REVENUE ADMINISTRATIVE BULLETIN 1989-25

Approved: April 12, 1989

BONDING REQUIREMENTS FOR TAXPAYING CIGARETTE ACCOUNTS

RAB-89-25. This Bulletin establishes the Department’s bonding requirements for taxpaying cigarette accounts.

The Michigan Cigarette Tax Act and Department of Treasury Cigarette Rules, MCL 205.503(d) and 1979 AC, R 205.403(1), respectively, provide that each applicant for a cigarette tax license must be able to prove their financial responsibility to the Commissioner of Revenue's satisfaction.

An applicant who does not satisfy the Commissioner as to their- financial responsibility may be required to file, with the Department of Treasury, a surety bond payable to the State of Michigan in such amount as the Department establishes. This bond is to secure the payment of the tax as specified in the Cigarette Tax Act, MCL 205.507.

All new applicants must secure a surety bond as a condition of obtaining a cigarette tax license. In each instance the applicant must obtain the surety bond before a license will be issued.  A current financial statement must be included when submitting a license application. The financial statement must show all assets and liabilities and any other information the Department may prescribe.

The Department will evaluate each applicant for financial responsibility at the time the license application is submitted, including new applicants, license renewal applications and at interim periods as deemed necessary by the Department.