What is Liquor Bond?
A liquor bond is a type of surety bond that’s made for retailers that sell alcohol. Like other surety bonds, these bonds are akin to a line of credit (even though they’re often offered by insurance companies). In the case of liquor bonds, the line of credit is used to pay the state if the retailer fails to pay all required sales taxes or makes certain other infractions.
A liquor tax bond involves three parties:
- The insurer that issues the bond
- The retailer, which is the obligee
- The state, which is the principal
What Businesses in New York Need Liquor Bonds?
Retail businesses that want a liquor license so they can sell alcohol to customers in New York State usually need a liquor bond. This is a requirement of the state’s licensing criteria. In order to get a license from the state’s Liquor Authority, the business must maintain a Bond Form L-9 with $1,000 worth of protection.