What is a Missouri Sales Tax Bond?
Businesses licensed to sell tangible property in Missouri are required to hold a sales tax license. Part of the state requirements for this type of business license includes securing a surety bond, known as a Missouri sales tax bond. A Missouri sales tax bond ensures that the state is protected against non-payment of sales tax by licensed businesses.
Similar to other surety bonds, a Missouri sales tax bond is a contract between three parties. The licensed business is known as the principal and is responsible for posting a bond. The obligee is the state of Missouri requiring a bond to be secured. A surety company provides the bond to the principal, and pays claims if sales taxes are not paid in a timely fashion. However, the business is required to repay these claims to the surety.
Does My Business Need a Missouri Sales Tax Bond?
The state of Missouri dictates which businesses are required to secure a Missouri sales tax bond as part of the licensing or permitting process. In general, any business that engages in the sale of tangible goods is likely to need a sales tax bond in order to comply with the law.
Missouri Sales Tax Bond Obligee Details
In Missouri, Revised Statutes, Title X Taxation and Revenue, Chapter 144 dictates the rules surrounding sales and use taxes for businesses operating in the state. Part of the requirements for most merchants or retailers is the need to post a Missouri sales tax bond to ensure these taxes are collected and paid in a timely fashion. The obligee of a Missouri sales tax bond is the State of Missouri, through the Director of Revenue. Contact information for the obligee is as follows:
Missouri Department of Revenue
Taxation Division
Harry S. Truman State Office Building
301 West High Street
Jefferson City, Missouri 65101
Phone: 573-751-3505
What Does a Missouri Sales Tax Bond Cost?
The cost of a Missouri sales tax bond depends on several factors, including the amount of the bond you need and your financial standing. To determine the bond amount, the state calculates three times the monthly sales tax for established companies or estimates this amount for new businesses. Fortunately, the full amount of your bond is not the price you pay.
The surety company that provides your Missouri sales tax bond charges a percentage of the bond, typically ranging from 1 to 5%. Your rate is based on your personal credit score, business financials, and past claims history. Businesses that have a low credit score due to court judgments, tax liens, or other negative marks may pay 10% or more for a Missouri sales tax bond.
How Do I Get a Missouri Sales Tax Bond?
Obtaining a Missouri sales tax bond starts by submitting a brief online application. Once the surety company reviews your business details and financial circumstances, you are provided a quote for your sales tax bond and instructions on how to complete the process.
Renewal Process for Missouri Sales Tax Bonds
Sales tax bond issued for Missouri businesses must be continuous in order to comply with current state laws. This means the bond cannot be canceled unless by the surety. However, there is a renewal process for Missouri sales tax bonds which must be completed in line with the business license or permit’s expiration date. The surety company providing a Missouri sales tax bond sends renewal information and details on how to complete the process prior to the end of the renewal period.
