North Carolina § 105-113 - 38. Bond or irrevocable letter of credit.

§ 105-113. 38. Bond or irrevocable letter of credit.

The Secretary may require a wholesale dealer or a retail dealer to furnish a bond in an amount that adequately protects the State from a wholesale dealer's or a retail dealer's failure to pay taxes due under this Part. A bond must be conditioned on compliance with this Part, payable to the State, and in the form required by the Secretary. The amount of the bond is two times the wholesale or retail dealer's average expected monthly tax liability under this Article, as determined by the Secretary, provided the amount of the bond may not be less than two thousand dollars ($2,000) and may not be more than two million dollars ($2,000,000). The Secretary should periodically review the sufficiency of bonds required of dealers, and increase the amount of a required bond when the amount of the bond furnished no longer covers the anticipated tax liability of the wholesale dealer or retail dealer and decrease the amount when the Secretary determines that a smaller bond amount will adequately protect the State from loss. For purposes of this section, a wholesale dealer or a retail dealer may substitute an irrevocable letter of credit for the secured bond required by this section. The letter of credit must be issued by a commercial bank acceptable to the Secretary and available to the State as a beneficiary. The letter of credit must be in a form acceptable to the Secretary, conditioned upon compliance with this Article, and in the amounts stipulated in this section. History (1969, c. 1075, s. 2; 1991, c. 689, s. 272; 2012-79, s. 2.1; 2014-3, s. 9.1(b); 2016-5, s. 4.1(b); 2020-58, s. 2.6(b).) Effect of Amendments. - Session Laws 2012-79, s. 2.1, effective June 26, 2012, rewrote the section catchline, which formerly read: "Bond"; and added the last sentence. Session Laws 2014-3, s. 9.1(b), effective May 29, 2014, rewrote the section. Session Laws 2016-5, s. 4.1(b), effective May 11, 2016, in the first paragraph, deleted the former third sentence, which read "The bond amount must be proportionate to the anticipated tax liability of the wholesale dealer or retail dealer," and added the present third sentence. Session Laws 2020-58, s. 2.6(b), effective June 30, 2020, substituted "a wholesale dealer's or a retail dealer's failure" for "loss if the dealer fails" in the first sentence of the first paragraph.