What Is a Missouri Sales Tax Bond?
Businesses in Missouri that sell tangible property in the state need to get a Missouri sales tax license. A major requirement for getting licensed is to post a surety bond.
Missouri sales tax bonds protect the state from non-payment of taxes, fees, interests and other finances by retailers. They guarantee that all payments are made in the required time limits and in the full amount needed, as per Section 144.087 of the Revised Statutes of Missouri.
Your Missouri sales tax bond functions just like other surety bonds. It’s a contract between three entities. Your retail company is the principal that needs to get bonded. The state authority, which in this case is the Missouri Department of Revenue, is the obligee. The surety is the third party that underwrites the bond.
Questions about Sales Tax Bonds in Missouri
Who needs to obtain a Missouri sales tax bond?
Any Missouri business that sells tangible personal property constituting sales tax nexus needs to get licensed. Accordingly, it must also post a sales tax bond.
The typical reasons for having a so-called ‘significant presence’ in the state include operating a physical office, running a warehouse, owning property, or having employees or contractors in the state for more than two days per year.
The licensing is done via an application with the Missouri Department of Revenue, which should be accompanied by the appropriate sales tax bond.
How much does a Missouri sales tax bond cost?
Your sales tax bond price will depend on the bond amount that you are required to post.
The bond amount equals three times your monthly sales and use tax. If you are just starting your company, an estimation is made to decide this amount. If you have already been in operation in the last 12 months, the bond amount is based on your tax liability for this period. You can use the Missouri Department of Revenue bond calculator to estimate your bond amount.
On the basis of this bond amount, your bond premium is calculated as a fraction of it. For standard bonding market applicants, the typical bonding rates are between 1% and 5%. Thus for a $50,000 bond, you can expect to pay a premium of $500 to $2,500 if you have good credit.
When you apply for your sales tax bond, your surety will take a close look at your personal and business finances. It will consider your personal credit score, as well as your business finances, professional experience and assets. If your financial situation is stable, you can expect to pay a lower bond premium.
For a full overview of how your Missouri sales tax bond price is set, our surety bond cost page is an excellent resource.
Can I get a Missouri sales tax bond with bad credit?
Lance Surety Bonds experts know that getting bonded with problematic finances can be tough. Our Bad Credit Surety Bonds program is here to help business owners with low credit scores, tax liens, bankruptcies, or civil judgements to get the sales tax bond they need.
Applicants with poor credit can expect bonding premiums between 5% and 20%. While the cost is higher, you’re guaranteed a top bonding rate with us for your situation, and the same top-quality bonding options. We work with numerous A-rated, T-listed surety companies. This allows us to shop around for the best bond for you.
How do I get my Missouri sales tax bond?
You can apply online today for a free Missouri sales tax bond quote. Once you have completed the application and added all necessary paperwork, we’ll make sure to deliver your exact bond price in no time.
For more information on the bonding process, you can consult our How to Get Bonded page.
We’re always here to help. Just call us at (877) 514-5146 and our bonding experts can assist you with your bonding application, or any other questions you have.
How are bond claims handled for sales tax bonds?
Missouri sales tax bonds are not insurance for your company, but instead are a way to ensure that you cover all your due taxes and fees to state and local authorities.
In case you fail to pay these in full and in time, you could face a claim on your bond. The maximum penal sum that can be paid to the claimant is the bond amount. At first, your surety will cover these costs, but you need to repay it completely afterwards.
Claims are a serious financial burden, and can make it difficult to get bonded in the future. Avoiding them is always the recommended course of action.