Fuel Tax Bonds

What Is a Taxable Fuel Bond?

Taxable fuel bonds protect the state and the public if a fuel seller does not comply with industry regulations. Maintaining a surety bond is a license requirement in every state. It guarantees fuel sellers will pay all taxes, penalties and interest owed to the government. 

This bond has different names depending on the state, including:

• Fuel tax bond
• IFTA (International Fuel Tax Agreement) bond
• Motor fuels tax bond
• Mileage and fuel tax bond
• Fuel distributor bond, fuel supplier bond

SuretyBonds.com is the nation’s top surety provider. We offer the best service, fastest delivery and most affordable fuel bond prices in the industry.

How Do Taxable Fuel Bonds Work?

As with all surety bonds, the taxable fuel bond is an agreement among three entities:

1. Principal: The fuel seller registrant purchasing the bond
2. Obligee: The Chief, Excise Tax Program requiring the bond
3. Surety: The company issuing and backing the bond

It ensures the fuel company complies with the guidelines established by the Internal Revenue Service (IRS). If the fuel seller fails to comply with federal and state regulations, the surety will compensate the obligee for any damages. From there, the principal must reimburse the surety in full.

The surety company writing the bond must be on the Department of Treasury Circular 570 list of approved companies.

Who Needs a Fuel Tax Bond?

All sellers of fuel, and in some cases suppliers, importers, exporters and distributors, are required to post a taxable fuel bond in all 50 states. Registrants must obtain the bond to guarantee payment of all taxes owed to the U.S. government by a date determined in advance (26 U.S. Code 6151).

How Much Does a Fuel Bond Cost?

The cost of a fuel tax bond is dependent upon an applicant’s financial capability, tax history and expected liability (sections 4041[a][1] and 4081 of the Federal Tax Regulations).

The premium price will never be more than the following:

• Expected tax liability for a representative 6-month period
• Expected tax liability of someone other than the terminal operator during a representative 1-month period (specific to terminal operators)
• The gasohol bond amount (specific to gasohol blenders)

How Do I Apply for My Taxable Fuel Bond?

SuretyBonds.com provides the fastest and easiest fuel tax bond application process:

• Step 1: Apply online for a free quote. 
• Step 2: Submit any requested information for underwriting. 
• Step 3: Purchase your bond online or via phone.
• Step 4: Receive your original bond form in the mail. 

This bond requires underwriting, so you will need to submit a credit check and potentially additional information, such as business and personal financials.

Do Taxable Fuel Bonds Need Renewal?

Your filed fuel tax bond will remain in effect and be renewed annually as long as you wish to continue business. The surety company may cancel the bond at any time by providing 60 days written notice to the Chief, Excise Tax Program of the IRS.

Additional Resources

• Application for Registration (Form 637)
• Excise Tax Information
• 26 CFR 48.4101-1 - Taxable fuel; registration
• 26 CFR 48.4101-1 - Taxable fuel; definitions
• 26 U.S. Code 6151 - Time and place for paying tax shown on returns
• Department of Treasury Circular 570 list of approved surety companies