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Tennessee Consumption on Premises - Alcohol Tax Surety Bonds
Tennessee's alcohol service industry faces strict regulatory requirements, with the Consumption on Premises Surety Bond serving as an important financial safeguard for both businesses and state revenue interests. Effective, July 1, 2024, tax bonds for liquor-by-the-drink (LBD) or Consumption on Premises accounts require a bond of no less than $10,000. This includes both full-service licensees and wine-only licensees. This mandatory bond, required for establishments serving alcohol on-site, guarantees proper collection and remittance of alcohol taxes while protecting business operators' licenses. As the bond amount is calculated at four times the average monthly tax liability, understanding its implications and requirements becomes necessary for restaurant owners, private clubs, and other venues offering liquor by the drink. Let's examine the specific details that make this bond a significant component of Tennessee's alcohol service compliance framework.
What is a Tennessee Consumption on Premises Surety Bond?
A Tennessee Consumption on Premises Surety Bond serves as a financial guarantee required by the Commissioner of Revenue for establishments selling alcoholic beverages for on-premises consumption. This alcohol tax surety bond guarantees that licensees properly collect and remit taxes from alcohol sales to the state.
The Tennessee alcoholic beverage tax bond amount typically equals four times the establishment's average monthly tax liability, with a minimum requirement of $10,000.
The Tennessee liquor tax bond protects the state's interests by providing financial recourse if a business fails to meet its tax obligations.
The Tennessee consumption on premises - alcohol tax surety bonds are mandatory for maintaining an active license. If a licensee fails to maintain their Tennessee alcohol sales tax bond or defaults on tax payments, their license faces automatic revocation.
These bonds guarantee compliance with state regulations while promoting responsible business practices within the alcohol service industry. Establishments must submit their bonds to the Commissioner's office in Nashville and maintain active coverage throughout their licensing period.
Who needs a Tennessee Consumption on Premises Surety Bond?
Businesses selling alcoholic beverages for on-premises consumption in Tennessee must obtain a Consumption on Premises Surety Bond as mandated by state law. This requirement applies to establishments holding Liquor-by-the-Drink (LBD) licenses, including restaurants, hotels, and private clubs serving beverages containing more than 8% alcohol by weight.
The bond requirement specifically targets licensees responsible for collecting and remitting alcohol taxes to the Commissioner of Revenue in Nashville. The standard bond amount equals four times the establishment's average monthly tax liability or $10,000, whichever is greater.
Primary establishments requiring the bond:
Full-service restaurants with Liquor By the Drink (LBD) licenses
Hotels and lodging facilities serving alcohol
Private clubs with on-premises consumption permits
Licensed establishments must maintain their surety bond throughout their operational period. Failure to maintain the required bond can result in automatic license revocation.
The bond serves as financial security, ensuring proper tax collection and remittance while protecting the state's revenue interests.
How much does a TN Consumption on Premises Surety Bond cost?
The cost of Tennessee Consumption on Premises Surety Bonds varies based on the establishment's tax liability and credit standing. For most licensees, the required bond amount equals four times their average monthly tax liability or $1,000, whichever is greater.
Restaurants benefit from a reduced requirement of one-fifth the standard amount, making their bonds more affordable.
The base rate for this particular surety bond is 1.2% of the required amount with a minimum premium of $120 annually for the $10,000 surety bond. Underwriting and credit report review is only required for bond amounts in excess of $25,000.
Bonds under $25,000 are issued instantly upon the completion of the bond application and providing premium payment.
Underwriting factors for bonds in excess of $25000 include:
Business Owners personal credit score
Business Financial Statements
Years in operation
Previous tax compliance history
Industry experience
Overall financial stability
How do I get my TN Consumption on Premises Surety Bond?
To obtain a Tennessee Consumption on Premises Surety Bond, licensees must submit an indemnity bond to the commissioner of revenue for an amount equal to four times their average monthly tax liability or $1,000, whichever is greater.
Restaurant licensees benefit from a reduced bond requirement set at one-fifth of the standard amount typically required.
