Iowa Cigarette and Tobacco Distributor Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain an Iowa Cigarette and Tobacco Distributor bond, also formally known as an Iowa Cigarette, Tobacco, or Delivery Seller bond.

At a Glance:

• Lowest Cost: $100 per year or $10 a month
• Bond Amount: $3,500
• Who Needs It: All cigarette and tobacco distributors operating in Iowa
• Who Regulates Cigarette and Tobacco Distributors in Iowa: The Iowa Department of Revenue
• Purpose: To ensure that the Department will receive compensation for financial harm if the permittee fails to pay all required taxes

Background

Iowa Code 453A.13 requires all cigarette and tobacco distributors operating in the state to obtain a permit/license from the Department of Revenue. The Iowa Legislature enacted the permit/license requirement to ensure cigarette and tobacco distributors do not engage in unethical business practices. To provide financial security for the enforcement of the permit/license law, cigarette and tobacco distributors must purchase and maintain a $3,500 surety bond to be eligible for a permit/license.

What Is the Purpose of the Iowa Cigarette and Tobacco Distributor Bond?

Iowa Code 453A.14 requires all cigarette and tobacco distributors to purchase a surety bond as part of the application process to obtain a permit/license. The bond ensures that restitution is available to the Department of Revenue should the cigarette or tobacco distributor fail to abide by the regulations outlined in the Iowa Code Chapter 453A. Specifically, the bond ensures that the Department will receive compensation for financial harm if the permittee/licensee fails to pay all required taxes. In short, the bond is a type of insurance that protects the Department if the cigarette or tobacco distributors violate the terms of their permit/license.

How Can an Insurance Agent Obtain an Iowa Cigarette and Tobacco Distributor Bond?

BondExchange makes obtaining an Iowa Cigarette and Tobacco Distributor bond easy. Simply log in to your account and use our keyword search to find the “cigarette/tobacco distributor” 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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Is a Credit Check Required for the Iowa Cigarette and Tobacco Distributor Bond?

No, a credit check is not required for the Iowa Cigarette and Tobacco Distributor bond. Because the bond is considered relatively low risk, the same rate is offered to all cigarette and tobacco distributors in Iowa regardless of their credit history.

How Much Does the Iowa Cigarette and Tobacco Distributor Bond Cost?

The Iowa Cigarette and Tobacco Distributor bond costs just $100 per year or $10 a month.

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 Iowa Cigarette and Tobacco Distributors Obtain a Permit/License?

Cigarette and tobacco distributors in Iowa must navigate several steps to obtain a permit/license. Below are the general guidelines, but applicants should refer to the Department of Revenue’s Cigarette and Tobacco Tax Information webpage for details on the process.

Permit/License Period – According to the Iowa Department of Revenue, cigarette and tobacco distributor permits/licenses expire on June 30th annually.

Step 1 – Purchase Surety Bond

Iowa cigarette and tobacco distributors must purchase and maintain a surety bond with the Department of Revenue for the entire duration of their permit/license period.

Step 2 – Complete and Submit Permit/License Application

Iowa cigarette and tobacco distributors must complete the Annual Application for Iowa Cigarette Permit, Tobacco Tax License, or Delivery Seller Permit and mail it to the Department of Revenue. A check made payable to the Department in the appropriate amount must also be attached. The application details any additional applicable attachments/information needed.

How Do Cigarette and Tobacco Distributors in Iowa Renew Their Permits/Licenses?

According to the Iowa Department of Revenue, cigarette and tobacco distributor permits/licenses expire on June 30th annually. Renewal permit applications must be submitted to the Department before the expiration date. Renewal fees may apply.

What Are the Insurance Requirements for Cigarette and Tobacco Distributors in Iowa?

Iowa does not require cigarette and tobacco distributors to purchase any form of liability insurance as a prerequisite to obtaining a permit. Cigarette and tobacco distributors must purchase and maintain a $3,500 surety bond.

How Do Cigarette and Tobacco Distributors File Their Bonds in Iowa?

Cigarette and tobacco distributors should submit their completed bond forms, including the power of attorney, when submitting their permit/license applications to the Iowa Department of Revenue (see the mailing address listed below).

Cigarette/Tobacco
Tax Management Division
Iowa Department of Revenue
PO Box 10472
Des Moines IA 50306

The surety bond requires signatures from the surety company, as well as the cigarette or tobacco distributor. 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 Iowa Cigarette and Tobacco Distributors Do to Avoid Claims Made Against Their Bonds?

The best way to avoid a claim against an Iowa Cigarette and Tobacco Distributor bond is to pay all cigarette/tobacco taxes, penalties, and interest that are due to the Department of Revenue in full and on time.

What Other Insurance Products Can Agents Offer Cigarette and Tobacco Distributors in Iowa?

Most reputable cigarette and tobacco distributors 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 Iowa Cigarette and Tobacco Distributor Customers?

Iowa conveniently provides a public database to search for active cigarette and tobacco distributors in the state. The database can be accessed under Cigarette and Tobacco Permit Listing. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.