Certain Texas businesses that are permitted to sell alcoholic beverages are required to post or renew their mixed beverage gross receipts bond and mixed beverage sales tax bond each year to ensure payment of taxes to the state.
In this short article, we'll look at these 2 surety bonds:
- What are these bonds?
- How to renew your bonds
- The cost to renew your bonds
- How to lower your surety bond cost
- Important details about the mixed beverage gross receipts tax and sales tax.
The Mixed Beverage Gross Receipts Bond Compared To The Mixed Beverage Sales Bond
First, these two surety bonds are required as a permitted business that handles and sells mixed beverages. Yet, there are different rules based the type of business or club and how the alcohol is being sold. We'll cover these scenarios at the end of this article.
Both of these surety bonds are required by the Sate of Texas Comptroller's Office as protection against a bar, caterer, or private club defaulting on:
- Payment of required taxes on new sales of "mixed beverages"
- Interest payments or penalties from missing tax deadlines
The two taxes in question are:
- Mixed beverage gross receipts tax
- Mixed beverage sales tax
Mixed Beverage A mixed beverage is defined as any alcoholic beverage... beer, wine, liquor... containing more than 1/2% of alcohol by volume.
This accounts for all alcohol based beverages as even "low alcohol" drinks hover around 5% alcohol by volume.
Both of these taxes are assessed on all businesses with the appropriate permit to prepare and sell alcoholic drinks. Plus, businesses that serve ice or non-alcoholic beverages that are used to prepare, served or sold for the purpose of being mixed with an alcoholic beverage and consumed on the premises of the licensee business.
Because the surety bonds protect the state for tax payments due for a given tax year, each of the bonds expire and must be renewed each year on December 31st.
Texas Mixed Beverage Gross Receipts Tax
|Tax Rate||Tax Due|
|6.70%||20th of Every Month|
The Texas Comptroller's Office assesses this tax based on on the new gross receipts of "mixed beverage" sales each month.
The gross receipts are the total of all new payments collected for mixed drinks before any deductions are taken such as labor, rent, or the cost of goods sold.
The business cannot pass the gross receipts tax as a separate line item to the customer and cannot deduct the tax from the payment received on the purchase. See some examples below.
Texas Mixed Beverage Sales Tax
|Tax Rate||Tax Due|
|8.25%||20th of Every Month|
The Texas Comptroller's Office assesses this tax based on new "mixed beverage" sales each month. Unlike the gross receipts tax, Texas does allow the state sales tax cost to be passed along to your customer as a line item on the final bill.
I'll share some examples on how you collect these taxes, but let's get into how to make sure your bonds are renewed for 2023.
How Much Do These Bonds Cost?
The surety bond amount (aka the "bond penalty", or "bond coverage") varies based on the type of business you're operating and your average monthly tax liability from the prior fiscal year.
You do not pay the full penalty of the bond, you pay a premium that is typically a small percentage of that amount. The rate/percentage is underwritten based on each applicant, and rates will vary between different surety companies.
The more mixed drinks you sell, the larger the bond coverage will need to be.
Bond Amount = 4 * Average Monthly Tax Liability over 12 months or $100,000 max
Minimum bond amounts are listed below (remember, the maximum will not exceed $100,000).
|Permit/License Type||Minimum Mixed Beverage Gross Receipts Bond||Minimum Mixed Beverage Sales Bond|
|Mixed Beverage Permit||$3,750||$3,750|
|Private Club Registration Permit||$2,250||$2,250|
|Private Club Exemption Certificate||$1,500||$1,500|
The bond amount may change each year because your average monthly tax liability will likely change year to year. Hopefully sales will go up, but it's possible your average will go down and your bond will be adjusted by the Texas Comptroller's Office.
How To Renew Your Mixed Beverage Bonds
Again, these bonds must be renewed before December 31st each year for a new term beginning January 1.
For each of these surety bonds, you need to contact your surety agent if they don't contact you first. At Surety Bonds Direct, we will be contacting you at least two months in advance so we can help you get your renewal complete.
The process is fairly straightforward, but don't wait until the deadline! Failure to renew your bond on time could result in your permit being revoked or the accumulation of fines. Remember, that nothing happens instantaneously with the state either, so renew at least several weeks before the deadline to ensure that the state has everything on file in advance of the new year.
Contact us for a free quote on Texas Mixed Beverage Sales Tax bond and Mixed Beverage Gross Receipts bond plus help through this process.
How To Lower Your Bond Cost
Because the Mixed Beverage Gross Receipts bond and Mixed Beverage Sales bond renew every year... you get an opportunity to shop for a better rate. Hopefully you're already working with an agent/broker that shops rates on your behalf (like Surety Bonds Direct) so that you don't have to spend your time shopping for surety bonds (boring!).
A surety bond broker can help you find the lowest possible rate. Once you determine the amount of your bond (from the state), your rate will be based on some or all of the following:
- Personal credit
- Liquid assets
- Business experience
- Business financials
One of our bond specialists can provide you a quote for the lowest possible rate for each of your bonds for the next year.
Must Know Details About The Mixed Beverage Gross Receipts Tax and Sales Tax
Permits required to pay the Texas Mixed Beverage Gross Receipts tax are:
- Mixed beverage permit
- Private club registration
- Private club exemption certificate
- Mixed beverage or private club late hours
- Daily temporary mixed beverage or private club
- Mixed beverage or private club holding a food and beverage certificate
- Caterers permit
- Distillers and rectifier permit
Examples of When Each Tax Is Assessed
Example 1: The Sale Of Beer or Wine
If you have a mixed beverage permit and you sell beer and win, you have to pay both taxes.
If you sell beer and wine with beer and wine retailer permit, you are subject to sales tax and a use tax.
Example 2: Private Club
Private clubs are subject to both taxes. Yet, if you're a private club with a section of the club open to the public where you sell beer. On these sales you only collect the sales tax.
On the private side of the club, you collect both the sales tax and the gross receipts tax. Make sure your records accurately distinguish between these two sales for auditing purposes.
Example 3: Bartender And Server Fees
Both bartender and server fees are subject to mixed beverage taxes when a mixed beverage permittee or private club permittee provides bartenders or wait staff who prep and serve alcoholic beverages.
This is even the case when the customer provides the alcohol.
There are more examples on the Texas Comptroller's FAQ.
The bottom line is if you have a Texas mixed beverage permit you are required to pay both taxes on any alcohol payments made on your premisses.
Example Line Item Bills For Both Taxes
|Mexican Martini (2)||$7.00|
|Mixed Beverage Sales Tax (8.25%)||$0.58|
Not included on this bill is the 6.7% gross receipts tax on the alcohol purchase. This totals $0.47.
The customer is paying the sales tax (food) and the mixed beverage sales tax (alcohol), but not the gross receipts tax.
|Mexican Martini (2)||$7.00|
In this example, the sales tax (food) and the mixed beverage sales tax (alcohol) are included in the final sales price.
Again, NOT included in this bill is the 6.7% gross receipts tax of $0.47 for the two martini drinks.
Don't Wait To Renew Your Bonds
The deadline is December 31st. Make sure you contact your surety company for help getting this process complete.
If you need help and want to potentially get a better rate, you can secure both the mixed beverage sales tax and mixed beverage gross receipts bonds or call us at 1-800-608-9950.
We will answer any questions you have and make this process fast.