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Liquor Bonds/Alcohol Bonds

What is an Alcohol Surety Bond?

liquor bond

An alcohol surety bond, also known as a liquor license bond or alcohol tax bond, is a type of compliance license bond. These liquor bonds provide a guarantee that the licensee will abide by all applicable statutes, laws and regulations that apply to their liquor license.

Different states feature various types of alcohol bonds. Some of these are: Alcohol manufacturing, warehousing, wholesaling, and transporting bonds as well as liquor license bonds for retailers that serve alcoholic beverages.

Each of these liquor bonds involves three parties.

  • The principal is the business purchasing the alcohol bond to guarantee that they will pay their liquor taxes.
  • The obligee is the beneficiary party who requires the bond. In the case of liquor tax bonds, it is usually a government entity.
  • The surety underwrites and issues the bond.

When Do I Need an Alcohol Surety Bond?

Certain businesses, such as wineries, breweries, liquor stores and restaurants need an alcohol surety bond to obtain a liquor license and they must maintain the liquor bond to operate. Liquor surety bonds are often paid on an annual basis, though the renewal requirements vary from state to state.

Why Do I Need an Alcohol Surety Bond?

You need a liquor bond to guarantee that you will pay all of the alcohol taxes that apply to your business.

Benefits for the Obligees:

A liquor bond ensures that a business selling alcohol pays all of their liquor taxes. In the event that the principal does not pay their alcohol taxes, or falsifies sale records, then the obligee can make a claim on the alcohol tax bond to collect the unpaid taxes. Then, the principal would be obligated to reimburse the surety for the amount paid out in the claim against the bond.

How Much Are Alcohol Surety Bonds Written for?

The amount a liquor bond is written for varies from state to state, and by the type of alcohol tax bond that is required. Usually, the amount corresponds to the penalty for a licensee that fails to follow applicable laws and regulations.

How Much Do Alcohol Surety Bonds Cost?

Alcohol and liquor bond amounts vary by state as well as by the type of license the alcohol bond is required for.

The price of an alcohol bond is generally determined as a percentage of the total bond amount, and the premiums are usually a little higher than those of other types of license bonds because liquor tax bonds come with strong financial guarantees.

For those with good credit, premium rates typically range between 1% and 5% of the total bond amount. Clients with bad credit can see rates as high as 15%.

What Do You Need to Secure an Alcohol Surety Bond?

There is usually very minimal paperwork required to acquire a liquor bond, so processing is often quick and easy. Good personal credit is a key factor in securing a liquor license bond, and getting a good premium rate, though there are programs available for clients with bad credit.

Get Your Alcohol Surety Bond Fast

At Viking, you can usually get a liquor license bond quote within 24 hours, or even the same day that you submit an application. Contact us and we can help you expedite your bonding process by guiding you through the application process, and providing timely underwriting.

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