If you want to sell cigarettes or other tobacco products in the state of California, you need to purchase a California Cigarette and Tobacco Products Tax Bond.
What is a California Tax Bond?
A California Tax Bond guarantees your customers, suppliers, and government that you will follow all of the rules and regulations set about by the California Cigarette and Tobacco Products Law while conducting your business and that you will pay your taxes.
How the bond works is this: The bond protects the State of California. If you do not follow the law, or if you fail to pay your taxes, the State of California can make a claim against your bond.
When this happens, the surety company who issued your bond will start an investigation. If they determine the claim to be valid, they will give you the opportunity to satisfy the claim. If you fail to do so, the surety company will compensate the State of California. The surety company will then come to you for repayment.
You can learn more about the bond claim process.
How Much Will My Bond Cost?
The amount of your California Tax Bond will be determined by the State of California Board of Equalization.
The amount you pay, however, will be a percentage of that amount, usually between 1-15% depending on your credit score.
If you have a good credit score, you might only need to pay 1-3% of the bond amount. If you have bad credit, you will have to pay a higher rate.
What Do I Do With My Bond When I Get It?
Your California Tax Bond will need to be mailed to:
The State of California Board of Equalization
P.O. Box 942879
Sacramento, CA 94279
The bond is just one part of the licensing process to get a California Distributor and Wholesale License. You can learn more about how to get a California Distributor and Wholesale License.
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