Bonding Requirement

# (1)

(1) The following entities are required to post security in the form of a surety bond in an amount equal to twice the licensee's average quarterly tobacco tax liability:

(a) A licensee that fails to furnish a tobacco tax return in two consecutive calendar quarters; or

(b) A licensee that fails to pay the tobacco products tax in full in two consecutive calendar quarters

# (2)

(2) The following entities are required to post security in the form of a surety bond in an amount equal to twice the licensee's average quarterly tobacco tax liability as determined by the licensee's projected sales or in the amount of $1,000, whichever is greater:

(a) An unlicensed individual or business that is seeking an initial license;

(b) A new licensee who has not previously filed a tobacco product tax return that fails to furnish a tobacco tax return in two consecutive quarters; or

(c) A new licensee who has not previously filed a tobacco product tax return that fails to pay the tobacco products tax in full in two consecutive calendar quarters.

# (3)

(3) If any of the following circumstances occur, the department may increase the current required bond amount to an amount equal to twice the licensee's average quarterly tobacco tax liability:

(a) The distributor reaches its bond or security limit;

(b) The bond or security becomes ineffective; or

(c) The surety cancels the bond or security.