What is a Tax Collector Surety Bond?

Individuals that collect taxes for municipalities and other government agencies need a Tax Collector Surety Bond which is a legally binding contract. It ensures the collector conducts business for the public ethically. Some states including Mississippi, Texas, Illinois, and Pennsylvania.

The bond amount needs to be 100% of the public funds the official will manage. However, some jurisdictions put a maximum cap on the bond amount if the bond amount is too high since getting credentials for such high amounts can be almost impossible.

Three parties are legally bound together with this bond:

1. Principal – the tax collector
2. Obligee – specific government agency requiring the tax collector to purchase the bond to protect public from potential financial loss
3. Surety  – the company that issues the bond and provides financial guarantee that the tax collector will abide by the rules stated by the bond

The goals for this bond.

• Guarantee that elected tax officials will handle their responsibilities according to the law. Officials who collect taxes for local municipalities usually are covered by this bond. If the tax collector makes poor financial decisions, the bond will cover the claims made against the tax collector.
• Protect the public from by holding the tax collector financially accountable for finishing their job in a timely manner. The public is guaranteed by the bond that the tax collector will fulfill their duties ethically and legally.

For example, in Texas, a Texas Tax Collector Bond is required by the State of Texas for the collector to comply with the State licensing requirements. The bond promises the  tax collector will fulfill their responsibilities legally and ethically. If the tax collector does not abide by the rules stated by the bond, the surety will pay out the claim.

Click here to apply for a tax collector surety bond