What Is a Nevada Tax Preparer Bond?
As of 2017, tax preparers in Nevada have to obtain a surety bond before they can operate legally in the state. You have to present it to the licensing body, which is the Nevada Secretary of State.
This Nevada surety bond is required in order to protect the interests of the general public. It safeguards your customers against potential unlawful activities you may engage in while preparing their tax documents. Harmed parties can make a claim against your bond if you don’t abide by your legal obligations.
Your bond works like a three-party contractual agreement. Your tax preparing entity is the principal, which needs the bonding. The Nevada Secretary of State is the obligee which requires it. The third entity is the surety, which is the bond provider.
Questions about Tax Preparer Bonds in Nevada
When do you need to obtain this bond?
The Nevada tax preparer bond is required during your licensing process as a document preparation service provider with the Secretary of State. There are two different bond forms, depending on whether you are getting licensed as an individual or as a business.
By obtaining the surety bond, you showcase your financial strength and ability to cover any damages in case your customers are harmed as a result of your actions. The bond guarantees your compliance with Chapter 240A of the Nevada Revised Statutes. It should be active at all times during your licensing period. The Secretary of State may retain the bond up to three years after you stop your operations.
What is the bond cost?
You need to obtain a $50,000 Nevada tax preparer bond. This is the bond amount that state authorities require from you. Your bond premium, however, is only a fraction of this amount. It is often between 1% and 5% if your finances are stable.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Nevada tax preparer bond||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
There are a number of factors that affect your surety bond cost. The most important ones are your personal credit score and business finances, as well as any cash on hand and assets. When you apply with a surety, it has to examine these criteria carefully, so that it can judge how risky it is to get you bonded. The stronger your profile is, the smaller your bond premium will be.
What if my credit is bad?
Applicants with low credit scores, tax liens, bankruptcies, or civil judgements can find it difficult to obtain a surety bond. That’s why Lance Surety Bonds operates its Bad Credit Surety Bonds program, which provides a bonding option if you struggle with problematic finances.
The bad credit bond rates you can expect are between 5% to 10%. The higher bond price is there to compensate for the increased risk that the surety takes. Our close collaboration with numerous trusted A-rated, T-listed surety companies allows us to provide you with a top bond option, even if you have bad credit.
How do I apply for my Nevada tax preparer bond?
How exactly does bonding work? You can learn the most important details in our How to Get Bonded page.
We are here to help. You can call us at (877) 514-5146 for further questions.
What if I get a claim on the bond?
Unlike insurance, your tax preparer bond does not protect you, but your clients. If they are harmed due to your actions, they can seek a reimbursement via a claim against your bond. Some typical situations that can lead to a claim include unethical handling of personal information, fraud, dishonesty, or negligence on your side.
If the claim is proven, you are liable to compensate the harmed parties. The maximum penal sum that you may have to cover is $50,000, which is the bond amount you have posted. At first, your surety may take on the costs in order to ensure a quick payment to the claimants. However, you need to repay it fully soon after. This means claims are to be avoided, as they present a serious financial threat.