Alabama to require tax surety bond from new, noncompliant retailers

ALABAMA — Beer, wine or tobacco retailers registering for a new sales tax license will have to acquire a one-time $25,000 surety bond as of January 1, 2020.

A retailer will become exempt from the bond requirements after two years as long as it remains in continuous compliance with the state’s sales tax laws, according to Act. No. 2018-508 (HB151).

Any noncompliant retailers will also be required to purchase a bond under the same two-year period conditions in order to “ensure that the trust fund taxes collected by a licensee are received by the state,” according the act. The bond amount for delinquent retailers must equal the total amount of sales tax liability for the three months preceding the non-compliant period but no less than $25,000.

A business is considered noncompliant when it has not paid or otherwise met the tax liability within 30 days from the date when the final assessment is no longer subject to appeal, according to the act.

A retailer will only have to pay a percentage of the bond to the surety that notarizes the bond. As with any surety bond, the premium amount will vary based on a number of factors, including the retailer’s financial situation.

More information about Alabama’s sales tax license and the required bond form can be found at the Alabama Department of Revenue’s website.

Alpha Surety & Insurance Brokerage will be happy to answer any questions regarding an Alabama Sales Tax Surety Bond or any surety bond questions in general. You can call 800-901-3099 or send an email through the contact us page. We are here to answer your questions and help you fully understand surety bonds regardless of whether you choose to bond with us.