Gasoline Fuel Tax Bond - Federal in All States
Table of Contents
Brief Summary
The IRS decides whether a gasoline registrant needs this bond, and how big it is, during Form 637 review. Companies with thin financials or a spotty tax record usually get the request. Having a surety ready to write Form 928 keeps a registration from stalling while you sort out security.
The federal gasoline fuel tax bond is filed with the IRS on Form 928, Taxable Fuel Bond, by a business registering under 26 U.S.C. 4101 when the IRS requires security for the gasoline excise tax under section 4081. The IRS sets the amount from the company's finances, tax history and expected liability, up to the expected tax for a representative 6 month period. The surety must appear in Treasury Circular 570.
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How to Apply for a Gasoline Fuel Tax Bond:
- Apply for section 4101 registration on IRS Form 637.
- If the IRS requests security, get the required bond amount from the IRS.
- Send the surety recent company financial statements and tax history.
- Execute IRS Form 928, Taxable Fuel Bond, with gasoline checked.
- Submit the signed bond to the IRS as directed during registration.
Detailed Information About the All States Gasoline Fuel Tax Bond:
Who registers
The federal excise tax on gasoline is collected high in the supply chain, at the terminal rack or on entry into the country. That is why 26 CFR 48.4101-1(c) requires blenders, enterers, pipeline operators, position holders, refiners, terminal operators and vessel operators to register with the IRS under section 4101. Registration is applied for on Form 637. Operating without it can bring civil penalties under section 7272 and criminal penalties under section 7232.
The bond is conditional
The IRS asks for a bond when an applicant does not pass the adequate security test in 26 CFR 48.4101-1(f)(4) on its own. Passing takes both adequate financial resources and a satisfactory tax history, which the IRS judges across all federal taxes of the applicant and any related person. A bond lets an applicant meet the test anyway. The IRS can also demand a bond from a current registrant as a condition of keeping its registration.
How the amount is set
Under 48.4101-1(j)(2), the IRS picks an amount that will ensure timely collection of the tax, considering the company's financial capabilities, tax history and expected liability under sections 4041(a)(1) and 4081. It can adjust the amount up or down later. The bond can never exceed the expected tax for a representative 6 month period. A terminal operator's cap also counts one representative month of tax owed by others on fuel pulled from its terminal racks.
The form and the surety
The bond goes on IRS Form 928, Taxable Fuel Bond, with gasoline checked. The same form handles original, strengthening and superseding bonds. A surety bond must be written by a company on Treasury Circular 570. The regulation also accepts U.S. government debt obligations or other security the IRS approves.
Ending the bond
A surety can stop covering future tax by giving the IRS and the registrant written notice at least 60 days ahead. It remains on the hook for tax incurred while the bond was active. If the IRS later finds the registrant meets the adequate security test without a bond, the requirement is lifted.
The premium is quoted from the amount the IRS sets and the surety's review of the company's financial statements and credit.
Eligibility and Requirements for an All States Gasoline Fuel Tax Bond:
- Surety listed in Treasury Circular 570.
- Bond written on IRS Form 928.
- Amount set by the IRS, no more than expected tax for a representative 6 month period.
- Company financial statements for underwriting.
- Satisfactory federal tax filing, deposit and payment history.
All States Gasoline Fuel Tax Bond FAQs:
No. The IRS requires it only when the applicant does not show both adequate financial resources and a satisfactory tax history under 26 CFR 48.4101-1(f)(4). Posting a bond is one way to meet that test.
The IRS. It looks at your financial capabilities, tax history and expected gasoline tax liability. The amount cannot be more than your expected tax for a representative 6 month period.
A terminal operator's cap also includes the expected tax owed by others on fuel removed at its racks during a representative 1 month period.
Yes, with written notice to the IRS and to you at least 60 days in advance. The surety stays liable for tax you incurred while the bond was in force.
