Missouri Transient Employer Tax Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Missouri Transient Employer Tax bond (formally referred to as a Missouri Transient Employer Withholding Tax and Unemployment Tax bond).
At a Glance:
- Lowest Cost: $100 per year or $10 a month
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: All non-resident transient employers who transact business in the State of Missouri temporarily or for less than 24 consecutive months
- Purpose: To ensure the Department of Revenue will receive compensation for any damages should the transient employer fail to promptly file accurate reports and pay any taxes due
- Who Regulates Transient Employers in Missouri: The Missouri Department of Revenue
Background
Revisor of Missouri Statute 285.230 requires all non-resident transient employers who transact business in the state temporarily or for less than 24 consecutive months to obtain an approved registration from the Missouri Department of Revenue. The Missouri Legislature enacted the registration requirement to ensure that non-resident transient employers do not engage in unethical business practices. To provide financial security for the enforcement of the registration law, non-resident transient employers must purchase and maintain a surety bond to be eligible for licensure.
What Is the Purpose of the Missouri Transient Employer Tax Bond?
Revisor of Missouri Statute 285.230 requires all non-resident transient employers who transact business in the state temporarily or for less than 24 consecutive months to purchase a surety bond as part of the application process for an approved registration. The bond ensures that restitution is available to any damaged party (specifically, the Department of Revenue) should the transient employer fail to abide by the regulations outlined in the Revisor of Missouri Title XVIII, Chapter 285. Specifically, the bond protects the Department if the transient employer fails to promptly file accurate reports and pay any taxes due. In short, the bond is a type of insurance that protects the Department if the transient employer violates the terms of their license.
How Can an Insurance Agent Obtain a Missouri Transient Employer Tax Bond?
BondExchange makes obtaining a Missouri Transient Employer Tax bond easy. Simply log in to your account and use our keyword search to find the “transient employer” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
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How Is the Missouri Transient Employer Tax Bond Amount Determined?
The limit of the Missouri Transient Employer Tax bond is determined by the Department of Revenue and is based on the transient employer’s average estimated quarterly withholding tax liability—a $5,000 minimum and $25,000 maximum bond amount are required. For further details on how to calculate the correct bond limit, check out the Transient Employer Missouri Tax Registration Application (Page 3 under “Employer Withholding Tax” header).
Is a Credit Check Required for the Missouri Transient Employer Tax Bond?
Surety companies will run a credit check on the transient employer to determine eligibility and pricing for the Missouri Transient Employer Tax bond. Non-resident transient employers with excellent credit and work experience can expect to receive the best rates. While non-resident transient employers with poor credit may be declined by some surety companies or have to pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.
How Much Does the Missouri Transient Employer Tax Bond Cost?
The Missouri Transient Employer Tax bond can cost between 0.5% to 5% of the bond amount per year. Monthly subscription options are also available. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below briefly references the approximate bond cost on the $25,000 maximum requirement.
$25,000 Missouri Transient Employer Tax Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $250 | $25 |
| 680 -719 | $375 | $38 |
| 650 – 679 | $500 | $50 |
| 600 – 649 | $1,000 | $100 |
| 550 – 599 | $1,875 | $188 |
| 500 – 549 | $3,125 | $313 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Missouri Define “Transient Employer”?
To paraphrase Revisor of Missouri Statute 285.230, a transient employer is an out-of-state company that temporarily conducts business in Missouri for less than 24 consecutive months (two years). It is important to note that it does not matter where their employees reside. If a non-resident employer falls within this definition, the transient employer is expected to register their business, acquire a surety bond, and remit their withholding tax to the Missouri Department of Revenue.
Exemptions to this definition include the following:
- Employers with a principal place of business located in a county of another state which is contiguous to Missouri
- Employers that have been under contract to perform work in Missouri for at least sixty days cumulatively out of twelve months during each of the two calendar years immediately preceding the employer’s initial application for exemption from the surety bond requirement
- Employers in possession of a tax clearance from the Missouri Department of Revenue and the Division of Employment Security
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Transient Employers Become Registered in Missouri?
Non-resident transient employers in Missouri must navigate several steps for an approved registration. Below are the general guidelines, but applicants should contact the Missouri Department of Revenue for details on the process.
Registration Period – Registration with the Missouri Department of Revenue as a transient employer is due on or before January 31st of each year.
Step 1 – Purchase a Surety Bond
All non-resident transient employers who transact business in the State of Missouri temporarily or for less than 24 consecutive months must purchase and maintain a surety bond.
Step 2 – Fulfill the Following Requirements
A completed Transient Employer Missouri Tax Registration Application must be submitted to the Department of Revenue, Taxation Division. In addition, the following details/forms are required as part of the application process:
- A completed insurance certification document indicating Missouri as a covered state for workers’ compensation
- Employment security account number issued by the Department of Labor (only applicable if hiring a Missouri resident)
- Certificate of authority number issued by the Corporate Division of the Secretary of State’s Office
How Do Transient Employers in Missouri Renew Their Registration?
Registration with the Missouri Department of Revenue as a transient employer is due on or before January 31st of each year. The Department should provide further details on the renewal process via the mailing address originally provided.
What Are the Insurance Requirements for Transient Employers in Missouri?
Missouri does not require non-resident transient employers to purchase any form of liability insurance as a prerequisite to obtaining a license. Transient employers must purchase and maintain a surety bond.
How Do Missouri Transient Employers File Their Bonds?
Transient employers should submit their completed bond forms, including the power of attorney when submitting their registration applications to the Missouri Department of Revenue (see the mailing address listed below).
Missouri Department of Revenue
Taxation Division
PO Box 357
Jefferson City, MO 65105
The surety bond requires signatures from the surety company, as well as the transient employer. The surety company should include the following information on the bond form:
- The legal name of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can Missouri Transient Employers Do to Avoid a Claim Against Their Surety Bond?
The best way to avoid a bond claim as a non-resident transient employer is to simply comply with state registration and tax laws. This includes the prompt payment of all withholding taxes and related fees, interest, additions to tax, and penalties due to the Missouri Department of Revenue. Failure to do so may result in the Department filing a claim upon the Transient Employer Tax bond.
What Other Insurance Products Can Agents Offer Transient Employers Registered in Missouri?
Most reputable transient employers will purchase business liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Transient Employers Operating in Missouri?
Unfortunately, Missouri does not provide a public list of active transient employers in the state. We suggest contacting the Department of Revenue to obtain a list of registered transient employers here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
