purchasing the bond

-������ The surety bond company that underwrites and issues the bond is known as the �surety�

Failing to make the necessary tax payments is a violation of the terms of an alcohol tax bond and can result in claims being filed against the bond. The claims process enables people who suffer financial harm due to the unlawful or unethical actions of the principal to be compensated for their loss.

Generally, when a claim is received, the surety will conduct an investigation to make sure it is valid and then attempt to negotiate an amicable settlement. If negotiation attempts fail, the surety typically pays the claim and is then reimbursed by the principal.

The surety is simply extending short-term credit to the principal, who bears full legal responsibility for paying claims. The surety has no legal obligation to do so.

What Does It Cost?

If you need to purchase a surety bond in order to obtain a Georgia liquor license, you�ll pay an annual bond premium that is a small percentage of the required bond amount. While the obligee establishes the required bond amount, the surety determines what that percentage�the premium rate�will be for each license applicant.

The surety�s primary concern is the individual�s personal credit score, because it�s a good predictor of how easy or difficult it might be to get reimbursed by the principal for claims paid on the principal�s behalf.

With a great credit score, you could pay a rate as low as 1% to 3%. If you�re credit-challenged, your premium rate could be as high as 10% to 15%.

Get Bonded Today

Contact us today about the Georgia liquor license bond you need, and we�ll help you get it at a competitive rate.