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Federal Fuel Tax Surety Bond

What is a Federal Fuel Tax Bond?

  • A Federal Fuel Tax Bond is a surety bond that is required to be posted by certain sellers, mixers, and users of various types of fuel when registering with the The U.S. Department of the Treasury and Internal Revenue Service (IRS). The IRS requires the Fuel Tax Bond in order to ensure the payment of excise taxes involving fuel. Excise taxes are imposed on fuels such as gasoline, diesel fuel, kerosene, compressed natural gas, etc. Fuel blenders, enterers (importers), position holders, refiners, and terminal operators are required to be registered with the IRS. Applicants will only be registered by the District Director if they “pass” three tests known as the registration tests. One of these registration tests is the adequate security test, which calls for both adequate financial resources and a satisfactory tax history as determined by the District Director. If an applicant does not pass the adequate security test then they may post a surety bond.
  • The surety bond amount will be calculated as no greater than:
    • The applicant’s expected tax liability under 26 Code of Federal Regulations (CFR) Section 4041(a)(1) and 4081 for a representative 6-month period
    • For terminal operators: The expected tax liability of persons other than the terminal operator under Section 4081 with respect to taxable fuel removed at the racks of its terminals during a representative 1-month period
    • For gasohol blenders: The gasohol bonding amount, which is the rate of tax applicable to later separation per Section 48.4081-6(f)(1)(iii) and the total number of gallons of gasoline expected to be bought at the gasohol production tax rate by the gasohol blender during a representative 6-month period
  • We also write Fuel Tax Bonds required at the state level.

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Fuel Tax Bonds are individually underwritten so the cost can vary and is dependent on the credit reports of the applicant as well as personal financials and business financials. Customers with good personal credit scores (generally 680 or higher) and overall good financials could qualify for a rate as low as 1% of the bond amount. Of course, we will always provide you with the lowest rates available on the market. And can typically handle all credit types and financial situations — from excellent to poor — as such those terms vary.

Federal Fuel Tax Bonds are in place to ensure the payment of taxes imposed on fuel under Section 4041 or Section 4081 of the Internal Revenue Code by a specific date as determined by 26 U.S.C. Section 6151. By posting the bond the Principal is guaranteeing they will not attempt to defraud the United States of any tax; will file all returns and statements as required by law or regulations; will pay all taxes including any penalty and interest charges; and, will comply with all other requirements of the law and regulations regarding tax.

The U.S. Department of the Treasury, Internal Revenue Service is charged with handling taxable fuel registration and requires certain applicants to post this fuel tax surety bond in pursuant to Title 26 Code of Federal Regulations Section 48.4101. The Obligee on this surety bond is the United States.

Federal Fuel Tax Bonds are continuous and remain in effect from the effective date until canceled or until the district director determines the registered applicant meets the adequate security test without a bond. The surety bond may be canceled with 60 days written notice from the Surety to the Principal (Fuel Registrant) and the Obligee (District Director of the Internal Revenue Service). The bonding company will renew and bill for the surety bond on an annual basis. It is likely that variations in business volume each year will require a different bond amount than the prior year, in which case an increase or decrease in the bond amount may be required by the U.S. Department of the Treasury, Internal Revenue Service (IRS). They may then call for a strengthening bond or a superseding bond in this case.

Contact The ProSure Group. As surety bond experts in business over 23 years in Florida, The ProSure Group has handled numerous fuel tax bonds and has partnerships with more than 30 different surety companies. This ensures that we get you the best, most competitive pricing and terms available in the marketplace. You just need to complete our simple application and one of our specialists will quickly contact you.

What you will need to submit in order to obtain registration:

  • Completed Application (Form 637)
  • Latest Federal Income Tax Return
  • Copies of income statement, balance sheet and/or bond rating
  • Certain applicants must pass the following three tests (the Registration Tests) as determined by the district director:
    • Activity Test - Section 48.4101(f)(2)
    • Acceptable Risk Test - Section 48.4101(f)(3)
    • Adequate Security Test - Section 48.4101(f)(4)
  • And more.
If you don't see the bond you're looking for give us a call at (800) 480-3883 and speak to one of our many
Federal Fuel Tax Bonds Surety Bond Experts!
Type Bond Obligee Bond Amount
Tax Federal Taxable Fuel Bond U.S. Department of the Treasury, Internal Revenue Service
Varies