Alabama - Alcohol Sales Tax License Bond

The Purpose of Local Alabama Alcohol Sales Tax License and Permit Bonds 

Under various Alabama sales tax ordinances, certain cities and counties require alcohol retailers to be properly licensed and bonded through their local government in order to legally sell alcoholic beverages with proper sales tax practices. Each type of surety bond and its limit will depend on the applicable license or permit classification, and the local residence of the business. Local Alabama Alcohol Sales Tax License and Permit Bonds provide an assurance that businesses will comply with the regulations of their license or permit and all local ordinances pertaining to retail alcohol sales tax laws. The surety bond also acts as a fiscal guarantee for the benefit of the local government in cases of the licensed business failing to properly collect, file, and/or pay all sales taxes due when making retail alcohol transactions. 

Who Needs an Alcohol Sales Tax Bond In Alabama

While all retailers of beer and wine are required to acquire a state sales tax surety bond; local cities and counties will also require these same businesses to obtain an additional surety bond where they act as the obligee. The type and amount of the bond will depend on the application for license and the residence of the business. 

Below you can find a list of each Alabama city or county and the required associated surety bond type and bond limit.

Alabama Cities and Counties:Required Surety Bond and Limit:
City of ArabAlcohol Ordinance Tax or Fee Bond- $10,000
City of AthensAlcohol Ordinance Tax or Fee Bond- $10,000
City of BoazAlcohol Ordinance Tax or Fee Bond- $5,000
City of CullmanAlcohol Ordinance Tax or Fee Bond- $10,000
City of DecaturAlcohol License Tax Bond- $5,000 or $10,000
City of Good HopeAlcohol Ordinance Tax or Fee Bond- $10,000
City of GuntersvilleRetail Liquor Tax Bond- $2,500
City of HaleyvilleAlcohol Ordinance Tax or Fee Bond- $10,000
City of HamiltonAlcohol Ordinance Tax or Fee Bond- $10,000
City of HomewoodRetail Liquor Tax Bond- $3,000
City of HuntsvilleLiquor License Tax Bond- $8,000
City of JacksonvilleRetail Liquor Tax Permit Bond- $2,500
Madison CountyLiquor License Tax Bond- $8,000
City of New HopeAlcohol Ordinance Tax or Fee Bond- $5,000 or $10,000

It is important to note that a surety bond will be needed for each business location of the principal. Meaning, if a licensee has multiple business residences where retail alcohol transactions are being made, each one of these locations will need their own surety bond. Alternatives to each surety bond requirement will need to be approved by the obligee before retail alcohol transactions may be legally completed by the business. 

What Do Surety Underwriters Need to Know About Local Alabama Alcohol Sales Tax License and Permit Bonds?

Suretypedia has confirmed with industry experts that local Alabama alcohol sales tax license and permit surety bonds stand at a moderate risk level for underwriters to take on. Standard credit checks of applicants are recommended with the additional request of business financials for applicants with high bond limits. 

While it is a rather simple and easy process to obtain a city or county-regulated retail liquor license or permit, the repercussions for violating such regulations are quite severe. Penalties include large fines per each violation, suspension or permanent revocation of the business’s alcohol license or permit, possible misdemeanor charges, jail time if convicted, and/or a bond claim. Due to the severity of some of these penalties that could be inflicted by local government entities, it is typical for licensed retail businesses to try and resolve any violations before such drastic measures are taken.

What Do Surety Claims Handlers Need to Know About Local Alabama Alcohol Sales Tax License and Permit Bonds?

Each Alabama alcohol sales tax license and permit bond is regulated under the city or county’s local ordinance. Below is a list of applicable surety bonds and the appropriate ordinance code that the bondholder is held accountable to. 

Alabama City or County Surety Bond:Local Ordinance Code Number:
Arab Alcohol Ordinance Tax or Fee BondOrdinance Code No. 2006-08
Athens Alcohol Ordinance Tax or Fee BondOrdinance Code No. 2005-1529
Boaz Alcohol Ordinance Tax or Fee BondOrdinance Code No. 2021-1152
Cullman Alcohol Ordinance Tax or Fee BondOrdinance Code No. 2011-09
Decatur Alcohol License Tax BondOrdinance Code No. 84-2412
Good Hope Alcohol Ordinance Tax or Fee BondOrdinance Code No. 003-2012
Guntersville Retail Liquor Tax BondOrdinance Code No. 1068
Haleyville Alcohol Ordinance Tax or Fee BondOrdinance Code No. 2010-04
Hamilton Alcohol Ordinance Tax or Fee BondOrdinance Code No. 2012-13
Homewood Retail Liquor Tax BondOrdinance Code No. 1970
Huntsville Liquor License Tax BondOrdinance Code No. 11-654
Jacksonville Retail Liquor Tax Permit BondOrdinance Code No. 1975
Moulton Alcohol Ordinance Tax or Fee BondOrdinance Code No. 2010-01
Madison Liquor License Tax BondOrdinance Code No. 1979
New Hope Alcohol Ordinance Tax or Fee BondOrdinance Code No. 401

The obligee (local government entity in charge of the surety bond) may file a claim on the alcohol sales tax license or permit bond if the business violates any terms under their licensure and surety bond ordinance code. Although, claims will typically only be filed by the obligee if the business fails to collect, pay, or file all alcohol sales taxes due as well as any interest, penalties, or additional fees due to the city or county. 

