Tax Surety Bond to be Required for S.C. Cigarette Distributors
The newly adopted regulation will come into effect on Jan. 1, 2019, and will require cigarette distributors to post a tax surety bond to the department.
This type of tax surety bond is required to provide an extra layer of protection for the State of South Carolina.
If a cigarette distributor is found to be in breach of the conditions of S.C. Regulation 117-1600 and the rules of the SCDOR, a claim may be filed against the bond.
The surety company may extend compensation to claimants after a full investigation. The claim paid by the surety could be up to the full bond amount. In turn, the principal listed on the bond must then repay the surety for its coverage of the claim.
The bond amount should not be confused with the cost of getting bonded. The bond amount, or penal sum, is the full amount of the financial guarantee provided by the surety bond company that issues and backs the bond. For this bond, it’s a minimum of $2,000.
To get a tax surety bond, however, you don’t have to pay the full amount but rather just a fraction of it.
Bond cost is determined by the credit score of applicants, as well as by a number of other financial factors. The higher an applicant’s credit score, the lower the rate that the surety will offer.
Conversely, if you have a low credit score, sureties will offer you a higher cost on your bond because of the greater risk they assume in bonding applicants with lower scores.