What Is an Alabama Sales Tax Bond?
An Alabama sales tax bond guarantees payment of all taxes, interest and penalties due to the state. The Alabama Department of Revenue, Sales and Use Tax Division requires a one-time sales tax bond for any business that is required to pay a privilege tax under Section 40-23-2 of state code.
This bond guarantees payment for all taxes on gross receipts. If a business fails to meet their tax obligations, they will need to file an additional non-compliance sales tax bond. The coverage must equal the greater of $25,000 or the sum of the past three months sales tax liability.
How Much Do Alabama Sales Tax Bonds Cost?
$25,000 Alabama sales tax bond premiums start at $875 for the two-year term, or $437.50 per year. Exact pricing varies per applicant based on credit score. Apply now for a free, personalized quote.
How Does an Alabama Sales Tax Bond Work?
An Alabama sales tax bond joins three parties in a legally-binding contract:
- Principal: The new or non-compliant sales tax licensee purchasing the bond
- Obligee: The Alabama Department of Revenue, Sales and Tax Use Division requiring the bond from the principal
- Surety: The company issuing the bond and backing the principal’s obligation
If the bonded principal fails to pay their sales tax liabilities to the state, the bond acts as a line of credit to pay the obligee. However, the principal must ultimately reimburse the surety for any claims.
Who Needs a Sales Tax Bond in Alabama?
If any of the following business types are applying for an initial license or renewing an expired or cancelled license, they must file and maintain a $25,000 bond for two years:
- Alcohol and tobacco product retailers applying for a first-time license
- Higher education institutes
- Retailers of any type of tangible personal property
- Amusement and entertainment operators (bowling alleys, movie theatres, sports venues, etc.)
- Trailer and mobile home dealers
- Coin-operated vending machine operators
Additional Types of Tax Bonds in Alabama
If you are a tobacco products wholesaler or jobber, visit our Alabama tobacco tax bond page instead. Or, if you need to file a $10,000 bond with the ABC Board, visit our Alabama alcohol tax bond guide.
The state also requires a separate Alabama motor fuel tax bond for sellers of fuel.
How Do I Get a Sales Tax Bond in Alabama?
SuretyBonds.com provides the fastest and easiest way to get your Alabama sales tax bond. Provide the following information when you apply online:
- Reason for needing the bond
- Line of business
- SSN or tax ID
- County where business is located
We’ll provide a free quote in one business day or less. Then, you can purchase anytime through our secure, online checkout.
How Fast Can I Get My Sales Tax Bond?
Most Alabama alcohol or tobacco product retailer sales tax bond orders placed before 4 PM CST Mon–Fri are processed same-day. You’ll receive your official bond form via email.
Do I Need to Renew My Bond?
No, Alabama sales tax bonds are one-time purchases. However, if you violate your license terms or let your business license expire, you may need to purchase a new non-compliance sales tax bond.
