§ 3114. Bonding requirements

(a) When the Commissioner, in his or her discretion, deems it necessary to protect the revenues collectible by the Commissioner, he or she may require any person required to collect, withhold, remit or pay any tax administered by the Commissioner (other than the personal income tax) to file with him or her a bond, issued by a surety company authorized to transact business in this State and approved by the Commissioner of Financial Regulation of this State as to solvency and responsibility, in an amount fixed by the Commissioner, to secure the payment of any tax or penalties or interest due or which may become due from that person. In determining whether a person should be required to obtain a bond, the Commissioner is specifically authorized to consider the filing and payment history, with respect to any tax administered by the Commissioner, of such person or any individual, corporation, partnership, or other legal entity with which such person is or was associated as principal, partner, officer, director, employee, agent, or incorporator.

(b) In the event that the Commissioner determines that such person is to file a bond, he or she shall give notice to that effect, specifying the amount of the bond required and the period for which such bond is required. That person shall file a bond within five days after the giving of the notice unless within those five days he or she shall request in writing a hearing before the Commissioner at which the necessity, propriety and amount of the bond shall be determined by the Commissioner. The determination of the Commissioner shall be complied with within 15 days after the giving of notice thereof. Any person aggrieved by a determination of the Commissioner may appeal therefrom in accordance with section 5885 of this title, but the determination of the Commissioner may be overturned on appeal only for abuse of discretion.

(c) Notwithstanding any appeal to the Commissioner or to the courts, no person shall operate any trade or business with respect to which a bond has been demanded during any period for which such bond is not in effect. In case of operation in violation of this section, the Commissioner may cause to be posted, at every public entrance of the vendor's premises, a notice identifying the person and the location and informing the public that the person has not filed a bond, and that no business may be conducted at that location. No person shall cover or deface the posted notice, and the posted notice may not be removed until the bond is posted or removal is otherwise authorized by the Commissioner or a court.

(d) In lieu of a bond, securities approved by the Commissioner or cash in such amount as he or she may prescribe, may be deposited, which shall be kept in the custody of the State Treasurer who may at any time upon instructions from the Commissioner without notice to the depositor apply them to any tax or interest or penalties due, and for that purpose the securities may be sold by him or her at public or private sale without notice to the depositor thereof. (Added 1985, No. 263 (Adj. Sess.), § 5, eff. June 4, 1986; amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a); 2005, No. 14, § 11, eff. May 3, 2005; 2011, No. 78 (Adj. Sess.), § 2.)