Texas Mixed Beverage Sales Tax Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Texas Mixed Beverage Sales Tax bond.
At a Glance:
- Lowest Cost: $200 per year or $20 a month
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: All mixed beverage and private club permit holders operating in Texas
- Purpose: To ensure that the Comptroller will receive compensation for financial harm if the permit holder fails to pay all required taxes
- Who Regulates Mixed Beverage and Private Club Permit Holders in Texas: The Texas Comptroller of Public Accounts
Background
Texas Code 151.201 requires all mixed beverage and private club business owners operating in the state to obtain a permit from the Comptroller of Public Accounts. The Texas Legislature enacted the permit requirement to ensure that mixed beverage and private club business owners do not engage in unethical business practices. To provide financial security for the enforcement of the permit law, mixed beverage/private club business owners must purchase and maintain a surety bond to be eligible for licensure.
What Is the Purpose of the Texas Mixed Beverage Sales Tax Bond?
Texas Code Sections 183.025 and 183.043 require all mixed beverage and private club business owners to purchase a surety bond as part of the application process to obtain a permit. The bond ensures that restitution is available to the Comptroller of Public Accounts should the mixed beverage or private club permit holder fail to abide by the regulations outlined in the Texas Tax Code Title 2, Chapters 151 and 183. Specifically, the bond ensures that the Comptroller will receive compensation for financial harm if the permit holder fails to pay all required taxes. In short, the bond is a type of insurance that protects the state if the mixed beverage or private club business owner violates the terms of their permit.
How Can an Insurance Agent Obtain a Texas Mixed Beverage Sales Tax Bond?
BondExchange makes obtaining a Texas Mixed Beverage Sales Tax bond easy. Simply log in to your account and use our keyword search to find the “sales tax” 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 Texas Code 183.025(b), the Mixed Beverage Sales Tax bond limit must be either the minimum amount required or four times the monthly average tax liability of the business, whichever is greater (bond amounts cannot exceed $100,000). Each permit type and its minimum bond amount are listed below:
- Mixed Beverage Permit- $3,750
- Private Club Permit- $2,250
- Private Club Exemption Permit- $1,500
Is a Credit Check Required for the Texas Mixed Beverage Sales Tax Bond?
Surety companies will run a credit check on the mixed beverage or private club business owner to determine eligibility and pricing for the Texas Mixed Beverage Sales Tax bond. Applicants with excellent credit and work experience can expect to receive the best rates. While 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 Texas Mixed Beverage Sales Tax Bond Cost?
The Texas Mixed Beverage Sales Tax bond can cost between 4% to 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 on the $5,000 requirement.
$5,000 Texas Mixed Beverage Sales Tax Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $200 | $20 |
| 650 – 719 | $400 | $40 |
| 600 -649 | $600 | $60 |
| 550 – 559 | $1,000 | $100 |
*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 Texas Mixed Beverage Sales Tax Bond?
Business owners that are applying for or currently hold any of the following permits must purchase and maintain a Texas Mixed Beverage Sales Tax bond:
- Mixed Beverage Permit – Allows the business to sell mixed beverages that are made up of sealed or unsealed containers like wine, beer, ale, and malt liquor for consumption on the premises
- Private Club Permit – The club may sell and serve alcoholic beverages belonging to members of the club to members, their family, and their guests only
- Private Club Exemption Permit – Allows the club to sell and serve alcoholic beverages to its members, as well as their guests
In addition, the permit holder must also purchase and maintain a Texas Mixed Beverage Gross Receipts bond for the entirety of their business operation.
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 Mixed Beverage and Private Club Business Owners Obtain a Permit in Texas?
Mixed beverage and private club business owners in Texas must navigate several steps to obtain a permit. Below are the general guidelines, but applicants should refer to the Comptroller’s Tax Registration webpage for details on the process.
Permit Period – Texas mixed beverage and private club permits expire one year following their activation date.
Step 1 – Purchase Surety Bond(s)
All mixed beverage and private club permit holders operating in Texas must purchase and maintain a Mixed Beverage Sales Tax bond, as well as a Mixed Beverage Gross Receipts bond for the entirety of their permit period.
Step 2 – Fulfil Permit Requirements
Complete the Texas Alcoholic Beverage Commission (TABC) On-Premises Prequalification Packet, as well as the Sales and Use Tax Permit application, and send both to the Comptroller of Public Accounts office for review. Application fees may apply.
How Do Mixed Beverage and Private Club Permit Holders in Texas Renew Such Permits?
Texas mixed beverage and private club permits expire one year following their activation date. Renewal permit applications must be submitted to the Comptroller of Public Accounts on or before the expiration date. Renewal fees may apply.
What Are the Insurance Requirements for Mixed Beverage and Private Club Permit Holders in Texas?
Texas does not require mixed beverage and private club business owners to purchase any form of liability insurance as a prerequisite to obtaining a permit. Mixed beverage and private club permit holders must purchase and maintain a Mixed Beverage Sales Tax bond and a Mixed Beverage Gross Receipts bond.
How Do Texas Mixed Beverage and Private Club Permit Holders File Their Bonds?
Mixed beverage and private club business owners in Texas should submit their completed bond forms, including a power of attorney, when submitting their permit applications to the Comptroller of Public Accounts (see the mailing address listed below).
Texas Comptroller of Public Accounts
PO Box 13528
Austin, TX 78711
The surety bond requires signatures from the surety company, as well as the mixed beverage or private club business owner. The surety company should include the following information on the bond form:
- The legal name of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can Texas Mixed Beverage and Private Club Permit Holders Do to Avoid Claims Made Against Their Bonds?
The best way to avoid a bond claim on the Texas Mixed Beverage Sales Tax bond is for the mixed beverage or private club permit holder to simply pay all taxes, penalties, and interest to the Comptroller of Public Accounts in full and on time.
What Other Insurance Products Can Agents Offer Mixed Beverage and Private Club Permit Holders in Texas?
Most reputable mixed beverage or private club permit holders 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 Texas Mixed Beverage and Private Club Permit Holder Customers?
Texas conveniently provides a public database to search for active mixed beverage or private club permit holders 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.