SECTION 3.327. Taxpayer's Bond or Other Security

(a) Each person who applies for a tax permit or who becomes delinquent in the payment of any taxes, penalties, or interest must furnish security in the amount that the comptroller determines to be sufficient to protect the state against a failure to pay any amounts or costs which may become due under the state, city, special purpose district, county, and metropolitan transit authority sales and use tax laws.

(b) A person who applies for a tax permit may be required to post a bond or security in an amount that is equal to the greater of $100,000 or four times the amount of the average monthly tax liability. An itinerant vendor may be required to post a bond, but the minimum amount may not be less than $500. For the purposes of this section, an itinerant vendor is a person who does not operate any place of business as defined in §3.286 of this title (relating to Seller's Responsibilities).

(c) A permitted retailer who is or has been delinquent in the payment of state or local sales or use taxes may be required to post a bond or security in an amount that is equal to the greater of either $100,000 or four times the amount of the average monthly tax liability.

(d) If the comptroller determines at any time that the amount of the bond on file is inadequate or if a permitted retailer is delinquent in the payment of any state or local sales or use taxes, the comptroller may require a new or additional bond to be posted.

(e) Types of security.

(1) Acceptable types of security:

(A) irrevocable assignments of accounts in banks, savings and loan institutions, and credit unions, whose deposits are insured by an agency of the United States government;

(B) cash (personal checks are acceptable);

(C) bank letters of credit that are deemed by the comptroller to be sufficient in amount and secure;

(D) United States Treasury bonds, readily convertible to cash;

(E) surety bonds.

(2) Unacceptable types of security:

(A) corporate stocks and bonds;

(B) personal guarantees.

(f) An assignment of either a savings account or a certificate of deposit in an institution insured by an agency of the United States government must be irrevocable and must be executed on an assignment form approved by the comptroller.

(g) A surety bond must be executed on a form approved by the comptroller and can be issued only by a surety company chartered or authorized to do business in the State of Texas. The bond shall constitute a new and separate obligation in the penal sum named therein for each calendar year or a portion thereof while the bond is in force. The bond must be executed by an attorney-in-fact appointed by the surety. The appointing instrument must be properly notarized and physically attached to the bond.

(h) In the event of forfeiture, the comptroller will notify the holder of the security and demand payment. The comptroller will also notify the permitted retailer and demand that a new or additional bond or security for a specified amount be furnished within 10 days of the date of such notice. This notice shall become final at the expiration of 10 days. Failure to comply with the requirements of the notice within the 10-day period will result in the suspension of the retailer's tax permit.

(i) Retailer's bond or security when ownership is changed.

(1) When the legal structure of a business changes, the retailer who holds a tax permit must apply for a new permit, as provided by Tax Code, §151.201. Examples include, but are not limited to, a change from a sole ownership to a partnership, or a change from a partnership to a corporation.

(2) When a retailer applies for a new permit because of a change in legal structure, the retailer may be required to post a bond or security as provided by the provisions of this section. The comptroller will review all available records of the retailer's history of payment of taxes.

(3) If, after the review, it appears that the interests of the state will not be endangered by the new ownership, the comptroller may determine that no new or additional bond is required.

(4) If, however, it appears that there has been a substantial change in ownership or that security is required to guarantee payment of taxes by the new entity, the comptroller may require security in accordance with the provisions of this section.

Source Note: The provisions of this §3.327 adopted to be effective December 13, 1977, 2 TexReg 4625; amended to be effective June 25, 1980, 5 TexReg 2272; amended to be effective December 21, 1983, 8 TexReg 5038; amended to be effective January 2, 1985, 9 TexReg 6370; amended to be effective September 18, 1990, 15 TexReg 5062; amended to be effective July 23, 2002, 27 TexReg 6537