At the state level, alcohol bonds typically are required for businesses involved in any aspect the industry: manufacturing, transporting, storing, distribution, or selling alcoholic beverages. Local jurisdictions typically require only sellers of alcohol to purchase an alcohol bond.
Alcohol Bonds for Licensed Businesses
Alcohol retailers, wholesalers, and distributors need an alcohol bond when tax or permit rules require financial assurance. Surety Bonds Agent supports clients in 50 states with clear steps and quick service. Apply today for an alcohol bond quote.
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What Are Alcohol Bonds?
Alcohol bonds are known by different names in different states—alcoholic beverage bonds, liquor bonds, liquor license bonds, and alcohol tax bonds, to name a few. They are a form of license and permit bond, meaning that they are mandated by a state or local government as a prerequisite for obtaining a liquor license or business permit.
While the terms and conditions of alcohol bonds vary by state, most of them are designed primarily to ensure the timely payment of sales taxes on alcoholic beverage sales and penalties owed for regulatory infractions, such as selling alcohol to minors or making after-hours sales.
Who Needs Them?
How Do They Work?
There are three parties involved in an alcohol surety bond agreement, which is a legally binding contract:
- The state or local authority requiring the bond is known as the “obligee,”
- The business owner required to purchase the alcohol bond is called the “principal,” and
- The company that underwrites and issues the bond is referred to as the “surety.”
The obligee can file a claim against an alcohol bond when the principal has failed to remit sales taxes as required or has not paid penalties or fees incurred in the course of doing business. If the claim is found to be valid, the surety will either negotiate a settlement with the obligee or initiate payment of the claim. Thus, an alcohol bond provides financial protection for the taxing authority and, by extension, for the tax-paying public.
What Happens if a Claim is Filed?
In selling an alcohol bond, the surety establishes a line of credit for the principal. If claims are incurred, they will be paid by the surety from that line of credit on behalf of the principal. The principal is not expected to pay the claim immediately out of pocket. Rather, the advance payment by the surety creates a debt owed by the principal to the surety.
The terms of the surety bond agreement legally obligate the principal to repay the surety, as the surety is indemnified against any responsibility for paying claims. Typically, the principal is allowed to repay the surety in installments over a given period of time.
costs
What Do They Cost?
Alcohol bonds are sold for an annual premium that is based on two variables: the required bond amount (also known as the bond’s penal sum) and the premium rate. The obligee establishes the penal sum based on the principal’s sales revenues, and the surety sets the premium rate based largely on the principal’s personal credit score.
The surety’s main concern is being repaid for the credit extended in making claims payments on behalf of the principal, so the principal’s creditworthiness is the primary consideration when determining the premium rate. With a good credit score, the principal will pay a premium as low as 1% of the bond’s penal sum. While someone with poor credit may still be able to get bonded, the premium rate may be higher.
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We proudly serve all 50 states, offering a full range of surety bonds. To buy surety bonds online:
- Choose your state
- Choose the bond type you need
- Apply online to request a free quote
There’s no obligation, and we can often help you get bonded in 24 hours or less.
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How Do Alcohol Bonds Work?
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Choose Your Bond Type
Select the bond you need — commercial, contract, or any specialized bond. We help you find exactly what is required in your state.
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Submit a Quick Application
Complete a short online form. It only takes a few minutes, with no extra paperwork or long verification steps.
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Get Approved & Receive Your Bond
Get fast approval and receive your bond instantly by email. Your document is ready to use right away.
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We work to get you bonded as quickly as possible, often in 24 hours or less.
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