42-1102

42-1102. Taxpayer bonds; definition

(L89, ch 132, sec 5)

A. If the department deems it necessary to protect the revenues to be collected
under this title and title 43, it may require a person liable for the tax to file a bond
to secure the payment of the tax, penalty or interest which may become due from that
person. The bond shall be:

1. Issued by a surety company authorized to transact business in this state and
approved by the director of insurance of this state as to solvency and responsibility or
composed of securities or cash which are deposited with, and kept in the custody of, the
department.

2. In the amount which the department prescribes by administrative rule to secure
the payment of any tax, penalty or interest which may become due from the person.

B. If the department determines that a person is to file such a bond it shall
notify him to that effect, specifying the amount of the bond required. The person shall
file the bond within five days after the giving of notice unless within that time he
requests in writing a hearing before the department at which time the department shall
determine the necessity, propriety and amount of the bond. The determination is final
unless within fifteen days after the giving of notice of the determination the person
appeals the determination to the state board of tax appeals. The board shall decide on
the appeal within fifteen days of its receipt. The bond may, at any time without notice,
be applied to any tax, penalties or interest due, and for that purpose the securities may
be sold at public or private sale without notice to the depositor.

C. For purposes of this section a bond may be required if:

1. After investigation of financial status, the department determines that an
applicant for a new license would be unable to timely remit amounts due.

2. An applicant for a new license held a license for a prior business, and the
remittance record for the prior business falls within one of the conditions in paragraph
5.

3. The department experienced collection problems while the applicant was engaged
in business under a prior license.

4. The applicant is substantially similar to a person who would have been required
to post a bond under paragraph 5 or the person had a previous license which was
revoked. An applicant is substantially similar if it is owned or controlled by persons
who owned or controlled a previous licensee.

5. An existing licensee has had two or more delinquencies in remitting tax during
the preceding twenty-four months if filing on a quarterly or less frequent basis or four
or more delinquencies during the preceding twenty-four months if filing on a monthly or
more frequent basis.

D. If a licensee who is required to post a bond or security maintains a good filing
and payment record for a period of two years, the licensee may request that the
department waive the continued bond or security requirement.

E. In this section "person" includes a firm, partnership, joint venture,
association, corporation, sole proprietorship or any other business or governmental
entity subject to a tax administered by this article but does not include an individual
subject to individual income tax.