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What's New: Government Affairs

SFAA Acts to Save Tax Bond in Texas

Monday, April 16, 2012  

SFAA provided to the Texas Alcoholic Beverage Commission (TABC) data on losses and an explanation of the benefits of the tax bonds current required of distributors, importers and makers of alcoholic beverages, as well as other licensees/permittees. TABC conducted a stakeholders meeting to discuss the potential elimination of these bonds. Our letter and data refute one of the primary reasons for eliminating the bond, namely, that there have been no claims on the bonds. There have been losses in Texas, and if bonding were not in place, TABC needs to consider how the State of Texas will step in and pursue collection of taxes from TABC licensee and permittees that fail to pay. Even if there were no claims, without the bond, TABC would lose the benefit of the surety’s prequalification and licenses and permits conceivably could be provided to entities that lack the financial capacity to meet their tax obligations.

Licensees/permittees of the TABC are authorized to provide certificates of deposit or letters of credit in lieu of the surety bond to secure their obligations to TABC. SFAA suggests that the TABC should survey the practices of its licensees/permittees in terms of the option they currently use to secure their obligations, and study the comparative benefits of all three alternatives before it moves to eliminate bonding and any requirement that its licensees/permittees secure their obligations under the law to TABC.

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