What is an Alabama Sales Tax Bond?
Alabama Sales Tax Bond's are required by Alabama's Department of Revenue to obtain your Alabama Sales Tax Bond. The Alabama Sales Tax Bond amount is set at $25,000. If said Principal shall promptly file with the Alabama Department of Revenue true reports, as required by law and shall pay all taxes, penalties, and interest imposed by the State of Alabama, and which may now be due or which may hereafter become due by said Principal to the State of Alabama, together with any and all penalties and interest thereon, and shall faithfully comply with the provisions of Title 40, Chapter 23, Article 1, supra; then this obligation shall be null and void after two years of compliance; otherwise the same shall remain in full force and effect.
The State requires a Sales Tax bond for :
a $25,000 surety bond
Different parts of a bond:
There are 3 parts to a Sales Tax surety bond. The Principal "YOU", The Surety Company, and the Obligee. The Principal is the business or individual applying for the Sales Tax Surety Bond. The Obligee is the individual or entity requiring the Surety Bond and the Surety Company is the company who provides the Surety Bond coverage.
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Alabama Sales Tax Bond Information and Requirements:
On or after January 1, 2020, certain retailers conducting business in the State of Alabama, who are applying for or renewing a sales tax license or who are non-compliant, will be required to purchase and maintain a one-time surety bond in the amount of no less than $25,000, for a period of two years.
Surety bonds are required for retailers selling beer, wine and tobacco products who:
• Are submitting an initial application for a sales tax license to sell beer, wine, and tobacco products at retail; or,
• Are renewing an expired or cancelled sales tax license which was issued for retail sales of beer, wine, and tobacco products.
The surety bond requirement for those addressed above can be waived if the applicant and a current license holder, who is complying with the license requirements, are related parties or members of a controlled group (see Code of Alabama 1975, Section 40-23-6(b)(2)).
Surety bonds are required for licensed retailers selling any items who:
• Become non-compliant in the collection and remittance of sales tax in any period occurring on or after January 1, 2020.
The non-compliant retailer shall be notified by the Department of their requirement to purchase and maintain a one-time surety bond. The surety bond shall be in the amount of the actual sales tax liability for the three months preceding the occurrence of non-compliance but not less than $25,000, and for a period of two years. The licensee will have thirty days to file the bond or file a notice of appeal to the Department.
Surety bonds shall be executed by the applicant as principal and by a surety company qualified to do business in the State of Alabama. The instructions for executing a sales tax surety bond as well as the bond form can be accessed on the Department’s website at https://revenue.alabama.gov/sales-use/.