Tobacco Tax Bonds bound those engaged with the tobacco industry in any capacity to pay their taxes as directed. In a way, this bond is intended to ensure that the public gets access to the best products of the highest quality. If the company defaults on paying their taxes, they can be penalized for the same.
Before buying Tobacco Tax Bonds, you must know a few things:
Single or Multiple Bonds
Some states require you to obtain different tax bonds to sell different tobacco products, while others cover all under one bond. Check with your state department to understand their specific requirements better.
Who Needs to Obtain These Bonds?
Companies involved in manufacturing, distributing, importing/exporting, and selling all kinds of tobacco products have to secure these bonds. The state agency is the obligee who requests these bonds from them to ensure timely payment of taxes. If the company fails to pay, the surety company that issued the bond needs to compensate the state agency for the loss.
Value of the Bond
The value of the bond itself is very affordable. The claim filed against it can go higher, though even that is defined while issuing the bond. You can check with your surety company about the exact coverage you can get from a bond.
Keep Production in Check
Tobacco bonds help the government keep the production and consumption of tobacco products in check. It also helps them generate adequate revenue through taxes, which helps keep the chain running.
You must always speak to your Surety Bond company about a bond before obtaining it. Every bond can have a different premium depending upon what coverage you seek from it. Give them a call today for a quick quote and other relevant details.