What is an Arizona Sales Tax Bond?
Some businesses operating in Arizona are required to hold a valid license in order to operate legally in the state. A component of the licensing requirements mandated for certain companies is posting an Arizona sales tax bond. This type of surety bond ensures that a licensed business will comply with Arizona state laws regarding payment of sales taxes due.
An Arizona sales tax bond works similarly to other surety bonds in that it is a contract between three parties. The licensed business is known as the principal, while the state licensing authority is called the obligee. A surety company provides the bond to the principal. Businesses that do not comply with sales tax regulations in Arizona may have a claim made against their bond.
Which Businesses Need an Arizona Sales Tax Bond?
Arizona sales tax bond is a blanket term that encompasses several different types of bonds that retailers or merchants may be required to have in place. Common business operations that require a bond in this category include tobacco sales, liquor or alcohol sales, and the sale of tangible goods to customers in Arizona. The state’s Department of Revenue determines which businesses must have an Arizona sales tax bond.
Arizona Sales Tax Bond Obligee Details
In the state of Arizona, Arizona Revised Statutes 42-1125 dictate that some businesses operating in the state need a license or permit to do so. Part of the licensing requirements include the need to secure an Arizona sales tax bond that provides protection against losses for failure to pay sales taxes. The obligee of an Arizona sales tax bond is the Department of Revenue. Merchants and retailers may use the following contact information for the obligee:
Arizona Department of Revenue
1600 West Monroe Street
Phoenix, Arizona 85007
What Does an Arizona Sales Tax Bond Cost?
Each business that is required to pay sales tax in Arizona must post a sales tax bond, but the amount of the bond depends on the company’s average monthly tax liability. That number can range significantly from one business to the next. However, the price you pay for an Arizona sales tax bond is not the full bond requirement. Instead, it is calculated as a percentage of the bond total.
Arizona sales tax bond prices range from 1 to 5% for businesses that are in a good financial position. This includes a strong credit score and a clean credit history. Businesses that have fair to poor credit may pay a bond premium closer to 10% of the total bond requirement.
How Do I Get an Arizona Sales Tax Bond?
If you are a business that is required to post an Arizona sales tax bond, you can begin the process by submitting an application online. The surety company will review your application and any required financial documents necessary to determine your bond rate, and then walk you through the process of finalizing your bond.
Expiration Date and Renewal Term for Arizona Sales Tax Bonds
No set expiration date or renewal term exists for Arizona sales tax bonds. This is because the state mandates bonds to be continuous, meaning they remain in force until canceled. The surety company providing an Arizona sales tax bond may require renewal periodically. When this takes place, information about the renewal process and time frame for that renewal is sent from the surety company to the principal of the Arizona sales tax bond.