Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. In this guide, we’ll walk you through how to get a Arizona liquor license.
With access to a broad range of surety markets, our expert agents are ready to assist with all of your Arizona alcohol tax bond needs.
What Are the Different Types of Arizona Liquor Licenses?
Arizona requires licensing of anyone selling, manufacturing, or any other aspect of the alcoholic beverages industry. There are five types of licenses for sellers of alcohol alone—Bar, Beer and Wine Bar, Liquor Store, Beer and Wine Convenience Store, and Restaurant.
What Are the Steps in the Licensing Process?
Arizona maintains a quota system that restricts the number of liquor licenses in a given area based on population. Consequently, most people who want to acquire a license will need to purchase an existing license on the open market, which often requires the help of a liquor license agent or broker. The Department of Liquor Licenses and Control (DLLC) must approve each such sale. Restaurants may apply directly to the Arizona Alcohol and Beverage Control (ABC) for a new license.
Only legal residents of Arizona or their agents who meet the eligibility criteria are allowed to obtain an Arizona liquor license. Once an application has been deemed complete, there are administrative and substantive reviews that can take more than three months.
Liquor License Application Kits for the different types of Arizona liquor licenses are available on the DLLC website. Applicants for certain types of liquor licenses must purchase an Arizona Alcohol bond as a mandatory step in the licensing process. Certain manufacturers (e.g., brewers, distillers, vintners) may also need to obtain a TTB bond from the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau.
Why is an Alcohol Bond Required?
The purpose of an Arizona alcohol bond is to ensure a licensee’s compliance with state liquor laws, including those regarding the payment of taxes. Any violation can result in DLLC (the bond’s “obligee”) filing a claim against the bond to collect unpaid taxes. DLLC can also file claims on behalf of consumers who have experienced a financial loss due to the unlawful actions of the licensee (the bond’s “principal”).
A federal TTB bond serves a similar purpose with regard to the nonpayment of federal excise taxes.
How Are Alcohol License Bond Claims Paid?
Although the terms of a surety bond agreement legally obligate the principal to pay all valid claims, that’s not as straightforward as you might think. In practice, the “surety” (the company that authorized the bond) pays a claim initially and then is reimbursed by the principal for the resulting debt.
How Much Does an Arizona Alcohol Bond Cost?
The annual premium for an Arizona alcohol bond is the product of multiplying the required bond amount (the bond’s “penal sum”) established by the obligee by the premium rate set by the surety.
The surety’s main underwriting concern is the risk of paying claims on behalf of the principal and not being reimbursed. Consequently, the principal’s personal credit score plays a big role in determining what the premium rate will be. A high credit score results in a low premium rate and vice versa. Great credit can be rewarded with a premium rate as low as one percent.
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