What is a fuel tax bond? Well, it is one type of surety bonds that follow the same basic rules with only exception that these types of bonds are purchased by fuel sellers across America. Different American states have different laws. However, most of them require fuel sellers to purchase the fuel tax bond as early as possible. