Missouri sales tax bond changes

More good news for small businesses in Missouri: Senate Bill 823 became effective in fall 2016, changing Missouri sales tax bonds.

The new rules decrease the sales tax bond amounts, also known as sales and use tax surety bonds, by one third.

Missouri Sales Tax Bond Form 331The bill also introduces a surety bond exemption for businesses after only one year of tax compliance, changed from two years.

Missouri retailers previously had to post a sales tax bond equal to three times their average monthly sales tax liability. With the new legislation, this amount is reduced to two times that amount. All bonds issued after August 28, 2016 must comply with the new criteria.

For newly registering retailers, the bond amount is estimated by their average monthly tax liability. For active retailers, the amount is set by looking at the last 12 months of liability.

The bill also changed bonding rules. Retailers now receive an exemption from the bond requirement after one year of tax compliance. Previously, the requirement was to keep the bond for two years.

There are no changes to the bond form itself. Businesses must still complete Missouri Sales Tax Bond Form 331 (pdf).

The Missouri sales tax surety bond is an extra layer of guarantee for the state, ensuring that businesses will pay all their taxes and fees — a safety net against non-payment, if you will.

The reduction in bond amount also has a direct effect on the surety bond price. To be bonded, retailers must cover a percentage of the required amount, called the bond premium. Since the bond amount has been decreased, the premium will also be smaller.

Businesses can use the Missouri Department of Revenue’s sales tax bond calculator┬áto calculate their bond. In general, the formula is average monthly gross sales multiplied by the exact tax rate, multiplied by two.

Retailers should also keep in mind that the Department of Revenue may increase a surety bond if they deem it necessary.

— Contributed by Todd Bryant, president and founder of Bryant Surety Bonds. Bryant is a surety bonds expert with years of experience helping business owners get bonded and start their business.

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