It is unclear exactly what steps will be taken by each obligee before the pursuance of a bond claim occurs, but it is assumed that the principal will be notified of these violations with a chance to resolve the dispute through payment. Further penalties such as a bond claim will be inflicted if the licensee refuses or is unable to pay all that is due. 

The obligee should give a clear timeline for the bond claim review and payout deadline, but if they do not, it is recommended that the surety provider default to their company’s bond claim review and payout timeline standards. 

Are There Any Alternatives to the Local Alabama Alcohol Sales Tax Bonds?

Some Alabama cities and counties will accept a cash deposit or readily marketable securities in an equal amount to the required bond limit. This alternative must be approved by the local city clerk or license collector in order to be granted licensure status. Listed below are the applicable cities and counties that accept bond alternatives:

All other Alabama cities and counties not listed do not accept alternatives to the alcohol sales tax surety bond requirement. 

How Much Do the Alabama Alcohol Sales Tax Bonds Cost?

Surety providers will typically base the bond cost at 1 to 15% of the required surety bond limit. The personal credit score of the applicant will be taken into account when offering prices; additional 2- or 3-year bond term rates may be offered so the cost of the bond can fluctuate due to these instances. 

How Are Local Alcohol Sales Tax Bonds Filed In Alabama?

Under each surety bond’s city or county ordinance, the signed and sealed bond must be filed with a local government entity such as the City Council or City Clerk’s office. The bond is to remain on file for the entire duration of the business conducting retail alcohol transactions. Licenses or permits will not be renewed if the applicant’s surety bond is not in full force and effect. 

The signed and sealed original bond form and licensure paperwork should be mailed to the appropriate address. Listed below you can find the local mailing address of each city and county that requires their own alcohol sales tax surety bond along with the necessary license or permit application.

Alabama City or County:Mailing Address:Alcohol Sales Tax License or Permit Application:
City of ArabArab City Council
740 North Main Street
Arab, AL 35016
ABC License Application
City of AthensAthens City Council
PO Box 1089
Athens, AL 35612
Alcoholic Beverage License Application
City of BoazCity of Boaz
Boaz City Council
PO Box 537
Boaz, AL 35957
ABC License Application
City of CullmanCullman City Council
PO Box 278
Cullman, AL 35056
Alcohol License Application
City of DecaturDecatur Department of Revenue
402 Lee Street NE
Decatur, AL 35601
ABC License Application
City of Good HopeGood Hope City Council
135 Municipal Drive
Cullman, AL 35057
Alcohol License Application
City of GuntersvilleGuntersville City Clerk
341 Gunter Avenue
Guntersville, AL 35976
Application for Beer, Wine, or Liquor License
City of HaleyvilleHaleyville City Council
1901 11th Avenue
Haleyville, AL 35565
ABC License Application
City of HamiltonHamilton City Council
PO Box 188
Hamilton, AL 35570
ABC License Application
City of HomewoodHomewood City Clerk
2850 19th Street South
Homewood, AL 35209
ABC License Application
City of HuntsvilleHuntsville City Clerk-Treasurer
308 Fountain Circle
Huntsville, AL 35801
Alcoholic Beverage License Application
City of JacksonvilleJacksonville City Council
320 Church Avenue SE
Jacksonville, AL 36265
Retail Liquor Drinking Places Permit Application
City of MoultonMoulton City Council
720 Seminary Street
Moulton, AL 35650
Alcoholic Beverage License Application
Madison CountyMadison County Administrator
100 NorthSide Square
Huntsville, AL 35801
ABC License Application
City of New HopeNew Hope City Council
5484 Main Drive
New Hope, AL 35760
ABC License Application

Can Alabama Alcohol Sales Tax License and Permit Bonds Be Cancelled?

Each surety bond may be cancelled by the surety provider upon the principal’s request or upon their own accord. Written notice is required to be sent by certified mail to the department that the signed bond form was originally filed with. The liability of the bond will be released within 30 days of the termination notice. However, the City of Guntersville holds the only surety bond with a 60-day liability period.

Are Local Alcohol Sales Tax Bonds Renewable In Alabama?

Yes, each surety bond is required to be in full effect in order to maintain an active retail alcohol license or permit in the business’s city or county. Failure to renew will result in the local government entity suspending or permanently revoking the business’s licensure status. 

What Other Bonds Do Alabama Retail Alcohol Licensees and Permittees Need?

Alabama requires retailers of beer, wine, or tobacco who are applying for a Department of Revenue state liquor license to obtain a one-time $25,000 Alabama Sales Tax Bond in addition to local alcohol sales tax surety bond mandates.