Tax & Customs
Cigarette Tax Bond
A bond a tobacco wholesaler or stamping agent files with the state so it can buy cigarette tax stamps and pay later.
- Required by
- State revenue departments (in Alabama, the Department of Revenue Tobacco Tax Section)
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond promises the state revenue department that the wholesaler will pay for the cigarette tax stamps it buys on credit or by uncertified check. If the wholesaler fails to pay, the department can claim on the bond. The wholesaler must repay the surety for any claim paid.
Who needs it
- Tobacco wholesalers and jobbers that affix tax stamps
- Wholesalers buying stamps on consignment
- Out-of-state manufacturers in some states
What the underwriter looks at
- Monthly stamp purchases
- Company financial statements
- Owner's personal credit
- Tax payment history
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
How is the bond amount set in Alabama?
The Department sets a bond limit, and your stamp purchases on consignment cannot exceed it. Ask the Tobacco Tax Section for your amount.
Do retailers need this bond?
Usually not this one. Alabama does require new beer, wine, and tobacco retailers to post a separate $25,000 minimum sales tax bond.