Can A Surety Company Cancel A Surety Bond Posted By A Government Contractor?
As you well know by now, a surety bond does expire after a certain amount of time. It is up to the principal to make sure that the bond does not expire, before the construction project is complete. To prevent a bond from expiring, all you have to do is send in the annual premium amount to the surety company, before the bond’s expiration date. If you are sending the payment by snail mail, be sure that you submit the payment at least two weeks in advance, so that it arrives early.
However, what if the principal wants to cancel a surety bond? It is possible that a bond can be canceled, but there are a few things that you need to know about canceling a bond.
Cancelling A Surety Bond
According to the Canadian Revenue Agency, an underwriter can cancel a surety bond that was posted by a government contractor. However, in order for a surety company to cancel a government contractor’s bond, they will have to submit a notification in writing to the appropriate government entity. The Canadian Revenue Agency will investigate the request to see if a surety bond is no longer required and no monies are owed, by the principal.
The letter of cancellation must be sent by registered mail to the appropriate regional excise duty office and must be received 60 days, prior to the cancellation date. After the audit is conducted, a formal decision will be made, based on the evidence collected, during the investigation.
If the surety company fails to comply by these standards, their business license may be jeopardy. If the government contractor is still in operation and the bond was cancelled without written permission from the CRA, it will need to be replaced immediately. If the surety refuses to comply, their license will be suspended or revoked
Underwriters are required to be compliance with their business licensed. Acting unethically will definitely put their business license at jeopardy and if you need more information about this topic, feel free to visit Canadian Revenue Agency website or contact an agent by phone or email.