(b) The Secretary may require a licensed distributor to furnish a bond in an amount
that adequately protects the State from loss if the licensed distributor fails 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 licensed distributor'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 the
licensed distributor and increase the required bond amount if the amount no longer
covers the anticipated tax liability of the licensed distributor and decrease the
amount if the Secretary finds that a lower bond amount will protect the State adequately
For purposes of this section, a licensed distributor 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.
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