California sales tax bond requirements
Sellers in the state of California are required to post a sales tax bond by the California State Board of Equalization (SBE). The main purpose of this surety bond is to guarantee that businesses pay the right amount of sales tax and do it on time.
Like other surety bonds, the California sales tax bonds acts as a three-party agreement, between a principal (the business), an obligee (SBE), and a surety (a bonding company). If the principal fails to meet their contractual obligations, the obligee can file a claim and seek reimbursement for the losses incurred. The surety and the principal are obliged to make good on the claim.
You can begin your online application now, or explore the sections below for some useful tips and information on sales tax bonds in California.
Frequently Asked Questions
How much does a California sales tax bond cost?
It is easy to calculate your bonding costs. First, you need to know the total value of the bond you need to post. The total value is the maximum protection the surety bond offers. Each city or county can decide on the sales tax bond amount they want to impose. The amounts can vary between $2,500 and $50,000, and is determined based on the amount of sales tax a given business is expected to pay. The more it is, the higher the total bond value.
Business owners pay only a small fraction of the total bond value, known as the bond premium. The premium normally varies from 1% to 5% per year, for applicants with good credit scores and no major issues on their credit reports.
Surety bond companies, however, can often consider other factors and request additional information, such as personal and business financial statements. Be sure to read all about bonding costs on our What Does a Surety Bond Cost? Page.
Can I get a California sales tax bond with bad credit?
Surety bond companies consider sales tax bonds to be high-risk, which means the underwriting process can be a bit more difficult. However, our bad credit surety bonds program can ensure you get the bond you need, regardless of your credit.
Premiums for bad credit applicants are in the range of 15%-17%. Choose Lance Surety Bonds and our agents will help you build a strong application that will still be accepted by bonding companies.
How do I apply for a California sales tax bond?
We offer a fast and secure online application. Simply fill it out and we will contact you as quickly as possible. You’ll get a free bond quote and instructions on how to finalize your application.
Our turnaround time is one of the fastest in the industry. Under normal circumstances we should be able to issue your bond in as little as 1-2 business days. For any questions, feel free to call us at (877) 514-5146.
What happens in case of a claim?
As already mentioned, California sales tax bonds serve as protection of the state in case you fail to declare your sales and pay taxes on time. In such a case, you may face a claim, which can be very costly to your business. This is why we advise avoiding claims at all costs. Stay up-to-date with all legislative amendments and sales tax amount changes, to make sure you’re in compliance.
If a claim is filed against you, you should notify the surety as quickly as possible. They will assess the charges, and they may provide legal assistance if they believe you have a strong case. In certain instances, an out-of-court settlement might be the more desirable outcome. In the worst case scenario, you will be mandated by a court decision to reimburse the claimant up to a sum not exceeding the total bond value.