Iowa Sales and Use Tax Bond

The bond amount is determined by the Iowa Department of Revenue based on your typical tax liability and filing frequency. Minimum amounts are: quarterly filers (3 quarters of liability), monthly filers (5 months of liability), semimonthly filers (3 months of liability), and annual filers (1 year of liability with a $100 minimum). Common bond amounts range from $2,000 to $50,000, though the exact amount is case-by-case based on your business's tax exposure.

If you fail to remit collected sales taxes, the Iowa Department of Revenue can file a claim against your bond. The surety company will investigate the claim and pay valid claims up to the bond amount. However, you (the principal) are legally required to reimburse the surety for all amounts paid plus costs. Claims can also be triggered by returned checks for tax payments, failure to file required returns, or unpaid tax assessments.

The Iowa Department of Revenue requires this bond in two main situations: (1) For new sales tax permit applicants who have a prior history of unfavorable filing/payment records or who may be financially unable to pay taxes on time, and (2) For existing permit holders who become delinquent based on filing frequency—quarterly filers with 2+ delinquencies, monthly filers with 4+ delinquencies, or semimonthly filers with 8+ delinquencies within a 24-month period. The bond is also required for out-of-state sellers hauling goods into Iowa for retail sale.