What is a Fuel Tax Bond?

A fuel tax bond is a specific type of surety bond that those who sell fuel have to procure before they can get their operating licenses. This bond takes care of the taxes on fuel. Many people may correlate it to an insurance policy, but it is not so. It does not provide cover to you. Rather, it covers the state’s interests when you don’t pay the taxes from selling fuel. It also covers the interest of your clients by financing any shortage they may face while working with you.

Sellers, mixers and just about anyone who uses various types of fuel need to have this bond handy. There are different bonds for airline, marine, and ground transportation, covering different guidelines and requirements as per the bond. To apply for a fuel tax bond, speak with your company or insurance company who should help you secure it easily. While applying for it, your company will also evaluate how much you need to pay for obtaining the fuel tax bond. The upfront amount you will need to pay with a good credit score will be about 1-4% of the total amount. If your credit isn’t that good, you may have to pay up to 15% of the total bond amount.