Missouri Code of State Regulations › Title 12 - DEPARTMENT OF REVENUE › Division 10 - Director of Revenue › Chapter 104 - Sales/Use Tax-Registration › Section 12 CSR 10-104.020 - Sales and Use Tax Bonds

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: Section
				  144.087,
				  RSMo requires all applicants for a retail sales tax license and all licensees
				  in default in filing a return and paying taxes when due to file a bond in an
				  amount to be determined by the Director of Revenue. Section
				  144.625,
				  RSMo authorizes the department to require a bond from out-of-state vendors
				  responsible for remitting vendor's use tax. This rule explains how to calculate
				  and submit a bond, the different types of bonds that may be filed with the
				  department, and how to obtain a bond refund.
(1) In general, all new taxpayers applying
				for a retail sales tax license or vendors use tax license, and taxpayers
				seeking reinstatement of a revoked license must file a bond in an amount
				determined by the director. The bond may be a cash bond, surety bond,
				certificate of deposit or an irrevocable letter of credit. The department will
				refund the bond to the taxpayer after two (2) years of satisfactory tax
				compliance or when the taxpayer closes its sales/use tax account, provided the
				account has no outstanding delinquencies.
(2) Basic Application of Tax.
(A) Taxpayers applying for a retail sales tax
				license or vendor's use tax license, or a taxpayer in default in filing a
				return and paying taxes, must submit a bond calculated at three (3) times the
				average monthly tax liability of the taxpayer. The department will not issue a
				license until the taxpayer submits sufficient bond. The bond amount of a new
				applicant is based on three (3) times the previous owner's average monthly tax
				liability for the prior twelve (12) months. The department estimates the bond
				based on the nature of the applicant's business. If the business is
				substantially the same as that of a previous owner, the previous business
				experience may be used. If the department determines a bond is insufficient to
				cover the taxpayer's liability, the department can require the taxpayer to
				adjust the bond amount.
(B) If the
				calculated bond amount of a new business is less than five hundred dollars
				($500), the taxpayer can submit a minimum bond of twenty-five dollars ($25). If
				the bond is calculated at five hundred dollars ($500) or more, the calculated
				amount must be submitted, rounded to the nearest ten dollars ($10). A taxpayer
				reinstating a revoked license must submit the calculated amount even if that
				amount is less than five hundred dollars ($500).
(C) Cash bonds must be in the form of a
				cashier's check, money order, certified check or charged to a credit card
				accepted by the department. A completed and signed cash bond form must
				accompany a cash bond.
(D) A surety
				bond issued by an insurance company licensed for bonding in Missouri may be
				submitted as bond on behalf of the taxpayer. The surety bond must bear the seal
				of the insurance company, contain the current effective date, be accompanied by
				a power of attorney letter if it is signed by the attorney in fact, and must be
				signed by the applicant. The department maintains a list of insurance companies
				approved by the Department of Insurance to underwrite surety bonds in Missouri.
				Surety companies who fail to comply with the rules of the Department of
				Insurance or who unreasonably fail to pay a taxpayer's delinquency within
				thirty (30) days of notification that the taxpayer has become delinquent, are
				subject to removal from the department's list of authorized surety companies.
				Additionally, the department will not accept future bonds from this company
				until the Department of Insurance reinstates the surety company. A taxpayer
				bonded by a surety company that is removed from the department's authorized
				list has thirty (30) days to file a new bond with the Department of Revenue.
				Failure to meet this requirement will result in the license being declared null
				and void.
(E) A certificate of
				deposit (CD) issued by a state or federally chartered financial institution may
				be submitted as a bond. A CD must be a new CD in the names of the Missouri
				Department of Revenue and the taxpayer. The names on the CD must be joined by
				the word "AND." The CD must be endorsed by the taxpayer and include an
				Assignment of Certificate of Deposit Form when submitted to the department.
				Book entry CDs must be accompanied by a signed withdrawal slip or a letter from
				the issuing bank indicating the means of withdrawal. The interest derived from
				the CD is compounded at maturity. If a delinquency occurs, the department may
				redeem the CD. Any proceeds from the CD exceeding the delinquency, including
				interest proceeds, will be converted to a cash bond. The department will not
				reinvest the proceeds from the CD after it has been converted to a cash bond.
				The taxpayer is liable for all taxes on the interest derived from the CD or
				penalties resulting from cashing the CD prior to maturity even if the
				department seizes the CD (and accumulated interest) for payment of a
				delinquency incurred by the taxpayer.
(F) An irrevocable letter of credit issued by
				a commercial bank chartered under the laws of Missouri or chartered pursuant to
				the National Banking Act may be submitted as a bond. The letter of credit is
				irrevocable and the beneficiary is the department. Payment will be made
				immediately upon presentation of a demand for payment signed by the Director of
				Revenue or his/her designated representative. All letters of credit must
				conform to a required format provided by the department and be accompanied by
				an authorization for release of confidential information to the issuing bank.
				The issuer can cancel a letter of credit sixty (60) days after written notice
				is delivered to the department. If the department is notified of a
				cancellation, the taxpayer must substitute another bond within sixty (60) days.
				If the required bond is not received within the sixty (60) days, the taxpayer's
				license is null and void. If a taxpayer closes its business, the department
				will retain the letter of credit until satisfied that no claim exists against
				the letter.
(G) The department may
				refund or release a bond to the taxpayer after two (2) years of satisfactory
				tax compliance. A taxpayer's tax record is considered satisfactory if there is
				no tax due and the taxpayer has fully filed and paid all returns due in a
				timely manner. The bond will also be released or refunded when the taxpayer
				closes its sales/use tax account, files a final return, and owes no tax,
				penalties, or interest. If a taxpayer replaces its current bond by any other
				acceptable type of bond, the bond being replaced will also be
				returned.