Texas Alcoholic Beverage Commission (TABC) stakeholders recently met to discuss the potential elimination of liquor and beer tax surety bond requirements.
The current law requires distributors, wholesalers, manufacturers and wineries to file a liquor and/or beer tax bond to protect the state against the anticipated tax liability. To date, however, no claims have ever been made on the bonds, spurring the TABC to consider eliminating the requirements.
According to the Surety and Fidelity Association of America, “Even if there were no claims, without the bond, TABC would lose the benefit of the surety’s prequalification and licenses and permits conceivably could be provided to entities that lack the financial capacity to meet their tax obligations.”
According to the TABC website, the current liquor and beer tax surety bond requirements are as follows.
“The amount is based on an estimate of sales for a six-week period and a minimum of $1,000 for liquor tax and $500 for beer tax. The amount of the bond can increase if it is determined the state is not fully protected for the tax liability. A new liquor tax and/or beer tax bond will be required each time the license or permit holder renews. At the end of your permit year, you can request an audit to determine if all taxes have been paid for that year. If so, you can request release of your liquor tax/beer tax bond. Once you have been in business for 36 months and you have filed all reports and paid all taxes and fees required by the Texas Alcoholic Beverage Commission, you can request exemption from the tax bond requirement by submitting the Application for Bond Exemption Form C-26.”
Although the TABC has not yet experienced losses, stakeholders must consider how — without the financial guarantees provided by Texas surety bonds — the government would step in to collect unpaid taxes from TABC licensee and permittees that might fail to pay taxes in the future.
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