Fuel Tax (Terminal Operator) Bond - Statewide in Alabama

Brief Summary

A terminal operator in Alabama is bonded on its own numbers, not a flat figure, and a licensed supplier that runs the terminal is already covered by its supplier bond. For everyone else, 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 with the terminal operator license application.

Alabama sets the terminal operator bond at approximately twice the licensee's average monthly motor fuel excise tax liability, capped by Code of Ala. 40-17-335 at $2,000,000. Under 40-17-332 a terminal operator that is not a licensed supplier must obtain a terminal operator's license for each terminal site. The bond runs to the State of Alabama through the Department of Revenue on Form B&L: BOND, and one bond covers all of a licensee's motor fuel licenses.

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How to Apply for a Fuel Tax (Terminal Operator) Bond:

• Confirm you are not already a licensed Alabama supplier. A licensed supplier operating its own terminal does not need a separate terminal operator license or bond.
• Identify each terminal site in Alabama. A terminal operator's license is required for each site.
• Work out your expected average monthly Alabama motor fuel excise tax liability. The bond is approximately twice that figure, up to the statutory cap, and the department fixes the final amount.
• 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.
• 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.

Detailed Information About the Alabama Fuel Tax (Terminal Operator) Bond:

Check whether you need this license at all

Code of Ala. 40-17-332 requires each terminal operator, other than a supplier licensed under that section, to obtain a terminal operator's license for each terminal site in Alabama. A licensed supplier that operates its own terminal is already licensed and bonded as a supplier, and only one bond is required for multiple licenses. The separate terminal operator license and bond are for operators that are not suppliers.

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. A terminal operator's own tax liability is usually small, since the supplier is the one collecting tax on removals across the rack, so the department fixes the amount from your application rather than from a published table.

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. An operator with several terminal sites, or one that also holds a distributor or exporter license, posts a single bond.

Grandfather clause

The October 1, 2012 grandfather clause in 40-17-335 names distributors, suppliers and permissive suppliers, not terminal operators. 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.

The form

The prescribed form is the Alabama Department of Revenue Motor Fuels Surety Bond, Form B&L: BOND. It lists terminal operator among the covered license types, 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 (Terminal Operator) 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, with terminal operator marked as the license type.
• 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.
• One bond covering every motor fuel license the operator holds, based on the highest monthly liability.

Alabama Fuel Tax (Terminal Operator) Bond FAQs:

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