What You Should Know About Fuel Tax Bonds
Fuel tax bond is required of fuel sellers in order to get licensed. It guarantees that the trader will pay the taxes on fuel. It is required of anyone who trades in gasoline, whether it is to import, export, supply or blend.
- It is also known as International Fuel Tax Bonds or IFTA.
- There are many types of fuel tax bonds and these are usually categorized according to the industry, such as marine, ground transportation operations, and airline.
- The fuel tax bond is required of anyone dealing with gasoline.
- Some states may need more than one fuel tax bond. One must check the state guidelines to find out what is required.
- A fuel tax bond promises that the principal will pay the taxes to the state government. If they fail to do so, the state can file a complaint against the bond. If the principal is found to be the faulty party, then the surety will pay the compensation, recovering the cost later from the principal.
- Fuel tax bonds are a type of financial guarantee bonds. These types of bonds are considered high risk by surety companies. This means that they carefully vet each applicant.
- The bond amount is decided by the state authority and can vary from state to state. However, the cost of the fuel tax bond is only a fraction of the bond amount. It will depend largely on the applicant’s credit score.