South Carolina has enacted regulations that will require some cigarette distributors to get a surety bond. The new regulations from the Department of Revenue (DOR) will take effect on January 1, 2019.
Cigarette distributors or retailers purchase untaxed cigarettes or tobacco products�the excise tax is paid only once, by the person purchasing the tobacco products. Since distributors collect this tax, they must record all monies collected and pay them to the state. Distributors need to get a license for each location where they will sell cigarettes in South Carolina—there is no cost for licensure. Licenses must be returned to the DOR if the distributor’s business is sold or closed.
Regulation #4702 requires tax stamps to be placed on cigarettes sold in South Carolina, and requires cigarette distributors to get a surety bond in order to purchase the stamps on thirty-day credit. This is how the state will distribute the stamps to all cigarette distributors. The surety bond must be 110% of the distributor’s estimated 30-day tax liability, but it can be no less than $2,000. Tax records must be submitted to the state and taxes paid on or before the 20th of the following month.
South Carolina cigarette distributors agree to pay taxes as required in the�Cigarette and Tobacco Tax Manual with the purchase of the surety bond. Since the tax stamps are purchased on credit, cigarette distributors simply report and pay taxes as required to the state, meaning they never purchase the stamps outright. Think of how you’re charged interest when you make purchases on credit—the surety bond is a form of ‘interest’ the state can seek payment from if the distributor does not pay required taxes or keep records as the law requires.
Ready to get a South Carolina surety bond? Get in touch with Single Source Insurance!