Who Benefits from a Fuel Tax Bond?

Fuel owners need a fuel tax bond for as long as they hold an active license. The bond is a guarantee that the holder (the fuel seller) will pay all the required taxes, interests, and applicable penalties. The obligee here is the State and by extension, the public. The fuel seller is the principal and must buy the bond from a surety company.

How does this bond benefit all three parties?

For the oblige:

• It ensures that the fuel seller will pay all taxes. Taxes are an important part of the State’s earnings.
• It gives the people a chance to claim damages if the bond conditions are not met. The bond amount can cover the losses.
• It ensures that business is conducted legally in the state.

For the principal:

• The bond is a requirement for legally operating their business.
• The terms of the contract are laid out in advance. This also means that the State cannot change the conditions suddenly and without notice.

For the surety: 

• Acceptance of the bond is a sign of the surety company’s good name and reputation.