Surety Bond Encyclopedia

Fuel Distributor Bond - Navajo Nation in Arizona

Brief Summary

The Navajo Nation does not set one bond figure for fuel distributors. The Office of the Navajo Tax Commission estimates your first period of fuel excise tax and asks for a bond of at least double that amount, then holds it for two years or more. A surety bond lets you meet that requirement for an annual premium instead of tying up cash with the Commission for that whole stretch.

Anyone distributing fuel within the Navajo Nation needs an authorized distributor's license from the Office of the Navajo Tax Commission, and section 911 of the Navajo Nation Fuel Excise Tax makes posting a bond a condition of that license. The bond must equal or exceed double the fuel excise tax the Commission estimates for your first period of operation. It can be a surety bond, cash, or another acceptable negotiable instrument, and the Commission keeps it for at least two calendar years.

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How to Apply for a Fuel Distributor Bond:

Apply to the Office of the Navajo Tax Commission for an authorized distributor's license before distributing any fuel in the Navajo Nation.
Get the ONTC's estimate of fuel excise tax for your first period and set the bond at double that figure or more.
Complete the bond application with the legal name that will appear on the license.
Have the surety execute the ONTC Bond for Fuel Distributor's License form naming the Navajo Nation as obligee.
File the signed bond with the license application and the $100 annual application fee.
Renew the license each calendar year, with the renewal application in ten days before the current license expires.

Detailed Information About the Arizona Fuel Distributor Bond:

How the amount is set

There is no flat bond amount. Under section 911(C)(7) of the Navajo Nation Fuel Excise Tax, the dollar amount must be equal to or greater than double the full fuel excise tax the Office of the Navajo Tax Commission (ONTC) estimates to be due for the first period you propose to operate as an authorized distributor. A small distributor and a large one will post very different bonds. Get the ONTC's figure before ordering the bond so the amount on the form matches what the Commission expects.

How long the bond stays in place

The statute requires the ONTC to hold the bond for at least two calendar years from the date it is posted. After that, it is released only to a distributor that has been in full compliance for the entire time the bond was held. Under Fuel Excise Tax Regulation 9.1014, release also requires a written request from the distributor and an ONTC review. The ONTC can instead release it after finding the distributor no longer distributes fuel in the Navajo Nation. The ONTC bond form says the same thing in plain terms: after two years of full compliance from the bond's effective date, the licensee may apply for release.

What the bond secures

The ONTC form binds the principal and surety to the Navajo Nation. It guarantees the distributor will comply with all laws and regulations affecting the distribution of fuel within the Navajo Nation, and both parties agree to the jurisdiction of Navajo Nation courts to enforce it. Regulation 9.1014 allows the bond to be forfeited for nonpayment of taxes, collected no sooner than 60 days past the payment due date. A surety can cancel by filing a written statement with the ONTC and sending the licensee a copy by certified mail. It is released from liability arising 20 days after both steps are done.

The rest of the license

Licenses run by calendar year and end December 31. The statute sets the application fee at no less than $100 per calendar year, and $100 until the ONTC sets another fee. Existing licensees must get their renewal application to the ONTC ten calendar days before the current license expires. The bond is only one condition. Section 911 also calls for proof of insurance, safety training certification, inspected equipment, disclosure of principals, and a clean record on felonies and fuel license suspensions over the prior 10 years. Distributors file monthly returns and pay the tax by the 20th of the following month. Confirm current forms and filing steps with the ONTC in Window Rock at (928) 871-6681 before the bond is issued.

Eligibility and Requirements for a Arizona Fuel Distributor Bond:

Bond equal to or greater than double the ONTC's estimate of first period fuel excise tax.
Navajo Nation named as obligee on the ONTC bond form.
Principal and surety agree to the jurisdiction of Navajo Nation courts.
Bond held by the ONTC for at least two calendar years.
Proof of insurance, safety training certification and inspected fuel equipment, all separate from the bond.
No felony conviction or fuel license suspension or revocation within the prior 10 years.

Arizona Fuel Distributor Bond FAQs:

How much is the Navajo Nation fuel distributor bond?

It depends on your volume. The Fuel Excise Tax statute requires a bond of at least double the tax the Office of the Navajo Tax Commission estimates you will owe for your first period of operation. Ask the ONTC for that estimate before you order the bond.

Can I get the bond back after a year?

No. The ONTC must hold it for at least two calendar years from the date it was posted. After that, you can request release if you have been in full compliance the whole time, or if you no longer distribute fuel in the Navajo Nation.

Can I post cash instead of a surety bond?

Yes. The statute allows cash, a bond issued by a surety, or another acceptable negotiable instrument. A surety bond keeps that cash in your business for the two years or more the ONTC holds the security.

What can cause the bond to be forfeited?

Nonpayment of fuel excise tax. Under the ONTC regulations, the Commission can collect on the bond no sooner than 60 days past the due date for the taxes owed.

What does the bond cost?

You pay a premium, not the bond amount. The surety sets it based mainly on the owner's credit, the company's finances and the size of the bond the ONTC requires.