Nevada Sales Tax Bonds
Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your Nevada sales tax bond needs.
What Are They?
Nevada imposes a sales and use tax on retail sales of tangible personal property. Personal property is defined as, “personal property which may be seen, weighed, measured, felt or touched, or which is in any other manner perceptible to the senses.”
A sales tax bond, officially referred to as a Title 32 performance bond, is a retailer’s pledge to comply with Title 32 of the Nevada Revised Statutes, which details the requirements for collecting, reporting, and remitting sales taxes to the Nevada Department of Taxation. The bond protects the Department against financial loss from overdue taxes, interest, and penalties owed by retailers.
Who Needs Them?
To operate a retail business selling tangible personal property in Nevada, you must first register the business with the Department of Taxation and apply for a business permit. But in most cases, you must first purchase a Nevada sales tax bond.
The required bond amount (also known as the bond’s penal sum) is calculated as three times your monthly sales and use tax liability. If that amount comes to less than $1,000, you are exempt from the bonding requirement. For new retailers, the required bond amount will be based on an estimate rather than the previous year’s sales.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
There are three parties to a Nevada sales tax surety bond agreement, which is a legally binding contract:
- The Department of Taxation, the party requiring and protected by the bond, is the “obligee.”
- The retailer purchasing the bond is the “principal.”
- The surety company that underwrites and approves the bond is the “surety.”
If the principal fails to make required payments to the Department of Taxation, the Department can collect the missing taxes, interest, and/or penalties by filing a claim against the principal’s sales tax bond.
The terms of the sales tax surety bond agreement make the principal solely responsible for paying claims against the bond. But the normal practice is for the surety to attempt to negotiate an amicable settlement, and if that is unsuccessful, pay the claim on behalf of the principal.
In making that payment, the surety is extending credit to the principal and creating a debt that must be repaid by the principal. This ensures prompt payment of the claim and relieves the principal of the burden of coming up with the entire claim amount immediately. In most cases, the surety will allow the principal to repay the debt in installments over a certain period of time.
What Do They Cost?
The annual premium for a Nevada sales tax bond is a small percentage of the bond’s penal sum. What that percentage, the premium rate will be, is based on the surety’s assessment of the risk involved in extending credit to the principal. The key considerations are the principal’s personal credit score and business financial strength.
A principal deemed creditworthy typically pays a premium rate between 1% and 3%. Some sureties offer bad credit programs that allow credit-challenged principals to get bonded, but at a higher premium rate.
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Our surety bond professionals will get you the Nevada sales tax bond you need at a competitive rate.