A Tennessee sales tax bond is a security the Tennessee Department of Revenue requires from a dealer to guarantee payment of sales and use tax. It is not a bond that every Tennessee seller posts. Under Tenn. Code Ann. § 67-6-522, a dealer licensed to do business in Tennessee who becomes delinquent for more than ninety (90) days in the payment of any sales or use taxes must, upon notice from the Commissioner of Revenue, post cash or an indemnity bond with good and solvent surety, approved by the Commissioner, in an amount equal to three (3) times the average monthly sales tax or use tax liability of the dealer. The bond is conditioned on the proper payment of the sales or use taxes the dealer owes. A dealer who is required to post the bond and fails to do so can have one or more of its certificates of registration revoked.
Tennessee registration for a sales tax account is otherwise free and does not require a bond. Tennessee is a full member of the Streamlined Sales and Use Tax Agreement, and a new or out-of-state dealer normally registers for a certificate of registration without posting security. The bond in Tenn. Code Ann. § 67-6-522 is a backstop the Commissioner imposes on a dealer who has already fallen behind, not a routine cost of getting registered.
There is a second, narrower situation. Under Tenn. Code Ann. § 67-6-602(c), if the Commissioner refuses to issue a certificate of registration because the Commissioner has reasonable cause to believe a business is being transferred to defeat collection from a delinquent transferor, the applicant can be issued the certificate while appealing that refusal by filing a surety company bond running to the state in an amount the Commissioner sets, conditioned on payment of all taxes then due and to become due during the appeal.
| Item | Detail |
|---|---|
| Who requires it | The Tennessee Department of Revenue, through the Commissioner of Revenue |
| Who must post it | Chiefly a dealer who becomes more than 90 days delinquent in paying sales or use tax and is directed to post security by the Commissioner (Tenn. Code Ann. § 67-6-522). Separately, an applicant appealing a refused certificate of registration under Tenn. Code Ann. § 67-6-602(c). A dealer registering normally does not post a bond. |
| Governing law | Tenn. Code Ann. § 67-6-522 (delinquent dealers); Tenn. Code Ann. § 67-6-602(c) (bond to obtain a certificate while appealing a refusal) |
| Official form | [VERIFY against Tennessee Department of Revenue: the § 67-6-522 bond is cash or an indemnity bond in a form and amount the Commissioner approves, and the § 67-6-602(c) bond is a surety company bond the Commissioner sets. Confirm whether the Department issues a numbered sales tax bond form or specifies the form by notice. Note: the tobacco and alcoholic-beverage “Tax Bond” PDFs on tn.gov are different instruments and are not this bond.] |
| Bond amount | For the § 67-6-522 delinquent-dealer bond: three (3) times the dealer’s average monthly sales or use tax liability. For the § 67-6-602(c) appeal bond: an amount the Commissioner determines appropriate under the circumstances. |
| Premium basis | [CLIENT FLAG: insert All n One premium structure, e.g. percentage of bond amount by credit tier] |
| Coverage term | The § 67-6-522 bond runs for such time as the Commissioner determines. The § 67-6-602(c) bond covers the pendency of the appeal to the Commissioner and any further judicial appeal. |
| Obligee | The State of Tennessee, through the Department of Revenue (Commissioner of Revenue) |
How much is the bond, and how is the amount set?
Tennessee does not use a flat schedule for the sales tax bond. The amount is tied to the tax the state expects the dealer to owe. For the main delinquent-dealer case, Tenn. Code Ann. § 67-6-522 fixes the amount at three (3) times the dealer’s average monthly sales tax or use tax liability. So a dealer whose sales or use tax averages $2,000 a month would face a bond of about $6,000, and a dealer averaging $10,000 a month would face about $30,000. The Commissioner calculates the average from the dealer’s filing history.
| Situation | How the bond amount is set |
|---|---|
| Dealer more than 90 days delinquent (the standard § 67-6-522 case) | Three times the dealer’s average monthly sales or use tax liability, as calculated by the Commissioner from the dealer’s returns. Cash or an indemnity surety bond, approved by the Commissioner. |
| Applicant appealing a refused certificate of registration (§ 67-6-602(c)) | A surety company bond in an amount the Commissioner determines appropriate, conditioned on payment of all taxes then due and to become due during the appeal. When the bond is filed, the Commissioner issues the certificate. |
| New dealer registering normally | No bond. A dealer registers for a Tennessee certificate of registration without posting security. |
| Out-of-state dealer registering normally | No bond. Remote and out-of-state sellers register the same way, including through the Streamlined Sales Tax registration system, without a routine bond. |
| Reinstating a revoked registration | Cure the delinquency and post the § 67-6-522 security the Commissioner requires. [VERIFY against Tennessee Department of Revenue: confirm the exact reinstatement steps and how the required bond amount is communicated after a revocation.] |
Because the amount is a multiple of your own tax history rather than a fixed statutory figure, the exact dollar amount comes from the Department of Revenue when it notifies you. [VERIFY against Tennessee Department of Revenue: confirm how the Department states the required bond amount to a delinquent dealer, for example by written notice, and the deadline to post it once notified.]
What does the bond cover?
The bond guarantees that the State of Tennessee gets paid the sales and use tax the bonded dealer collects or owes. If the dealer collects sales tax from Tennessee customers and fails to remit it, or otherwise leaves an unpaid sales or use tax liability, the state can make a claim against the bond up to its full amount.
Key points about coverage:
- It protects the State of Tennessee and its tax collection, not your customers.
- The § 67-6-522 bond is conditioned on the proper payment of the retail sales or use taxes for which the dealer may become liable, up to the bond amount.
