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.
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.