Texas Sales Tax Bonds

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Texas requires businesses that charge their customers sales tax to remit the taxes they collect to the state on a regular basis. To make sure they do that, the state makes it mandatory for those businesses to purchase a Texas sales tax bond as a prerequisite for obtaining a license to do business within the state.

Learn more about these bonds below, and request a quote with Surety Bond Professionals today.

What Are They?

A Texas sales tax bond is a business license applicant’s guarantee to make all required tax payments to the Texas Comptroller of Public Accounts in a timely manner. These are continuous bonds that must be renewed annually to avoid revocation of your business license. That’s why this type of bond is also referred to as a “continuous bond of seller.”

Who Needs One?

All retailers and other businesses that are required to collect sales tax must purchase a sales tax bond. Any business that sells more than two taxable items within a 12-month period through any means must obtain the bond.

Note that producers and sellers of mixed beverages in the state must purchase a specific type of sales tax bond and a gross receipts bond, both of which must be presented to the Texas Comptroller of Public Accounts.

How Do They Work?

There are three parties to the bond agreement:

  • The state of Texas (known as the obligee)
  • The business seeking the bond (known as the principal)
  • The company that issues the bond (known as the surety)

If a principal violates any of the terms and conditions of the bond, they are obligated to pay any claim against the bond, up to the full bond amount. When a claim is filed, the surety will first ensure that it is valid. If it is, but the principal does not pay it within a reasonable period of time, the surety will pay it. However, the principal is legally required to repay the surety, as the responsibility for paying claims against the bond belongs solely to the principal.

What Do They Cost?

You will pay an annual premium that is only a small percentage of the total required bond amount. That bond amount is established by the Texas Comptroller of Public Accounts based on the previous year’s tax liability, the expected tax liability for the current year, and whether the principal has been delinquent in paying taxes in the past. The maximum bond amount is either $100,000 or four times the principal’s average monthly tax liability, whichever is greater.

The premium rate you will pay, however, is determined by the surety. It is based largely on the business owner’s personal credit score. For those with good credit, the premium rate is typically between 1% and 3%.

Get The Bonds You Need

Contact Surety Bond Professionals today to request a quote. Whether you need a Texas sales tax bond or any other type of bond, we can help you get what you need at a competitive rate.