North Carolina Cigarette Distributor Bond and Tobacco Tax Bond

North Carolina Cigarette Distributor Bond and Tobacco Tax Bond

The North Carolina Department of Revenue (NCDOR) requires a bond to be filed in an amount between $2,000–$2,000,000 for the guarantee of tobacco tax compliance. Cigarette distributors must hold a Tax Bond for Cigarettes, more commonly known as a Cigarette Distributor Bond. Tobacco product wholesalers or retailers must hold a Tax Bond for Tobacco Products Other Than Cigarettes, more commonly known as a Tobacco Tax Bond. 

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Jet helps you get your Cigarette Distributor Bond or Tobacco Tax Bond quickly with monthly payments exclusive to Jet. 

Which Bond Do I Need to Comply With My License?

The Cigarette Distributor Bond and the Tobacco Tax Bond are very similar, both of which would fulfill the bonding requirement for the Cigarette Distributor’s License and Tobacco Products (Other Than Cigarettes) License (form B-A-2). The type of business that will be conducted will determine which bond is required: a cigarette distributor or manufacturer is required to have a Cigarette Distributor Bond and an Other Tobacco Product (OTP) wholesale dealer, manufacturer, or retail dealer is required to have a Tobacco Tax Bond. 

What Is the Cost of the Cigarette Distributor Bond or Tobacco Tax Bond?

The cost for a Cigarette Distributor Bond or a Tobacco Tax Bond starts at $100 annually or $10 monthly with Jet. The cost will vary depending on the bond limit that is required and underwriting factors, such as personal credit. The bond limit that is required by the NCDOR must be in an amount twice your expected average monthly tax liability, starting at $2,000 going up to $2,000,000. The NCDOR will periodically evaluate whether your bond limit reflects the liability appropriately and may suggest an increase or decrease in the bond limit. The chart below shows an example of rates for good credit at various bond limits.

Bond TermCost
Monthly$10
1 Year$100
2 Years$175
3 Years$250
North Carolina Cigarette Distributor and Tobacco Tax Bond Pricing

Regardless of your bond limit, Jet will never add on unnecessary fees or be influenced by commission like third-party brokers would. Jet cuts out middlemen to make sure that you are able to purchase your Cigarette Distributor Bond or Tobacco Tax Bond for a fair price. 

How Does the Cigarette Distributor Bond or Tobacco Tax Bond Get Filed to the NCDOR?

After purchasing your Cigarette Distributor Bond or Tobacco Tax Bond, Jet will provide the bond with signatures and the surety seal as required by the NCDOR and then mail the bond to you. To complete the bond, you must add any signatures, seals, and attachments as needed. An individual or partnership will only need a signature before submitting to the NCDOR but corporations and LLCs have additional requirements.

A corporation must include:

An LLC must include: 

The original bond and any attachments can be mailed to:

North Carolina Department of Revenue
Attention: Tobacco Licensing and Bonding
1429 Rock Quarry Road, Suite 105
Raleigh, NC 27610

What Happens if I Need to Cancel My Cigarette Distributor Bond or Tobacco Tax Bond?

If you need to cancel your Cigarette Distributor Bond or Tobacco Distributor Bond at any time, Jet will help you! For monthly payment plans, Jet will stop the automatic payments and notify the NCDOR of the cancellation. The NCDOR will keep the bond in effect for 30 days upon receipt of notice, which may require one more payment for the additional coverage. 

For bonds that have been purchased by the year, you will receive a partial refund. Jet doesn’t work with brokers so no extra fees or commissions will get subtracted from your refund. Jet will calculate the time that the bond was in effect (including the additional 30 days of coverage after cancellation was requested), and you will receive a refund for any unused premium.

How to Avoid Claims on the Bond

The Cigarette Distributor Bond and the Tobacco Tax Bond are required by the NCDOR to make sure that tobacco excise taxes are paid. Cigarette distributors and wholesale and retail dealers of other tobacco products are obligated to follow the Tobacco Products Tax Act to comply with their licensing requirements and pay due taxes to avoid claims on their bond. 

Taxes are to be paid with the submission of the monthly reports due within 20 days after the end of the month. The excise taxes for the sale or possession for sale of tobacco products are as follows:

If tobacco excise taxes are not paid by the cigarette distributor or the tobacco wholesaler or retailer, the NCDOR will file a claim to ensure that they receive payment to distribute to public services, such as the General Fund and the University Cancer Research Fund. 

The NCDOR may discipline the tobacco wholesaler or retailer or the cigarette distributor with a civil penalty in an amount starting at 5% of the taxes that were due according to the General Administration, Article 9. The penalties may increase to as much as 50% of the taxes due if there was willful withholding of taxes or the intent of fraud. It is in the best interest of those holding a Cigarette or Tobacco Tax Bond to comply with the NCDOR and be responsive in complaints against the license as to avoid a bond claim.

What Happens if I Get a Bond Claim?

If a claim is filed on your Cigarette Distributor Bond or Tobacco Tax Bond, Jet will take accounts from both parties to investigate the accusation. Usually in the case of a government entity filing a claim, such as the NCDOR, they are able to provide sufficient evidence to back up the claim. Jet will make payment through the bond to the NCDOR right away, which acts as an extension of your credit. However, you are still responsible for your actions and must repay Jet in the amount of the claim.

Why Are These Bonds Required by the North Carolina Department of Revenue?

The NCDOR requires a Cigarette Distributor Bond or Tobacco Tax Bond to be filed to ensure tobacco tax compliance. The revenue of tax from vapor products and three percent of the cost price of products is allocated to the General Fund, which is spent on education, health and human services, and other services. The remainder of the funds collected from tobacco taxes is contributed to the University Cancer Research Fund. If the monthly tobacco excise tax is not paid, the NCDOR can file a claim on the bond to receive payment to ensure the redistribution of tax money for the good of the public.

How Does the Application Process Work With Jet?

You can apply for a Cigarette Distributor Bond or a Tobacco Tax Bond with Jet in minutes! The online application will take you through each step, asking for license information or personal information, such as a social security number that is needed for the underwriting process. Once you finish the application, you may receive an approved rate that is ready to purchase or a further review may be required. 

As the bond limit increases, the risk that whether or not a bond claim will be paid back also increases. To evaluate the risk of higher bond limits, a further evaluation of credit is necessary. Once approved for a rate, Jet will send you the rate for immediate online purchase.

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How to Renew the Cigarette Distributor Bond or Tobacco Tax Bond

When it is time to renew your bond, Jet makes it easy by sending a renewal notice through mail and email. For bonds purchased in 1-, 2-, or 3-year terms, you can renew online instantly or fill out and mail back the renewal form. If you are on the monthly payment plan, the payments will continue to come out of your account as long as there are no changes to the bond. 

During your renewal, you may need to adjust your bond limit to reflect the NCDOR’s required amount of coverage. The new limit may result in a change to the cost of the upcoming bond term. To show the change in coverage, an Increase or Decrease Rider must be submitted to the NCDOR with the same filing requirements as the original bond. Jet can easily make any adjustments to the Cigarette or Tobacco Tax Bond upon request.

Do the Cigarette Distributor Bond or Tobacco Tax Bond Expire?

No, the Cigarette Distributor Bond and Tobacco Tax Bond do not expire. Both bonds work in the same fashion, remaining in effect until a cancellation is requested.

Notary Bond Application:

X

Business Information:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Employee Dishonesty Bond Application:

Business Information:

Business Description:

Coverage Requirements:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Contract Bond Application:

X

Business Information:

Owner Information:

Job Details:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Worker's Compensation Application:

X

Business Information:

Business Description:

Coverage Requirements

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information: