Alaska Cigarette Stamp Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain an Alaska Cigarette Stamp 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 licensees who are applying with the Department of Revenue to purchase cigarette stamps on a deferred payment basis in Alaska
- Purpose: To ensure that the Department of Revenue will receive compensation for financial harm if the licensee fails to pay all required taxes
- Who Regulates Cigarette and Tobacco Licensees in Alaska: The Alaska Department of Revenue
Background
Alaska Statute 43.50.010 requires all cigarette manufacturers, distributors, direct-buy retailers, vending machine operators, and buyers operating in the state to obtain a license from the Department of Revenue. The Alaska Legislature enacted the licensing requirement to ensure licensees do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, licensees must purchase and maintain a surety bond to be eligible for licensure.
What Is the Purpose of the Alaska Cigarette Stamp Bond?
Alaska Statute 43.50.580 requires all licensees who are applying with the Department of Revenue to purchase cigarette stamps on a deferred payment basis to obtain a surety bond. The bond ensures that restitution is available to the Department should the licensee fail to abide by the regulations outlined in the Alaska Statutes Title 43, Chapter 50. Specifically, the bond ensures the payment of all cigarette taxes, penalties, and interest that is due to the State of Alaska. In short, the bond is a type of insurance that protects the state if the licensee violates the terms of their license.
How Can an Insurance Agent Obtain an Alaska Cigarette Stamp Bond?
BondExchange makes obtaining an Alaska Cigarette Stamp bond easy. Simply log in to your account and use our keyword search to find the “cigarette stamp” 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.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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How Is the Bond Amount Determined?
According to Alaska Statute 43.50.550, the Cigarette Stamp bond limit must be equal to 200% of the maximum dollar amount of allowed monthly purchases or equal to 100% of the maximum dollar amount of allowed monthly purchases (only applies to licensees that either hold a license for a physical location or have been in full compliance with all license regulations during the preceding 60 months).
Is a Credit Check Required for the Alaska Cigarette Stamp Bond?
Surety companies will run a credit check on the licensee to determine eligibility and pricing for the Alaska Cigarette Stamp bond. Applicants with excellent credit and work experience can expect to receive the best rates. Some surety companies may decline applicants with poor credit 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 Alaska Cigarette Stamp Bond Cost?
The Alaska Cigarette Stamp bond can cost between 2% to 10% 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 $10,000 requirement.
$10,000 Alaska Cigarette Stamp Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $100 | $10 |
| 680 – 719 | $150 | $15 |
| 650 -679 | $200 | $20 |
| 600 – 649 | $400 | $40 |
| 550 – 599 | $750 | $75 |
| 500 – 549 | $1,250 | $125 |
*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.
Who Is Required to Purchase an Alaska Cigarette Stamp Bond?
According to Alaska Statute 43.50.580, licensees ( i.e. cigarette manufacturers, distributors, direct-buy retailers, vending machine operators, and buyers) that apply with the Department of Revenue to purchase cigarette stamps on a deferred payment basis must purchase and maintain a Cigarette Stamp bond.
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 to Obtain a Cigarette and Tobacco License in Alaska
Applicants for a cigarette or tobacco license in Alaska must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Department of Revenue’s Tobacco Tax webpage for details on the process.
License Period – Cigarette and tobacco licenses in Alaska must be renewed yearly.
Step 1 – Purchase Surety Bond (if applicable)
Cigarette and tobacco licensees who are applying with the Alaska Department of Revenue to purchase cigarette stamps on a deferred payment basis must purchase and maintain a surety bond.
Step 2 – Submit License Application
Appropriate license renewal applications (e.g. cigarette manufacturer, cigarette distributor, cigarette buyer, etc.) must be completed and submitted to the Department via their online application portal.
How Is a Cigarette or Tobacco License Renewed in Alaska?
Cigarette and tobacco licenses in Alaska must be renewed yearly. To renew, utilize the Department of Revenue’s online application portal. Fees may apply.
What Are the Insurance Requirements for Licensees That Qualify for an Alaska Cigarette Stamp Bond?
Alaska does not require applicants who qualify for cigarette stamp deferred payments to purchase any form of liability insurance as a prerequisite to obtaining a license. Such licensees must purchase and maintain a surety bond.
How Are Cigarette Stamp Bonds Filed in Alaska?
Applicants should submit their completed bond forms, including the power of attorney, when submitting their license applications to the Alaska Department of Revenue (see the mailing address listed below).
Alaska Department of Revenue
Tax Division
PO Box 110420
Juneau, AK 99811
The surety bond requires signatures from the surety company, as well as the license applicant. 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 Licensees Do to Avoid Claims Made Against Their Cigarette Stamp Bonds?
The best way to avoid a claim against an Alaska Cigarette Stamp bond is to pay all cigarette taxes, penalties, and interest that is due to the Department of Revenue in full and on time.
What Other Insurance Products Can Agents Offer Cigarette and Tobacco Licensees in Alaska?
Most reputable cigarette and tobacco licensees 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 Cigarette and Tobacco Licensee Customers in Alaska?
Alaska conveniently provides a public database to search for active cigarette and tobacco-related licenses in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
