What Is a Cigarette Tax Bond?
Cigarette tax bonds are a type of sales tax bond, and fall in the category of financial guarantee bonds. Local governments require them of sellers of tobacco products and cigarettes, in order to license them as such.
Like all other surety bonds, cigarette tax bonds work like a three-party contract. The principal is your business. The obligee is the entity that requires you to get bonded. Finally, the surety is the bond underwriter that guarantees the legal compliance of your business.
The purpose of tobacco tax bonds is to protect governmental bodies, and the general public, from non-payment of sales tax on tobacco and cigarette sales. In case a merchant does not fulfill their sales tax obligations, they can face a claim on their bond. For proven claims, the surety repays relevant authorities up to the penal sum of the bond. The seller then needs to fully cover these costs.
Some states require tobacco and cigarette sellers to obtain only one bond, while in others, you need to obtain separate bonds for selling tobacco products and for selling cigarettes.
Ready to start your bonding process? You can apply online today for your free cigarette tax bond. Need to locate your exact bond? You can use the table at the end of this page.
Questions about Cigarette Tax Bonds
Who needs to obtain a cigarette tax bond?
Distributors of tobacco products and cigarettes, as well as cigarette manufacturers, wholesalers and importers across the country, are often required to post a cigarette tax bond and/or a tobacco tax bond. The bond guarantees their legal compliance and ensures they will pay due taxes on tobacco and cigarette sales.
Not all states require such bonds, so check the exact requirements of your local authority before moving forward with getting bonded.
Are there different types of cigarette tax bonds?
There is no uniform rule for cigarette and tobacco tax bonds in the U.S. That’s why local authorities require different bonds in different amounts, which are often named in different ways.
The usual differentiation among these bonds is between cigarette tax bonds and tobacco tax bonds. In some states, you need a cigarette tax bond to sell cigarettes, but if you want to sell other tobacco products, you have to obtain a tobacco tax bond as well.
For example, in California you need to obtain a Cigarette and Tobacco Products Tax Bond if you want to sell such products. If you want to manufacture or import, you have to get a Tobacco Manufacturer and Importer Bond. If you’re based in North Carolina, you’ll need a Tax Bond for Cigarettes and Tax Bond for Tobacco Products Other Than Cigarettes to sell both tobacco products and cigarettes.
How much does a cigarette tax bond cost?
Your cigarette tax bond amount depends on your specific local requirements. There is no universal bond amount for all states, and most states don’t have a fixed amount either. The tobacco or cigarette tax bond amount is calculated is by making an estimation of your yearly sales tax liability.
On the basis of this amount, you will be able to determine your actual surety bond cost. Luckily, it is only a fraction of the required bond amount, which is called the bond premium.
The premium that you need to pay to get bonded is set when the surety examines your personal and business financials. It considers factors such as your personal credit score, business stats and experience in the industry. With overall solid finances, you are likely to pay a lower percentage.
If you have strong personal credit of 650 or better, you may qualify for a standard market rate, which means you can expect to pay 1%-3% of the bond amount. Whatever your credit score is, Lance Surety Bonds is here to help you get bonded.
Can I get a cigarette tax bond with bad credit?
Usually with financial guarantee bonds such as cigarette tax bonds, a collateral needs to be posted to mitigate the higher risk of the bond. In this case, however, this is not necessary. Because of this, you are able to obtain your tobacco tax bond even with bad credit.
We operate our Bad Credit Bonds Program in order to help out in such cases. You can expect bond premiums in the range of 5%-15%. The higher prices are needed to compensate for the increased risk. Yet, this bonding option is a great opportunity to get the cigarette tax bond you need and stay in business.
Lance Surety Bonds cooperates with multiple renowned A-rated, T-listed** surety bond companies. Because of our excellent connections with them, we can shop around for the best bonding option for your specific circumstances. You’re guaranteed to get the best bond price, whatever your credit situation. |
How do I get my cigarette tax bond?
You can get your cigarette tax bond in no time by applying online for a free, no-obligations quote. For your exact bond price, you’ll have to submit your complete application, and we’ll get back to you as soon as possible.
We are here to answer all your questions about your tobacco bond or the bonding process. Just reach us today at (877) 514-5146. Our experts are here to help.
If you need more information about the bonding process, our How to Get Bonded page has everything you need to know.
Find Your Surety Bond
ArkansasCoin Operated Cigaretter Machine Operators BondTobacco Control Board
CaliforniaCigarette and Tobacco Products Tax BondState of California Dept of Equalization
CaliforniaTobacco Manufacturer and Importer BondCA Office of the Attonrey General
Federal GovernmentTobaccoAlchohol and Tobacco Tax and Trade Bureau
FloridaDivision of Alcoholic Beverage and Tobacco SuretyState of Florida
GeorgiaCigar, Cigarette, Loss & Smokeless Tobacco ManuDepartment of Revenue, Alcohol and Tobacco Divisio
IllinoisTobacco Products Tax BondDepartment of Revenue
IllinoisFinancial Responsibility BondDept of Revenue
IndianaOther Tobacco Products Distributor's LicenseIndiana Department of Revenue
KansasTobacco Products Distributor's Tax BondKansas Department of Revenue
LouisianaTobacco Tax BondDepartment of Revenue
MarylandOther Tobacco Products (OTP)Comptroller of Maryland
New JerseyTobacco Performance BondDivision of Taxation
North CarolinaTax Bond for Tobacco Products Other Than CigaretteNorth Carolina Dept. of Revenue
North CarolinaTax Bond for CigarettesNORTH CAROLINA DEPT OF REV
OklahomaCigarette Stamp & Unstamped Tobacco Products TaxOklahoma Tax Commission
OklahomaNon-Participating Tobacco ManufacturerOffice of Attorney General, Tobacco Enforcement
South CarolinaSTATE TOBACCO TAXSouth Carolina Dept of Revenue Misc Tax Section
TennesseeTOBACCO TAX STAMP AFFIXING AGENTTennessee Department of Revenue
UtahTobacco Tax BondUtah State Tax Commission
WashingtonWholesale Cigarette Dealer BondSpecial Programs Department