Why do we Need to Post a California Cigarette Tax Stamp Surety Bond

What is the California Cigarette Tax Stamp Program?

The California Cigarette Tax Stamp Program was developed by the State Board of Equalization (BOE) to implement the new California tax stamp mandated under Senate Bill (SB) 1701, enacted September 26, 2002. SB 1701 required the BOE to replace the old heat-applied decal tax stamp with a new tax stamp that can be read by a scanning device or similar device and encrypted with specific information after January 1, 2005. The BOE has entered into a contract with SICPA Products Security to sell the new cigarette tax stamps and related application equipment.

If you wish to purchase stamps, you will need to register as an authorized purchaser.  If you are willing to pre-pay for your stamps, you do not have to post a surety bond. However, the State offers many deferred payment options.  If you choose one of these options you are required to provide a surety bond in the amount of the expected tax that will be owed to the State. The purpose of the surety bond is to guarantee that the tax payments are made to the State.