1. (a) Who must post bond or security. Every 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 determined by the comptroller to be sufficient to protect the state against a failure to pay any amounts or costs which may become due under the state, city, and metropolitan transit authority sales and use tax laws.
2. (b) Conditional permit. An applicant may be issued a conditional permit to do business for a period of time not to exceed 14 days in order to furnish the security required.

3. (c) The amount of bond or security required of persons applying for a tax permit.

   1. (1) Each applicant must post bond or security in an amount equal to two times the amount of the average monthly tax liability.
   2. (2) If a bond amount for a person other than an itinerant vendor is calculated to be less than $3,000, an initial bond will not be required.
   3. (3) If a bond amount for an itinerant vendor is calculated to be less than $100, an initial bond will not be required. For the purposes of this paragraph, 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).

4. (d) The amount of bond or security required of a person who currently is or has been delinquent in payment of any amount due.

   1. (1) Monthly filers. A retailer reporting on a monthly basis must post bond or security in an amount equal to two times the amount of the retailer's average monthly tax liability.
   2. (2) Quarterly and yearly filers. A person reporting on a quarterly or yearly basis must post bond or security in an amount equal to three times the amount of the person's average monthly tax liability.
   3. (3) Bond amounts calculated to be less than $100. If a bond amount is calculated to be less than $100, bond will not be required.
5. (e) Recalculation of amount of bond required under certain circumstances. If it is determined at any time that the amount of bond on file is inadequate or that a person is delinquent in the payment of any amount due, the comptroller may recalculate the amount of security and require new or additional bond to be posted. Under no circumstances, however, will the amount required exceed $50,000 or be less than $100.

6. (f) Types of security.

   1. (1) Acceptable types of security:

      1. (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;
      2. (B) cash (personal checks are acceptable);
      3. (C) bank letters of credit which are deemed by the comptroller to be sufficient in amount and secure;
      4. (D) United States Treasury bonds, readily convertible to cash;
      5. (E) surety bonds.

   2. (2) Unacceptable types of security:

      1. (A) corporate stocks and bonds;
      2. (B) personal guarantees.
7. (g) Assignments. 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.
8. (h) Surety bonds. 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.
9. (i) Forfeiture. In the event of forfeiture, the comptroller will notify the person holding the security and demand payment. The comptroller will also notify the retailer and demand that another or additional bond or security be furnished within 10 days of the date of such notice. The amount of bond or security specified in the notice shall be fixed by the comptroller subject only to the limitations stated in subsection (e) of this section. 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.

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

    1. (1) The Tax Code, §151.201, requires a retailer holding a tax permit to apply for a new permit when the legal structure of the retailer's business changes; for example, a change from a sole ownership to a partnership, a partnership to a corporation, etc.
    2. (2) When a retailer applies for a new permit because of a change in legal structure, the retailer must comply with the provisions of this section. The comptroller will review all records and such other information as the comptroller may require regarding the prior taxpaying performance of the retailer.
    3. (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. (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.