Fuel Tax (Supplier) Bond - Statewide in Alabama

Brief Summary

The supplier license is the anchor license under the Alabama Terminal Excise Tax Act, and the bond behind it is sized to your own monthly tax liability rather than a flat figure. A surety bond satisfies the Department of Revenue without tying up two months of excise tax in a cash deposit, and the executed Form B&L: BOND files directly with the license application.

Alabama requires every motor fuel supplier to post a bond of approximately twice its average monthly motor fuel excise tax liability, capped by Code of Ala. 40-17-335 at $2,000,000. The supplier license fee is $200 under 40-17-332. The bond runs to the State of Alabama through the Department of Revenue on Form B&L: BOND, and a supplier who also holds terminal operator, permissive supplier, importer, exporter, blender or distributor licenses posts one bond based on the highest monthly liability among them.

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

• Work out your expected average monthly Alabama motor fuel excise tax liability. The bond is approximately twice that figure, up to the statutory cap.
• If you hold or are applying for more than one motor fuel license, use the highest monthly liability among them. Only one bond is posted.
• Have the legal entity name and FEIN exactly as they appear on the Motor Fuels Excise Tax License Application, Form B&L: MFT.
• Provide owner and company financial information for underwriting. Bonds at this size are priced on the company's financial statements as much as on personal credit.
• Receive the executed Form B&L: BOND and file it with the Motor Fuels Section of the Business and License Tax Division with the license application and the $200 supplier license fee.
• Confirm the bond amount with the Motor Fuels Section before issuance if your liability approaches the cap.

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

The amount is a formula, not a fixed number

Code of Ala. 40-17-335 sets the bond for a supplier, permissive supplier or terminal operator at approximately twice the licensee's average monthly tax liability, not to exceed $2,000,000. The Department of Revenue's online FAQ lists the cap as $3,000,000. The statute as it reads today says $2,000,000. If your liability is anywhere near that range, ask the Motor Fuels Section of the Business and License Tax Division which figure it will apply before the bond is written.

Under 40-17-332 each person engaged in business in Alabama as a supplier must first obtain a supplier's license, and the fee for that license is $200. A licensed supplier may also act as a terminal operator, permissive supplier, distributor, importer, exporter, blender, motor fuel transporter or aviation fuel purchaser.

One bond for several licenses

Only one bond is required for multiple licenses, and it is based on the highest average monthly tax liability of the separate licenses. A supplier that also operates a terminal does not post a second terminal operator bond.

Who is grandfathered

A distributor, supplier or permissive supplier licensed as of October 1, 2012 may keep the bond amount it had on that date unless the department requires an increase. Motor fuel transporters and aviation fuel purchasers have no bond requirement at all.

The department can raise the amount

If the surety becomes unsatisfactory, the surety gives notice of cancellation, or a financial review shows the bond is too small, the commissioner can require an additional bond. The combined amount cannot exceed two months of the licensee's average excise tax. The statute gives the licensee 30 days to comply or appeal to the Alabama Tax Tribunal, and Senate Bill 86 of the 2026 regular session, as enrolled, extends that window to 60 days.

Cash instead of a bond

Rule 810-8-1-.29 allows a licensee to deposit certified funds equal to the bond amount fixed by the department with the Business and License Tax Division instead of posting a surety bond. For most suppliers the annual premium on a surety bond is far cheaper than parking that cash.

The form

The prescribed form is the Alabama Department of Revenue Motor Fuels Surety Bond, Form B&L: BOND. It names the State of Alabama through its Department of Revenue as obligee, covers Title 40, Chapter 17, Articles 12 and 12A, and conditions the bond on filing every required report and paying all tax, penalty and interest. The surety may be discharged 30 days after written notice to the department, but that does not release liability already accrued.

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

• Bond amount of approximately twice the average monthly tax liability, not to exceed $2,000,000 under Code of Ala. 40-17-335.
• State of Alabama, through its Department of Revenue, named as obligee on Form B&L: BOND.
• Surety authorized to write bonds in Alabama.
• Bond conditioned on timely reports and payment of all motor fuel excise tax, penalty and interest under Title 40, Chapter 17, Articles 12 and 12A.
• Thirty day written notice to the department before the surety is discharged, with no release of accrued liability.
• Suppliers licensed as of October 1, 2012 may keep their existing bond amount unless the department requires more.

Alabama Fuel Tax (Supplier) Bond FAQs:

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