What is an Iowa Taxable Fuel Bond?

Those who are in excise tax-related businesses such as buying, selling, and producing taxable fuel (gasoline, diesel fuel, and kerosene) are required to procure a surety bond. The surety bond is a prerequisite for Taxable Fuel registration applicants as part of a security test.

 

The requirement is enforced by the Internal Revenue Service in accordance with the Code of Federal Regulations Section 48.4101-1.

 

Some of the persons that need to be registered are:

  • Pipeline operator or vessel operator
  • Enterers, position holders, refiners, and terminal operators
  • Blenders
  • Producers or importers of alcohol, Agri-biodiesel, and biodiesel
  • Producers of second-generation biofuel


What is the bond amount?

The bond amount varies. It will be determined by the district director based on several factors such as the following:

  • The person’s tax history
  • The person’s significant risk in a late payment or nonpayment of taxes
  • The person’s financial capabilities and other expected liabilities.

Those who have excellent credit scores may be eligible for a low bond premium, or just 1% of the assigned bond amount!

 

Find out what you need to pay by getting your FREE quote here!


What are the bond conditions?

  • The surety bond company who will issue the bond should be part of the Department of the Treasury Circular 570 list of accepted sureties such as Surety Bond Authority
  • The bond must be in the form prescribed by the district director
  • The bond must be a public debt obligation of the United States Government
  • The obligation of the principal is unconditionally guaranteed by the government
  • In case of bond cancellation, the district director requires a 60-day notice


How can I obtain a Taxable Fuel bond?

To secure this type of bond, the Taxable Fuel registration applicant must seek the assistance of a surety bond company.

 

You will be asked to apply for this bond.

 

Once the application is received, the surety bond company will immediately process it. In our case, one of our expert surety bond agents will guide you through the whole process from the time you applied for the bond.

 

An underwriter will then evaluate the following:

  • Your financial strength
  • Your job/business performance history
  • Your tax payment history
  • Your credit score

Once the prequalification process is fulfilled, we will execute the bond and send it to you.


What else are the requirements for a Taxable Fuel registration?

You must complete IRS Form 637. This is a blanket form for different excise tax activities including taxable fuel.

 

The IRS will perform a registration test on the applicant. This will include an Activity Test, Acceptable Risk Test, and Satisfactory Tax History Test.

 

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