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Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
The $2,000 figure is only the floor. Alabama sets a motor fuel distributor's bond at twice the average monthly excise tax liability whenever that number is higher, so a distributor moving real volume needs a larger bond. Start with your monthly tax estimate and the bond can be written once, at the right amount, on the Department of Revenue's current Motor Fuels Surety Bond form.
Under Code of Alabama Section 40-17-335, a motor fuel distributor must file a surety bond with the Alabama Department of Revenue once its license application is approved. The bond is $2,000 or approximately twice the average monthly tax liability, whichever is greater. It guarantees that the distributor files its returns and pays the motor fuel excise tax, and it must be written by a surety authorized to do business in Alabama.
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Section 40-17-335(a)(2) 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. The Department of Revenue's bond FAQ states the same rule. A distributor expecting about $5,000 a month in excise tax would be looking at a bond near $10,000, not $2,000. Suppliers, permissive suppliers and terminal operators are bonded under a separate subdivision with a statutory ceiling.
Section 40-17-332(h) requires any person other than a licensed supplier who buys taxable motor fuel for resale in Alabama from a licensed terminal supplier to first obtain a distributor's license. The license fee is $50, and one license covers every location the distributor controls in Alabama or in another state from which it removes fuel for delivery and use in Alabama.
An applicant licensed only as a motor fuel transporter or aviation fuel purchaser posts no bond. An applicant holding several licenses files one bond, sized on the highest average monthly tax liability among those licenses and covering all of them. Distributors, suppliers and permissive suppliers licensed with the department on October 1, 2012 keep the bond amount they had on file that day, unless the commissioner requires more.
Act 2026-528, signed April 15, 2026, amended Sections 40-17-168.5 and 40-17-335 and extended the surety bond cancellation period from 30 days to 60 days. The department told licensees to send a bond rider or a new bond on the current B&L: BOND form reflecting the 60 day period by June 1, 2026, and warned that failing to do so may result in license revocation. A bond written on an older version of the form with 30 day language is the wrong document.
Under Section 40-17-335(b) the commissioner may require an additional bond if the surety on the existing bond is unsatisfactory, if the surety gives notice that it intends to cancel, or if a review of the licensee's financial condition shows the existing bond is not enough to secure the tax. A new or additional bond can never exceed two months of average excise tax owed. The licensee is notified by mail and must either file the bond or appeal to the Alabama Tax Tribunal within the period the statute allows.
The bond is conditioned on faithful compliance with Article 12 of Chapter 17, including filing returns and paying all tax. It must be approved by the commissioner as to sufficiency and form, and it indemnifies the state against loss from the licensee's failure to pay the motor fuel excise tax. The surety prices the premium from the bond amount and the applicant's credit and financial strength, so a larger tax volume means a larger bond and a larger premium.
No. $2,000 is the minimum. Section 40-17-335(a)(2) sets the bond at the greater of $2,000 or approximately twice the average monthly tax liability, so the amount grows with the volume of taxable fuel you handle.
Distributors licensed with the department on October 1, 2012 keep the bond amount they had on file that date. The commissioner can still require an additional bond under Section 40-17-335(b), capped at two months of average excise tax owed.
No. An applicant licensed only as a motor fuel transporter or aviation fuel purchaser posts no bond. If you also hold a distributor license, one bond covers all of your licenses.
Yes. Act 2026-528 extended the cancellation period to 60 days, and the department asked for a bond rider or a new bond on the current B&L: BOND form by June 1, 2026. It warned that missing corrected bond documents may result in revocation.
The department's FAQ says a seller of gasoline or undyed diesel fuel to any licensed exempt entity needs a distributor's license in order to apply for a refund of the excise tax. A distributor's license carries this bond.
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