What is an Arizona Sales Tax Bond?
Some businesses in Arizona must hold a valid license to operate legally. A component of the licensing process for certain companies involves posting an Arizona sales tax bond. This type of surety bond ensures that the business complies with Arizona state laws regarding payment of sales tax.
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 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.
Arizona Sales Tax Bond Obligee Details
Arizona Revised Statutes 42-1125 dictate that some businesses operating in the state need a license or permit. Part of the licensing requirements include securing an Arizona sales tax bond. This bond protects the state 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
Which Businesses Need an Arizona Sales Tax Bond?
“Arizona sales tax bond” is a blanket term that encompasses several types of bonds 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.
How Do I Get an Arizona Sales Tax Bond?
If your business 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 they will walk you through the process of finalizing your bond.
What Does an Arizona Sales Tax Bond Cost?
Each business 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.
The price you pay for an Arizona sales tax bond is not the full bond requirement. The price you pay is calculated as a percentage of the bond total.
Arizona sales tax bond prices range from one to five percent for businesses that are in a good financial position. This includes a strong credit score and a clean credit history.
Can I Get an Arizona Sales Tax Bond With Bad Credit?
Businesses that have fair to poor credit can still get a sales tax bond in Arizona, but they may pay a bond premium closer to 10 percent of the total requirement.
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.