To manufacture, distribute, or sell beer, wine, or liquor, you must first have a surety bond in place to guarantee taxes will be paid on all alcohol transactions. The alcohol bond also referred to as the liquor bond helps protect the state if you are unable to pay collected taxes or falsify sales records.
Three-Tier Licensing System
Since 1933, a three-tier licensing system for the distribution of alcoholic beverages has been used, which requires the manufacturer, distributor, and vendor stay separate and independent of each other. Meaning, the manufacturer (supplier) can only sell to the distributor (wholesaler), and the distributor to the vendor (retailer).
Though there are some exceptions to this rule depending on the state, the three-tier regulatory system acts as a ‘checks and balances’ for the way alcohol is sold and distributed from one licensed tier to another throughout the system.
The only state that doesn’t follow a three-tier system, and has their own privately operated retailing and distribution system, is the State of Washington. In Washington, retailers can purchase alcoholic beverages directly from manufacturers.
Surety Bond Requirements
Each state requires specific types of alcohol bonds. Businesses such as restaurants, liquor stores, wineries, and breweries, must have an alcohol surety bond to receive a liquor license. Typically, businesses acquire a surety bond each year. However, renewal requirements differ from state to state.
Get Your Alcohol Beverage Tax Bond Today
If you need an alcohol bond, start the process today by calling 1-866-379-3151 or by filling out our quick and easy individual or business bond application online. With over 29 years of experience, Insurance Office of America (IOA Bonds) can get your bond approved and issued faster than other agencies.