Retailers are required to pay sales and use taxes and to file tax returns. Although you are required to pay and report sales and use taxes to your specific state entity, you may be required to provide proof of financial responsibility or a deposit in the form of a sales tax or sales and use tax bond.
A sales tax bond and sales use tax bond is a common way to guarantee compliance with the state or municipality which is requiring you to be bonded. It is the retailer’s responsibility to report the correct amount of sales and use tax and to pay the taxes or fees due to the state. To avoid paying a penalty and interest charges most retailers must also obtain a seller’s permit which is usually accompanied by a sales tax bond or sales and use tax bond.
When you obtain your seller’s permit and sales tax bond or sales and use tax bond, in most cases you will be instructed to file your tax return on a monthly, quarterly, or annual basis. The state entity or municipality will in most cases send out a tax return form to complete at the close of each reporting period.
Your state entity will require local sales tax or sales and use tax bonds and in return the taxes must be collected by retailers who are either engaged in business, intend to sell or lease personal property which would ordinarily be subject to sales tax if sold at retail.
A sales tax surety bond or sales tax bond is usually based on your projected revenues and income from sales during the year. However you must make sure your taxes and fees are paid in a timely manner otherwise if you are delinquent on your sales tax the state could file a claim against your bond, if this is the case your bond will be subject to cancellation and the indemnification retrieval process will go into effect.
Please check with your local state, city or county governments to verify your sales tax bond requirements.
