Texas Sales Tax Bond
- Required by the Texas Comptroller of Public Accounts
- May be required of applicants for a tax permit
- Guarantees payment of taxes, interest and penalties in a timely manner
- Also known as a Texas continuous bond of seller
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What is a Texas Sales Tax Bond?
According to the Texas Administrative Code (Title 34, Part 1, Chapter 3) certain retailers and sellers in the state may be required to obtain a Texas sales tax surety bond. The conditions under which such a bond may be required are:
- Applying for a tax permit
- Becoming delinquent in the payment of taxes, penalties and interest after having obtained a tax permit
- Being a permitted retailer and becoming delinquent
- Being asked by the Comptroller to supply a new or increased bond upon becoming delinquent
- Upon changing the legal structure of the business and applying for a new permit
The Texas sales tax bond guarantees that bonded sellers will comply with the requirements of the Texas Comptroller and the Administrative Code. It guarantees that they will make their payments in a timely manner, and meet all other conditions and requirements stipulated in the Code.
If a bonded business violates any of these requirements, the state of Texas and any of its authorities or agencies may enforce the obligations of this bond by filing a claim. The sales tax bond is an agreement between the bonded business (the bond principal), the Texas Comptroller of Public Accounts (the bond obligee), and the surety bond company which vouches for the bonded individual.
When a claim is filed, the surety will take action to remedy the situation, but the seller will then have to repay the surety for its coverage. This is why sellers should always comply with state law to avoid potential claims, which can gravely damage your business.
Keep reading to learn all about the cost of the bond.
Texas Sales Tax Bond Cost
The cost of your Texas sales tax bond is a percentage of its full amount. Its full amount varies depending on each case, but is the greater of either $100,000 or four times the amount of the average monthly tax liability.
How high or low that percentage is is determined by the surety bond company when it assesses an applicant. Your personal credit score has the strongest influence on the cost of your bond. Financial statements, your asset profile, and your industry experience are also important determinants, to a lesser extent than your credit score.
If you have a high credit score, you can expect to get a so-called standard market rate, which ranges between 1%-3% of the full amount of the bond.
Your sales tax bond cost is also determined by the surety bond agency you work with. Bond agencies receive their rates from bond companies, but not all agencies work with the same group of sureties.
Bryant Surety Bonds prides itself with working only with A-rated and T-listed companies. They provide us with exclusive rates on all our bonds, and are among the most financially stable sureties out there.
Bad Credit Bonds
If you are struggling with your credit but still want to get bonded– don’t worry. Our Bad Credit Program is specifically aimed at assisting applicants with a lower score.
Bonds under this program are underwritten at higher rates, because of the higher risk in bonding bad credit applicants. Your bond rate will be recalculated each time you renew the bond. By improving your credit score over time you can get better rates with each bond renewal.
How to Get Your Texas Sales Tax Bond
To apply for a Texas sales tax bond or just to get a free quote, submit your online surety bond application here.
Filling out your application takes just a few minutes. Processing times for these bonds are short, so we will contact you soon with your free quote.
To speak to one of Bryant Surety Bonds’ experts, call (866)-450-3412. Our professionals can provide you with further information regarding the bonding requirements for sellers and retailers in Texas, and answer any other surety bond related questions you have. Don’t hesitate to call!