- Tenn. Code Ann. § 67-6-522 lets you satisfy the requirement with either cash or an indemnity bond with good and solvent surety approved by the Commissioner. A surety bond lets you avoid tying up cash with the state.
- A bond is not a substitute for filing and paying your tax. You still file returns and remit tax; the bond is the state’s backstop if you do not.
- If a dealer who is required to post the bond fails to do so, the Commissioner can revoke one or more of the dealer’s certificates of registration, which stops the dealer from legally operating.
How much does the bond cost?
You do not pay the full bond amount. You pay a premium, which is a small percentage of the bond amount and is set mainly by the bond size and your credit.
[CLIENT FLAG: insert All n One Insurance pricing for the Tennessee sales tax bond, e.g. premium rate range by credit tier and one worked example such as “a $X bond for $Y.” Do not publish a premium number until All n One provides it.]
Because the § 67-6-522 bond is sized at three times your average monthly tax, your premium scales with the bond amount the Department requires. [CLIENT FLAG: confirm whether All n One quotes this bond on a flat fee or as a percentage of the bond amount, and note that a dealer who is already tax-delinquent may be a tougher credit risk to underwrite.]
Is this the same as a Tennessee sales tax certificate or permit?
No. The certificate of registration and the bond are two different things.
- The Tennessee certificate of registration (often called the sales tax permit) is what authorizes you to sell taxable goods and services in Tennessee and to collect sales tax. Every dealer needs one, and Tennessee issues it through registration without charging for the certificate itself. Under Tenn. Code Ann. § 67-6-602, the Commissioner issues the certificate on a proper application, though the Commissioner will not issue one to a person who is delinquent or who has not filed and paid as required.
- The Tennessee sales tax bond is the security the Commissioner requires from a dealer who falls more than 90 days delinquent (§ 67-6-522), or from an applicant who must post a bond to be issued a certificate while appealing a refusal (§ 67-6-602(c)). Most dealers never post it.
This bond is also different from the Tennessee “Tax Bond” forms you may find on tn.gov for tobacco and alcoholic-beverage taxes. Those are separate instruments for separate taxes and use their own amount formulas, not the sales tax rule described here. It is likewise separate from any nonresident contractor tax requirement. [VERIFY against Tennessee Department of Revenue and Tenn. Code Ann. Title 67: confirm whether a distinct nonresident contractor sales or use tax security applies to your situation before treating it as the same bond.]
How do I get bonded and file for my Tennessee sales tax obligations?
- Register for your Tennessee sales and use tax account and certificate of registration through the Tennessee Taxpayer Access Point (TNTAP) at tntap.tn.gov, or through the Streamlined Sales Tax registration system if you are a remote seller. Registering does not require a bond.
- File and pay on time. The sales tax bond requirement in § 67-6-522 is triggered only if you fall more than 90 days delinquent. Staying current is how most dealers avoid the bond entirely.
- If the Department notifies you that a bond is required, confirm the amount. For the delinquent-dealer bond it is three times your average monthly sales or use tax liability, calculated by the Department from your returns. [VERIFY against Tennessee Department of Revenue: confirm how and when the Department states the required amount and the deadline to post.]
- Get a surety bond quote. Apply with All n One Insurance for the required amount. Approval and premium depend mainly on the bond size and your credit, and an existing delinquency can affect underwriting.
- Receive and sign your bond. All n One issues the bond naming the State of Tennessee (through the Department of Revenue) as obligee.
- File the bond with the Department of Revenue and clear the delinquency. Posting the bond and paying what you owe keeps your certificate of registration from being revoked. [VERIFY against Tennessee Department of Revenue: confirm the exact filing method and the form or format the Department accepts.]
- If you were denied a certificate under § 67-6-602(c), you can be issued the certificate while you appeal by filing the surety company bond the Commissioner sets. File that bond to obtain the certificate during the appeal.
Frequently asked questions
Does every Tennessee business need a sales tax bond?
No. Tennessee does not require a sales tax bond as a routine condition of registering. Registration is free of any bond. The main sales tax bond, under Tenn. Code Ann. § 67-6-522, applies to a dealer who becomes more than 90 days delinquent in paying sales or use tax and is directed by the Commissioner to post security.
How does Tennessee decide how big my bond must be?
For the delinquent-dealer bond, the amount is fixed by statute at three times your average monthly sales or use tax liability. The Department of Revenue calculates that average from your filing history, so the dollar figure depends on your own sales.
What triggers the bond requirement?
Becoming delinquent for more than ninety days in paying any sales or use tax due the state. On notice from the Commissioner, the dealer must then post cash or an indemnity surety bond.
What happens if I am required to post the bond and I do not?
The Commissioner can revoke one or more of your certificates of registration, which stops you from legally operating as a dealer in Tennessee until you comply.
Do out-of-state or remote sellers have to post this bond?
Not just for registering. Out-of-state and remote sellers register the same way other dealers do, including through the Streamlined Sales Tax system, without a routine bond. The § 67-6-522 bond applies only if such a dealer becomes delinquent and is directed to post security.
Can I post cash instead of a surety bond?
Yes. Tenn. Code Ann. § 67-6-522 allows either cash or an indemnity bond with good and solvent surety approved by the Commissioner. A surety bond is usually preferred because it does not tie up your cash with the state.
How long does the bond last?
The delinquent-dealer bond runs for such time as the Commissioner determines. The separate bond used to obtain a certificate while appealing a refusal covers the appeal to the Commissioner and any further judicial appeal.
How much will the bond cost me?
[CLIENT FLAG: insert All n One premium guidance, e.g. a percentage-of-bond-amount range by credit tier and a worked example. Do not publish a premium figure until All n One provides it.]
