Beginning Jan. 1, 2020, any new or sales-tax delinquent beer, wine and tobacco retailer must purchase a one-time surety bond, under legislation Gov. Kay Ivey signed into law April 4, 2018.
Act No. 2018-5o8 by Rep. Ron Johnson, R-Sylacauga, and Sen. Clyde Chambliss, R-Prattville, requires a $25,000 surety bond in the first two years for beer, wine and tobacco retailers. The same two-year bond would be required for those types of businesses that fail to remit sales taxes, no matter how long they have been in operation.
Johnson said the surety bond required is the same bond Alabama automobile dealers already must have.
The Alabama Revenue Department requested the legislation in response to what the department says is an increase in retailers who sell beer, wine and tobacco products, who are collecting, but not remitting sales taxes. Chambliss said the department sends out an average of 1,500 delinquent notices monthly for failure to remit sales taxes in a timely manner.
“New businesses are starting and turning over ownership intentionally” to avoid remitting taxes, Chambliss said.
The surety bond requirement begins Jan. 1, 2020. Johnson and Chambliss said the bond would cost new or sales-tax delinquent businesses between $150 and $250. After two years of compliance, a business will be exempt from the surety bond requirement, according to the legislation.
A business is considered delinquent or noncompliant when a final assessment has been entered, appeals have been exhausted and the licensee has not satisfied the tax liability within 30 days from the date when the final assessment was no longer subject to appeal, under the new law.
In 2017, the Alabama Legislature passed a law requiring tobacco, beer and wine wholesalers and distributors to report sales on which no taxes are collected. The Wholesale to Retail Accountability Program, or WRAP, also targets businesses that fail to remit sales taxes.
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