Liquor-by-the-drink license holders have been receiving notices from the Tennessee Department of Revenue.
What does the notice mean? The message is cryptic.
In 2024, Tennessee passed a new law that sets a $10,000 minimum for liquor-by-the-drink bonds. Previously, the bond amount could be less than $10,000.
Here is a copy of the law.
Every business that has a liquor-by-the-drink license with the Tennessee Alcoholic Beverage Commission has a bond on file with the Department of Revenue. It is a requirement to be issued a liquor license.
Prior to July 1, 2024, the initial bond amount for a full liquor license was $10,000. The initial bond for wine-only licenses used to be $2,000.
No more.
Beginning July 1, 2024, the minimum bond amount is $10,000. This includes wine-only bonds.
All this talk about bonds reminds us of our favorite bond – James Bond. Alicia Keys and Jack White sing:
Someone that you think that you can trust
Is just another way to die
The Department of Revenue periodically reviews the bond amount. The bond amount is set at four times the average monthly liquor-by-the-drink tax liability.
Before July 1, 2024, the bond amount could be less than $10,000 if a business did not sell that much wine, spirits, and high gravity beer. We saw bonds as low as $1,000.
No more.
Going forward, the minimum bond amount will be $10,000.
Bonds can go up if you sell lots of wine, spirits, and high gravity beer. Bonds can exceed $100,000 if you are selling copious quantities of alcohol.
If your current bond is less than $10,000, expect a notification from the Department of Revenue to increase the bond to $10,000. Going forward, all bonds have to be at $10,000 at a minimum, regardless of sales (or lack thereof, as lawyers like to say).
The Department of Revenue generally reviews bonds in September and October. If your bond needs to be increased, you will receive notice via TNTAP or email and you must increase your bond with your surety. The ABC will not renew your liquor license if your bond is not valid.
We expect that the Department of Revenue will deny bond clearance for all bonds that are less than $10,000.
This means that the ABC will not renew the liquor license.
Going forward, wine-only liquor licenses will require a $10,000 initial bond. In our experience, there is not a lot of difference in the cost of the bond, although it means a higher personal guaranty from the owner of a small business to the surety.
We will leave you with some bonus lines from Bond, James Bond:
Another tricky little gun giving solace to the one
That will never see the sunshine
Another inch of your life sacrificed for your brother in the nick of time
Another dirty money heaven-sent honey turning on a dime