Gasoline, Diesel Fuel and Kerosene Excise Tax (Combination) Bond - Federal in All States
Table of Contents
Brief Summary
If the IRS has told you a bond is the price of your Form 637 registration, this is that bond. One Form 928 can cover gasoline, diesel fuel and kerosene together, so a terminal operator, refiner, enterer or blender handling all three fuels files a single instrument instead of three, and pays an annual premium instead of tying up Treasury securities with the IRS.
The combination fuel excise tax bond is filed on IRS Form 928, Taxable Fuel Bond, with the gasoline, diesel fuel and kerosene boxes all checked. It is posted when the IRS requires security as a condition of registration under Internal Revenue Code section 4101, or as a condition of keeping an existing registration. The IRS sets the amount case by case, and it can never exceed the registrant's expected fuel tax liability for a representative 6-month period.
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How to Apply for a Gasoline, Diesel Fuel and Kerosene Excise Tax (Combination) Bond:
- Have your Form 637 application, or the IRS notice requiring bond, in hand so the amount and registration number match.
- Confirm the bond amount the IRS employee handling your registration has set.
- Business legal name, address and EIN exactly as on Form 637.
- Complete the bond application and review the premium quote.
- Have the principal sign Form 928: the individual, a principal corporate officer, an authorized member of a partnership or LLC, or the fiduciary of a trust or estate.
- File Form 928 in duplicate with the IRS employee who required the bond.
Detailed Information About the All States Gasoline, Diesel Fuel and Kerosene Excise Tax (Combination) Bond:
Not every registrant posts a bond
Most people come to this bond assuming every fuel registrant needs one. That is not how the rule works. Under 26 CFR 48.4101-1(f), the IRS registers a blender, enterer, position holder, refiner or terminal operator only if it passes three tests: activity, acceptable risk and adequate security. An applicant meets the adequate security test either by showing adequate financial resources and a satisfactory tax history, or by giving a bond. So the bond is the fallback when the IRS is not satisfied with the balance sheet or the tax record. The IRS can also require a bond later from an existing registrant whose activities create a significant risk of late or unpaid tax, as an alternative to revoking or suspending the registration.
How the amount is set
There is no fixed figure. Section 48.4101-1(j)(2) says the bond must be in an amount the IRS determines will ensure timely collection of the taxes imposed by sections 4041(a)(1) and 4081, based on your financial capability, tax history and expected liability. The cap is your expected liability for a representative 6-month period. For a terminal operator, the cap also takes in the expected section 4081 liability of other persons on fuel removed at its racks over a representative 1-month period. The IRS can raise or lower the amount as those facts change, and the Form 928 instructions tell you to check in after any quarter where your liability moves.
What the bond guarantees
Form 928 obligates the principal and surety to the United States. The principal agrees not to defraud the government of tax under sections 4041(a)(1) or 4081, to file all required returns, to pay all tax with penalties and interest, and to follow the other fuel tax rules. If tax goes unpaid, the IRS can collect it, with penalties and interest, from the bond.
Changes after filing
The bond is continuous, with no fixed term. The IRS may ask for a strengthening bond, which adds to the existing amount, or a superseding bond, which replaces it, when monthly volume grows beyond what the bond was based on or ownership or management changes substantially. Failing to provide one can lead to suspension or revocation of registration. If the IRS later decides you meet the adequate security test without a bond, you can be released from the requirement.
Eligibility and Requirements for an All States Gasoline, Diesel Fuel and Kerosene Excise Tax (Combination) Bond:
- Surety listed in Treasury Department Circular 570 as acceptable on federal bonds.
- IRS Form 928, Taxable Fuel Bond, with the gasoline, diesel fuel and kerosene boxes checked.
- Bond amount set by the IRS, capped at expected tax liability for a representative 6-month period.
- Strengthening or superseding bond when volume, ownership or management changes.
- Owner and business credit and financial review by the surety. Larger penal sums usually need financial statements.
All States Gasoline, Diesel Fuel and Kerosene Excise Tax (Combination) Bond FAQs:
No. Under 26 CFR 48.4101-1(f)(4), you satisfy the adequate security test either by showing adequate financial resources and a satisfactory federal tax history, or by posting a bond. The IRS asks for the bond when it is not satisfied on the first route, or later as a condition of keeping a registration it would otherwise revoke or suspend.
The IRS decides. The amount must be enough to ensure timely collection of the section 4041(a)(1) and 4081 taxes, and it cannot exceed your expected liability for a representative 6-month period. Terminal operators can also be bonded for removals by others at their racks over a representative 1-month period.
Form 928 has separate boxes for gasoline, diesel fuel and kerosene excise tax. If your registration covers all three, checking all three on one bond keeps the paperwork to a single instrument.
Yes, with written notice to you and the IRS at least 60 days before the release date. The surety stays liable for tax, penalties and interest you incurred before that date.
The regulation also allows Treasury obligations, obligations guaranteed by the United States, or other security the IRS accepts. A surety bond lets you meet the requirement without parking cash or securities.
