Georgia Tobacco Distributors Tax Stamp Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Georgia Tobacco Distributors Tax Stamp bond.
At a Glance:
- Lowest Cost: $100 per year or $10 a month
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: All licensed tobacco distributors operating in Georgia that have been permitted to purchase tax stamps on account
- Purpose: To ensure that the Georgia Department of Revenue will receive compensation for financial harm if the licensee fails to pay all required stamp taxes
- Who Regulates Tobacco Distributors in Georgia: The Georgia Department of Revenue
Background
Code of Georgia Annotated 48-11-4 requires tobacco wholesalers and distributors operating in the state to obtain a license from the Department of Revenue. The Georgia Legislature enacted the licensing requirement to ensure that tobacco wholesalers and distributors do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, tobacco wholesalers and distributors must purchase and maintain a surety bond to be eligible for licensure. An additional surety bond is required for tobacco distributors who have been permitted to purchase tax stamps by the Department of Revenue.
What Is the Purpose of the Georgia Tobacco Distributors Tax Stamp Bond?
Code of Georgia Annotated 48-11-16 requires all licensed tobacco distributors that have been permitted to purchase tax stamps from the Department of Revenue to obtain a surety bond. The bond ensures that restitution is available to the Department of Revenue should the tobacco distributor fail to abide by the regulations outlined in the Code of Georgia Annotated Title 48, Chapter 11. Specifically, the bond ensures that the Department will receive compensation for financial harm if the licensee fails to pay all required taxes and fees. In short, the bond is a type of insurance that protects the Department if the distributor violates the terms of their approved permit.
How Can an Insurance Agent Obtain a Georgia Tobacco Distributors Tax Stamp Bond?
BondExchange makes obtaining a Georgia Tobacco Distributors Tax Stamp bond easy. Simply log in to your account and use our keyword search to find the “tobacco distributor” bond in our database. Don’t have a login? Enroll now, and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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How Is the Bond Amount Determined?
According to the Georgia Department of Revenue, the Tobacco Distributors Tax Stamp bond limit must be in an amount sufficient to secure payment for stamps delivered to the account, and the commissioner decides this.
Is a Credit Check Required for the Georgia Tobacco Distributors Tax Stamp Bond?
Surety companies will run a credit check on the distributor to determine eligibility and pricing for the Georgia Tobacco Distributors Tax Stamp bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants with poor credit may be declined by some surety companies or have to pay higher rates. The credit check is a “soft hit,” meaning that the credit check will not affect the applicant’s credit.
How Much Does the Georgia Tobacco Distributors Tax Stamp Bond Cost?
The Georgia Tobacco Distributors Tax Stamp bond can cost between 2% and 10% of the bond amount per year. Monthly subscription options are also available. Insurance companies determine the rate based on several factors, including your customer’s credit score and experience. The chart below briefly references the approximate bond cost if you were seeking a $10,000 bond limit.
$10,000 Georgia Tobacco Distributors Tax Stamp Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $100 | $10 |
| 680 – 719 | $150 | $15 |
| 650 -679 | $200 | $20 |
| 600 – 649 | $400 | $40 |
| 550 – 599 | $750 | $75 |
| 500 – 549 | $1,250 | $125 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to years of experience and underlying credit factors contained within the business owner’s credit report.
Who Is Required to Obtain a Georgia Tobacco Distributors Tax Stamp Bond?
According to the Code of Georgia Annotated 48-11-16, licensed tobacco distributors that have been permitted to purchase tax stamps from the Department of Revenue on account must obtain a Tobacco Distributor Tax Stamp bond. The surety bond is to be maintained by the licensee for the entirety of the permitted period.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Tobacco Distributors Obtain a License in Georgia?
Tobacco distributors in Georgia must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Department of Revenue’s Licensing requirements for details on the process.
License Period – Tobacco distributor licenses in Georgia expire one year from the initial activation date.
Step 1 – Purchase Surety Bond
Tobacco distributors operating in the State of Georgia must purchase and maintain a Cigar, Cigarette, and Vapor Products Distributor for the entirety of their license period. If the distributor wants to also be permitted to purchase tax stamps on account, a Tobacco Distributor Tax Stamp bond is mandated.
Step 2 – Complete License Application
Applicants must submit a completed license application through the online Georgia Tax Center. In addition, the following requirements/documents must be attached:
- Scanned copy of the current annual registration from the GA Secretary of State
- List of products to be sold
- Scanned copy of local license
- Scanned copy of warehouse lease/deed
- Notarized ATT-17 Georgia Alcohol & Tobacco Personnel Statement
- A notarized financial affidavit
- Power of Attorney (if applicable)
- Citizenship Affidavit along with secure and verifiable documents (i.e., a government-issued photo ID)
- Cigar & Cigarette Distributor License Performance & Liability Bond
- Tobacco Distributors Tax Stamp Bond (if applicable)
- Application fee of $250
How Do Tobacco Distributors Renew Their Georgia Licenses?
Tobacco distributor licenses in Georgia expire one year from the initial activation date. License renewals must be completed through the Department of Revenue’s online Georgia Tax Center. Renewal application fees may apply.
What Are the Insurance Requirements for Tobacco Distributors in Georgia?
Georgia does not require tobacco distributors to purchase any form of liability insurance as a prerequisite to obtaining a license. Tobacco distributors must purchase and maintain a surety bond.
How Do Georgia Tobacco Distributors File Their Bonds?
Tobacco distributors in Georgia should electronically submit their completed bond forms, including a power of attorney, when submitting their license applications. The surety bond requires signatures from the surety company and the distributor. The surety company should include the following information on the bond form:
- Legal name and address of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can Georgia Tobacco Distributors Do to Avoid Claims Made Against Their Bonds?
The best way to avoid a claim against a Georgia Tobacco Distributors Tax Stamp bond is to pay all related fees, taxes, penalties, and interest that are due to the Department of Revenue in full and on time.
What Other Insurance Products Can Agents Offer Tobacco Distributors in Georgia?
Most reputable tobacco distributors will purchase business liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Georgia Tobacco Distributor Customers?
Georgia conveniently provides a public database to search for active tobacco distributors in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.