City of Huntsville, Alabama - Retail Vendor Bond

What Is the Purpose of the Huntsville Retail Vendor Bond?

The Huntsville Clerk-Treasurer Department requires retailers to acquire a custom Retail Vendor Bond as a requisite of the city’s initial or renewal business license approval process. The surety bond ensures that the retailer will follow the rules and regulations of their license, and acts as a fiscal guarantee in cases of principal failing to pay all sales taxes and/or licensing fees due to the City. 

Under the Huntsville, AL Code, Section 15-85, merchants, retailers, vendors, and sponsors engaged in the business of selling goods or products are required to obtain a custom Huntsville Retail Vendor Bond in order to be licensed. 

A cash deposit equal to the required bond amount can be used as an alternative to the surety bond requirement. Approval from the Clerk-Treasurer is needed before the retail operation may begin. 

What Do Surety Underwriters and Claims Handlers Need to Know About the Huntsville Retail Vendor Bond?

Suretypedia has confirmed with industry experts that the Huntsville Retail Vendor Bond is low risk for underwriters to take on in Alabama. The custom bond limit is determined by the Clerk-Treasurer upon review of the principal’s business license application; it is unclear what factors will be considered when determining such bond limit. A standard credit check is recommended for applicants requesting a limit over $25,000 amount. 

The Huntsville Clerk-Treasurer may file a claim on the surety bond if the retailer violates any business license regulation pursuant to Huntsville, AL Code Chapter 15, Article 2. However, claims will typically only be filed if the licensee fails to pay all licensing fees and/or sales taxes due to the City. 

It is unclear what steps will be taken by the Clerk-Treasurer Department before the pursuance of a bond claim occurs. But if the Clerk-Treasurer resorts to filing a claim on the licensee’s Retail Vendor Bond, they should give a clear timeline for the bond handling and claim payout deadline, but if they do not, it is recommended that the surety provider default to their company’s claim handling and payout timeline standards.

How Much Does the Retail Vendor Bond Cost in Huntsville, Alabama?

The Huntsville Retail Vendor Bond cost is typically based at 1 to 10% of the custom bond limit. For example, a surrey provider that is underwriting a $10,000 bond limit may offer a rate of $100 annually for preferred credit applicants. 

Huntsville Retail Vendor Bond Process

The Huntsville Clerk-Treasurer Department requires the original, signed, and sealed Retail Vendor Bond to be filed to their License Division. The bond must remain on file to maintain an active business license.

The signed and sealed bond form should be mailed to the following address:

City of Huntsville
Clerk-Treasurer Department, License Division
PO Box 308
Huntsville, AL 35804-0308

New and renewal business licenses can be completed and submitted through Huntsville’s online application system.  

The Retail Vendor Bond may be cancelled by the surety provider at any time. Written notice of the cancellation must be sent to the Clerk-Treasurer Department. Once received, the liability of the bond will be released within 30 days.

The bond is continuous and will need to be renewed upon the bond term’s expiration date in order to maintain an active business license with the Huntsville Clerk-Treasurer Department.