Complete our online application for a Liquor by the Drink bond to receive a copy of your bond the same day!
Fast Approval—Get Your Bond Today!
Instant Issue: Bonds up to $25,000 approved in minutes.
Same-Day Digital Delivery: Submit directly to the Commissioner of Revenue.
Expert Assistance: Guidance on meeting underwriting requirements for larger bonds.
Don’t delay—non-compliance can cost you your livelihood. Act now to secure your Tennessee Consumption on Premises Surety Bond and keep your business running smoothly.
Essential compliance requirements include:
Monthly tax payments submitted to the Commissioner in Nashville by the first day of each month
Gross sales reports filed using prescribed forms by the fifteenth of each month
Strict adherence to display regulations for tax amounts on sales receipts
The bond requirement applies to all establishments serving alcohol for on-premises consumption, regardless of size or service type.
Maintaining compliance with these bond requirements is vital for continued operation under Tennessee alcohol licensing regulations.
Instant Issue for Bonds up to $25,000
Business owners seeking Tennessee alcohol tax surety bonds can now access streamlined instant approval for bonds up to $25,000. Get your bond as soon as today!
This expedited process enables licensees to fulfill their bond requirements efficiently while maintaining compliance with state regulations regarding tax collection and remittance.
The automated system allows applicants to secure their bonds immediately, allowing them to proceed with their licensing requirements without delay.
This modernized approach aligns with the state's commitment to efficient tax administration while maintaining the security requirements necessary for proper revenue collection.
Whether you're a new business owner or an established entity seeking to renew your bond, we've got you covered with the expertise and support you need. Our goal is to ensure your compliance with Tennessee's liquor tax regulations so you can focus on growing your business.
Buy your Consumption on Premises (Liquor-by-the-Drink) Alcohol Tax bond today and receive a copy of your bond the same day!
Underwriting required for Bonds over $25,000
While our instant issue program streamlines smaller bond approvals, applications for alcohol tax surety bonds exceeding $25,000 require underwriting review. This thorough evaluation process guarantees proper risk assessment for higher-value bonds that secure larger tax obligations to the Commissioner of Revenue.
The underwriting process typically examines the licensee's personal and business credit history, tax payment record and possibly business financial statements. Applicants must demonstrate their ability to consistently meet monthly tax reporting requirements and maintain sufficient financial capacity to cover potential tax liabilities. The underwriting team evaluates this information alongside the establishment's operational history and compliance record.
For establishments with significant monthly sales volumes, the four-times monthly tax liability calculation often results in bonds exceeding the $25,000 threshold.
Upon approval, the bond must be properly filed with the commissioner before conducting business. The Consumption on Premises surety bond protects state revenue while guaranteeing qualified establishments can operate within Tennessee's regulatory framework.
Frequently Asked Questions
Can I Transfer My Surety Bond to a New Business Location?
Surety bonds generally remain valid when transferring business locations within the same jurisdiction, provided you notify the commissioner and update documentation. However, verification with licensing authorities is recommended to guarantee compliance.
What Happens if My Bond Provider Goes Bankrupt?
If your surety provider becomes bankrupt, you must immediately obtain a replacement bond from a solvent provider to maintain compliance. Your existing bond coverage may be compromised, potentially affecting your licensing status. This will never be an issue with any of the surety bond carriers we utilize here at A1SuretyBonds.com, our partners are fully vetted to make sure they meet the states requirements and are financially stable. We only deal with A Rated (by AM Best) surety companies and only those that have a longstanding history of good business practices are allowed to service our clientele
Does Seasonal Operation Affect My Bond Requirements?
Seasonal operation status does not affect bond requirements. The mandatory bond amount remains at four times the average monthly tax liability or $10,000, whichever is greater, regardless of operational schedules or temporary closures.
Are There Different Bond Requirements for Franchises Versus Independent Establishments?
Bond requirements are standardized based on monthly tax liability, not ownership structure. Both franchises and independent establishments must post bonds equaling four times their average monthly tax liability or $10,000, whichever is greater.