Sales Tax Bond

Sales tax bonds are generally required of a principal if, in the instance that the state requires a bond be obtained, the principal is issued or has applied for a permit to do business as a seller and has been demanded to have security by the obligee. The obligee (person or entity requiring the bond) is usually at a state level for sales tax bonds. It is important to clarify with the obligee the bond penalty (amount) that is being required of the principal.

Sales tax bonds guarantee that the taxes, fees, penalties, and any other costs that might accrue for the principal will be paid promptly when demanded by the obligee. This protects the obligee against loss of these penalties. This bond also binds the principal to comply with all laws, acts, ordinances, etc. in relation to the permit which they have been granted or are applying for.

These bonds are typically continuous, but some states may require continuation certificates. If a certificate is required, it will be mailed to the principal upon receipt of the renewal payment. The principal then becomes responsible for delivering the certificate to the appropriate obligee address.