Overview
A remittance bond, sometimes called a financial guarantee or tax bond, guarantees that a business will hand over funds it collects on behalf of a government or another party. Common examples include sales tax collected from customers, fuel taxes, and amounts a company holds in trust and must forward on a schedule. The bond gives the agency a way to recover if the business collects the money but fails to remit it.
Because the bond guarantees payment of money rather than completion of work, underwriting leans on credit and financial strength. The agency sets the bond amount based on the volume of funds expected to pass through the business.
It is a guarantee, not insurance. If the business does not remit, the surety can pay the agency up to the bond amount and then collect from the business under the indemnity agreement.
Who needs this bond
Sales tax collectors, alcohol and tobacco wholesalers, fuel tax remitters, and other licensees who hold government funds in trust between filings.
Typical amount and term
Bond amount set by the state in statute or rule, usually 1 to 3 times the average monthly remittance. Premium 1 to 3 percent for clean credit, term one to three years.
What this bond costs
Your premium is a small percentage of the bond amount, set by underwriting. The biggest drivers:
- The bond amount the agency requires
- Personal and business credit
- The business's financial statements and time in operation
- The volume of funds the business handles
| Scenario | Bond amount | Estimated premium |
|---|---|---|
| Small retailer, good credit | $10,000 | around $100 to $300 per year |
| Mid-size distributor | $50,000 | around $500 to $1,500 per year |
| Higher-volume filer, mixed credit | $100,000 | 1.5 to 5 percent depending on financials |
Figures are illustrative premium ranges, not quotes or statutory amounts. Your rate depends on the bond amount your obligee requires and your underwriting profile.
What you will need
- State license number and copy of the bond form the obligee will accept
- Two years of business financials
- Owner personal credit authorization
How to apply
- Send the obligee bond form and your license details
- Receive a firm quote in one business day
- Sign, pay, and file the issued bond with the state
How a surety bond differs from insurance
A remittance bond is a surety guarantee, not insurance. It protects the agency that is owed the funds, not your business. If the surety pays the agency, you repay the surety under the indemnity agreement, so the bond does not erase the underlying tax or trust obligation.
Frequently asked questions
What is a remittance bond?
It is a surety bond that guarantees a business will forward funds it collects, such as sales tax or other trust money, to the agency that is owed them.
Why does the agency require it?
It gives the agency a way to recover collected funds if the business fails to remit them, without having to chase the business through other means first.
How much does it cost?
Premium scales with the bond amount and your credit, often a small percentage of the bond. The examples here are illustrative.
What happens on a claim?
The surety pays the agency up to the bond amount and then seeks reimbursement from the business under the indemnity agreement.
More contract bonds
Reviewed by the Cornerstone Surety bond team. Last reviewed 2026-06-17.