Motor Fuel Tax Bond Guide
Sellers of fuel in many states require a fuel tax bond for local licensing. Learn how fuel tax bonds work, where to get one, and how much they cost in this guide.
If you need a federal Taxable Fuel Bond (Form 928) required by the Department of Treasury – Internal Revenue Service, please visit our Taxable Fuel (IFTA) Bond Guide page instead.
What Is a Fuel Tax Bond?
Fuel tax, or taxable fuel, bonds protect the state and the public if a fuel seller, mixer or distributor does not comply with industry and tax regulations. Maintaining a surety bond is a license requirement in most states. This guarantees fuel sellers will pay all taxes, penalties and interest owed to the local government, along with operating according to state law.
This type of surety bond has different names depending on the state, including:
- Fuel bond
- Motor fuels tax bond
- Petroleum tax bond
- Liquid fuels tax bond
- Mileage and fuel tax bond
- Fuel distributor bond
- Gasoline/fuel supplier bond
- International Fuel Tax Agreement (IFTA) bond
Select your state to learn more and start your bond application today.
SuretyBonds.com is the nation’s top surety provider. We offer the best service, fastest delivery and most affordable fuel tax bond prices in the industry.
How Do Taxable Fuel Bonds Work?
A taxable fuel bond is an agreement between three parties:
- Principal: The fuel seller licensee or company purchasing the bond
- Obligee: The government entity requiring the bond
- Surety: The company issuing and backing the bond
This legally-binding contract ensures the principal (fuel company) complies with the state and federal guidelines. If the fuel seller, supplier or distributor fails to comply with regulations, the surety will compensate the obligee for any damages. From there, the principal must reimburse the surety in full.
How Much Does a Motor Fuel Tax Bond Cost?
The cost of a fuel tax bond depends on the coverage amount, state requirements, and your financial standing. Some state-specific taxable fuel bonds are available for instant purchase at a flat rate. For example, Alabama motor fuels bonds and Illinois IFTA financial responsibility bonds cost just $100 for up to $10,000 in coverage.
However, higher bond amounts require a quick application and underwriting review to determine personalized pricing. Rates are typically 0.5–10% of the total bond coverage, based on credit score. For instance, a $1,000 New Jersey distributor of motor fuels tax bond starts as low as $50.
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 (if required).
- Step 2: Purchase your surety bond online or over the phone.
- Step 3: Receive your official bond form in the mail or via email.
Once you receive your bond documentation, file it with your state licensing agency to be considered officially bonded.
Do Taxable Fuel Bonds Need Renewal?
Most taxable fuel bonds require annual renewal. Your SuretyBonds.com account manager will contact you starting 90 days before your bond expires with your renewal invoice and instructions. For more information, check out our Surety Bond Renewal Guide.
