The North Carolina legislature passed Senate Bill 729 in May, amending several tax revenue laws and setting more detailed surety bond guidelines. The new laws took effect with the bill’s May 11, 2016 passage. All of these revisions affect tax bonds, which ensure that individuals pay the taxes required of their professions.
A cigarette distributor in North Carolina is defined as a cigarette manufacturer, or anyone who purchases non-tax-paid cigarettes from the manufacturer to store, sell or otherwise dispose of them. Distributors are currently required to hold a surety bond in the amount of their anticipated tax liability. SB 729 mandates that bond amounts will now be set based on two times the distributor’s average expected monthly tax liability. The distributor’s bond must not be less than $2,000 or more than $2,000,000. The Secretary of Revenue will periodically review the bond amount and adjust it if needed.
The same change will apply to wholesale and retail dealers in the state. Wholesale dealers manufacture tobacco products other than cigarettes, or acquire those products for sale to another dealer. Retail dealers sell tobacco products to consumers. Their tax bond amount will be calculated the same as the cigarette distributors’ bond.
Another section of SB 729 mandates that producers, those who take an energy mineral (natural gas, oil) from the soil or water, in North Carolina need to post a surety bond after obtaining a permit. Their bond amount is already set at twice the average expected monthly tax liability; the bill adds the $2,000 minimum and $2,000,000 maximum bond amount shared by cigarette dealers and distributors. Previously, only producers who had failed to tax returns were required to post a tax bond.
Cigarette distributors are licensed by the Department of Revenue, while dealers are not required to be licensed. Contact the Department with questions about distributing or dealing tobacco in North Carolina. Miners in the state are regulated by the Department of Environmental Quality, and mining requires various permits.