Liquor License Bond

Starting a business that sells liquor to the public? This tax bond safeguards the tax system by ensuring all levies on liquor transactions are paid to the relevant authorities.
What if a business attempts to evade these taxes or finds itself unable to make the required payments? The Liquor License Bond steps in, covering the appropriate tax amounts to the relevant authority if a claim is made against it.
The Liquor License Bond Mechanism:
A Liquor License Bond functions much like any other surety bond, bringing together three key players: the Principal (that’s you, the business owner), the Obligee (the state or federal agency collecting liquor taxes), and the Surety Company (usually an insurance company that provides the bond).
The twist? Unlike most bonds that guarantee a particular action or performance by the Principal, a Liquor License Bond promises the financial payment of collected taxes on liquor sales.
It’s true that some surety companies may shy away from providing these bonds due to the financial risks involved. However, others account for this heightened risk by pricing Liquor License Bonds accordingly.
When a business fails to collect or remit the appropriate liquor taxes or submits fraudulent records, a claim can be made against the Liquor License Bond. If valid, the surety company covers the claim amount, reimbursing the state agency. It then seeks to recover these funds from the Principal.
Keeping the Bond intact is crucial – a claim could significantly tarnish your business reputation and financial stability. Therefore, the presence of the bond serves as a compelling motivation to duly collect and submit taxes as mandated.