Motor Fuels Tax Continuous (Gasoline) Bond - Statewide in Texas

Brief Summary

The $30,000 figure is only the floor. Texas sizes this bond at twice the most gasoline tax that could accrue on your tax-free gallons in a reporting period, up to $600,000. A surety bond covers that amount without locking cash in the state treasury.

Texas Tax Code Section 162.111 lets the Comptroller of Public Accounts require security from gasoline suppliers, permissive suppliers, distributors, exporters, importers and blenders. When a bond is required, it equals two times the maximum tax that could accrue on tax-free gasoline purchased or acquired during a reporting period. The minimum is $30,000 and the maximum is $600,000 unless the Comptroller sees undue risk of lost revenue.

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How to Apply for a Motor Fuels Tax Continuous (Gasoline) Bond:

• Apply to the Texas Comptroller for the gasoline license that matches your activity.
• Estimate the most tax-free gasoline you could purchase or acquire in one monthly reporting period.
• Obtain the Comptroller's bond amount, no less than $30,000.
• Have a surety authorized in Texas issue the continuous bond to the Comptroller of Public Accounts and file it.
• File monthly returns by the 25th of the following month.
• Report gasoline activity at least once every nine months to keep the license active.

Detailed Information About the Texas Motor Fuels Tax Continuous (Gasoline) Bond:

The amount is a formula

Section 162.111(b) ties the bond to volume. It equals two times the maximum tax that could accrue on tax-free gasoline purchased or acquired during a reporting period. Suppliers, permissive suppliers, distributors, importers, exporters and blenders file monthly, so the reporting period is a month. The gasoline tax is twenty cents per gallon.

The result can never be less than $30,000. It is capped at $600,000 unless the Comptroller believes there is undue risk of loss, in which case one or more bonds above that may be required. The Comptroller can also demand a new or additional bond if the existing one becomes insufficient.

Who the Comptroller bonds

The Comptroller sets security for a supplier, permissive supplier, distributor, exporter, importer or blender after weighing the tax that has come due or is expected, the person's history as a license holder, and the need to protect the state. A bond is required when the Comptroller determines it is necessary.

Continuous, not annual

There is no renewal date. The bond is a continuing instrument and a new and separate obligation in the penal sum for each calendar year it is in force. It stays in effect until the surety is released. Under Section 162.110(a) the gasoline license itself is permanent while the bond or security is in force and reports are timely, but the Comptroller cancels a license with no gasoline purchase, sale or use reported in the previous nine months.

Getting released

After four consecutive years of compliance a license holder may ask for release, though the Comptroller can decline if revenue would be jeopardized. Security is released only after an examination or audit shows no tax, penalty or interest is owed, and cash is returned within 60 days of that finding. A surety can exit on the 31st day after filing a written request, and the license is canceled unless replacement security is filed first.

Cash and letters of credit

Section 162.111(e) accepts cash deposited in the state treasury suspense account, an assigned certificate of deposit, or an irrevocable letter of credit, each from an FDIC member bank or savings and loan in Texas, in place of a surety bond.

Eligibility and Requirements for a Texas Motor Fuels Tax Continuous (Gasoline) Bond:

• Texas Comptroller of Public Accounts as obligee.
• Bond equal to two times the maximum tax on tax-free gasoline in a reporting period.
• $30,000 minimum and $600,000 maximum, unless the Comptroller finds undue risk.
• Continuous bond with no expiration date.
• Cash, an assigned Texas certificate of deposit or an irrevocable letter of credit accepted in place of a surety bond.

Texas Motor Fuels Tax Continuous (Gasoline) Bond FAQs:

Official and Additional Resources for the Texas Motor Fuels Tax Continuous (Gasoline) Bond: