Fuel Tax (Blender) Bond - Statewide in Alabama

Brief Summary

The Alabama blender bond is not a fixed dollar figure. The Department of Revenue sets it at the greater of $2,000 or roughly twice your average monthly motor fuel excise tax liability, so a small blending operation usually posts the $2,000 floor while a high volume blender posts far more. Quoting the bond takes minutes once the Department has told you the amount, and the premium is a fraction of the penal sum rather than the whole figure tied up in a cash deposit with the state.

Alabama requires a surety bond from every blender's license applicant under Code of Ala. 40-17-335. The amount is the greater of $2,000 or approximately twice the average monthly motor fuel excise tax liability, with no stated ceiling for blenders. The bond runs to the State of Alabama on Department of Revenue form B&L: BOND and guarantees that the blender files accurate returns and pays all tax, penalty and interest due under Title 40, Chapter 17, Articles 12 and 12A.

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How to Apply for a Fuel Tax (Blender) Bond:

• Get the bond amount from the Department of Revenue first. It is the greater of $2,000 or about twice your average monthly motor fuel excise tax liability, based on the estimated gallons on your application.
• Confirm you actually need a blender's license. A licensed Alabama supplier blends under the supplier's license and posts no separate blender bond.
• Legal entity name, FEIN and business address exactly as shown on the motor fuel license application.
• Owner or officer name, home address and Social Security number for the surety's credit review.
• Complete the bond application, review the premium and pay it.
• Have the surety execute Department of Revenue form B&L: BOND with the blender box marked and the State of Alabama as obligee, then file it with the Business and License Tax Division, Motor Fuels Section, at P.O. Box 327540, Montgomery, AL 36132-7540.
• Keep the bond continuous. A cancellation notice from the surety starts a 60 day clock to replace it or lose the license.

Detailed Information About the Alabama Fuel Tax (Blender) Bond:

The amount is a formula, not a flat number

Code of Ala. 40-17-335 sets the bond for an exporter, blender, importer or distributor at a minimum of $2,000 or the approximate amount of twice the average monthly tax liability, whichever is greater. A new blender with a small estimated monthly liability posts $2,000. A blender whose average monthly excise tax runs $25,000 should expect the Department to fix the bond near $50,000. The $2,000,000 ceiling in the same section applies only to suppliers, permissive suppliers and terminal operators. There is no stated cap for a blender.

The Department of Revenue, not the surety, fixes the figure. Your license application reports the estimated monthly gallons you will blend, and the Department uses that to set the amount. Do not order the bond before you know the number.

Who needs a blender's license

Code of Ala. 40-17-322 defines a blender as a person who produces blended motor fuel outside the bulk transfer terminal system. Blended fuel is a mixture of gasoline or diesel fuel and any other liquid that can be used as a motor fuel in a highway vehicle. Under 40-17-332, anyone other than a licensed supplier who owes the blending tax in 40-17-326(d) must hold a blender's license. A licensed supplier does not need a separate blender's license, and the statute lists no license fee for the blender's license even though exporters and importers pay $100.

One bond can cover several licenses

If you also hold or are applying for an importer's, exporter's or distributor's license, only one bond is required, and it is sized to the highest average monthly tax liability among the separate licenses. Motor fuel transporters and aviation fuel purchasers post no bond at all.

Form, obligee and alternatives

The prescribed form is Department of Revenue form B&L: BOND, titled Motor Fuels Surety Bond, with the State of Alabama as obligee. The same form is used for terminal operators, suppliers, permissive suppliers, distributors, importers, exporters and blenders, so make sure the blender box is marked. Ala. Admin. Code 810-8-1-.29 lets a licensee deposit certified funds with the Department in the amount of the bond instead of posting a surety bond.

After you are licensed

The Department can demand an additional bond if the surety becomes unsatisfactory, the surety gives notice of cancellation, or the Department decides the existing bond no longer covers the tax exposure. Any additional bond cannot exceed two months of average excise tax owed. If a surety cancels, 40-17-335 as amended by 2026 Senate Bill 86 gives the licensee 60 days from the date the Department mails notice to file a replacement bond or appeal to the Alabama Tax Tribunal before the license is cancelled.

Eligibility and Requirements for a Alabama Fuel Tax (Blender) Bond:

• A surety company authorized to write bonds in Alabama.
• Penal sum fixed by the Department of Revenue under Code of Ala. 40-17-335: the greater of $2,000 or approximately twice the average monthly tax liability.
• State of Alabama named as obligee on form B&L: BOND, Motor Fuels Surety Bond.
• Bond conditioned on filing accurate reports and paying all tax, penalty and interest due under Title 40, Chapter 17, Articles 12 and 12A.
• Principal name on the bond matching the blender's license application exactly.
• Owner credit review. At the $2,000 floor most applicants are approved on credit alone. Larger penal sums may bring a request for financial statements.

Alabama Fuel Tax (Blender) Bond FAQs:

Official and Additional Resources for the Alabama Fuel Tax (Blender) Bond: