Illinois Alcohol, Cigarette and Tobacco Tax Financial Responsibility Bond Guide
In Illinois, all cigarette, tobacco, and alcohol distributors must register with the Department of Revenue and file a financial responsibility surety bond. Keep reading to learn more about how the bonding process works.
Bond Overview
- Purpose: To ensure tobacco and alcohol product distributors pay state excise taxes
- Who Needs It: Cigarette, alcohol, and tobacco products distributors, liquor-serving airlines, cigarette machine operators, and wine shippers in Illinois
- Regulating Body: The Illinois Department of Revenue
- Required Amount: Varies based on license type and average monthly tax liability
- Premium Rates: $100 for up to $5k coverage, start at 1.2% for bonds over $5k
If you are a motor fuel supplier, please visit our Illinois IFTA Financial Responsibility Bond Guide instead.
What Is an Illinois Liquor or Tobacco Tax Financial Responsibility Bond?
In Illinois, the state-required financial responsibility bond guarantees distributors of tobacco and/or liquor products meet their state tax obligations and properly report tax and revenue information.
This surety bond serves as a form of financial protection for the Illinois Department of Revenue (IDOR) if a company fails to meet these requirements.
Who Needs a Financial Responsibility Bond?
Illinois Compiled Statute 35 ILCS 505 requires companies to file a surety bond (Form REG-4-A) before they can be licensed as the following business types:
- Cigarette distributor
- Cigarette machine operator
- Direct wine shipper
- Liquor airline
- Liquor distributor
- Motor fuel distributor
- Motor fuel supplier
- Motor fuel receiver
- Tobacco products distributor
Note: You don't need to file a bond for a new tobacco distributor’s license or if you had less than $50,000 of tax liability in the prior year.
How Much Does an Illinois Financial Responsibility Bond Cost?
The Illinois liquor, cigarette or tobacco tax bond costs $100 annually for bond amounts less than $5,000. If your required financial responsibility amount is more than $5,000, your personal premium will be provided after a quick application review.
Rates start at just 1.2% of the total bond amount. For example, a $10,000 cigarette tax financial responsibility bond would cost $120 for an applicant with excellent credit. Apply now to get your free quote.
How Do I Get My Bond?
You can purchase your Illinois financial responsibility bond online 24/7. You'll need to provide the following information for Department of Revenue filing approval:
- Tax bond type
- Company name
- Address
- Line of business
Once your payment is processed, we'll email your official Illinois surety bond to you instantly. Sign and submit the bond documentation to the IDOR at the address below:
Central Registration Division 3-222
Illinois Department of Revenue
P.O. Box 19039
Springfield, IL 62794-9039
How Fast Can I Get My Bond?
SuretyBonds.com offers instant Illinois financial responsibility tax bond delivery 24/7. Purchase now to receive your official liquor, cigarette or tobacco tax surety bond for up to $5,000 delivered in minutes by email.
Bonds over $5,000 in coverage require a quick underwriting review to determine pricing. Apply now to get a same-day quote. We can typically process these bonds same-day.
How Does an Illinois Liquor or Tobacco Financial Responsibility Tax Bond Work?
By filing this bond, you have an obligation to pay the appropriate taxes to the Illinois Department of Revenue based on sales generated by tax generating revenue. A financial responsibility tax bond creates a contract between three parties:
- Principal: The company or distributor purchasing and filing the bond
- Obligee: The IDOR requiring the bond for financial security
- Surety: The company issuing and backing the bond for the principal
If you, as the principal, fail to pay or calculate your owed taxes appropriately, the surety will pay valid claims to the DOR up to your full bond amount. The principal is ultimately responsible for reimbursing any costs incurred to the surety.
Who Regulates Tax and IFTA Payments in Illinois?
The Illinois Department of Revenue enforces tax collections in the state, including this tax bond requirement. You can contact the DOR with bond questions by calling 1 (217) 558-7425 or by emailing [email protected].
Note: You will not be issued a certificate of registration to do business in Illinois until the IDOR receives your bond.
What Bond Amount Do I Need?
Your exact bond amount will vary based on your license type and monthly tax liability as follows:
- Tobacco products distributors must file a bond equal to 3x their average monthly tobacco tax liability or $50,000, whichever is less.
- Cigarette distributors, under the Cigarette Tax Act, need a $2,500 bond for each business location.
- Alcohol-related tax bond amounts must be 2x the average tax liability, with a $1,000 minimum and $100,000 maximum.
If you need help determining your tax bond amount, contact the DOR before purchasing your bond.
How Do I Update My Financial Responsibility Tax Bond?
If the Illinois Department of Revenue requires your tax bond to be updated for any reason, contact your surety company. If you purchased your bond from SuretyBonds.com, email [email protected] to explain the needed change. The most common changes requested are updating your name or address to match your business license or other tax filing paperwork.
How Do I Renew My Alcohol, Cigarette or Tobacco Tax Bond?
You must renew your Illinois financial responsibility surety bond before its current term expires. Once you pay your SuretyBonds.com renewal invoice, instructions will be provided to you to keep your bond active to ensure your tax payments remain current.
The surety company can cancel the bond by providing 90-day's official written notice to IDOR.
