What is a California Taxable Fuel Bond?
The Internal Revenue Service (IRS) requires taxable fuel registrants to maintain a taxable fuel bond to ensure the payment of all relevant taxes.
Who Needs a California Taxable Fuel Bond?
The government imposes excise taxes on a range of fuels, including:
- Gasoline, including aviation gasoline and gasoline blendstocks
- Diesel fuel, including dyed diesel fuel
- Diesel-water fuel emulsion
- Kerosene, including dyed kerosene and kerosene used in aviation
- Other Fuels (including alternative fuels)
- Compressed natural gas (CNG)
- Fuels used in commercial transportation on inland waterways
- Any liquid used in a fractional ownership program aircraft as fuel
Any individual or organization that received a Letter of Registration from the excise tax registration provisions is required to post a taxable fuel bond. These taxable fuel registrants include blenders, enterers, pipeline operators, refiners, terminal operators, vessel operators, and producers or importers of fuel.
Why Do I Need a California Taxable Fuel Bond?
Taxable fuel bonds are required by the IRS to guarantee the payment of any and all taxes owed to the United States government. Taxable fuel registrants are required to comply with U.S. Code 6151. If the taxable fuel registrant fails to pay taxes on time, the government is able to make a claim against the bond.
How Much Does a California Taxable Fuel Bond Cost?
The IRS bases the required amount of the taxable fuel bond on the registrant’s financial capability, tax history, and expected liability. They base these deciding factors on 4041(a)(1) and 4081 of the Federal Tax Regulations.
While the bond amount will vary on a case-by-case basis, the required bond amount will never be greater than the individual or company’s expected tax liability for an average 6-month period. For terminal operators, it will not exceed the expected tax liability of someone other than the terminal operator during an average 1-month period.
The taxable fuel bond is subject to underwriting, and the cost will vary based upon the credit rating of the principal.
Get Started Today!
To operate as a taxable fuel registrant, you must first purchase a California taxable fuel bond. Don’t delay your application.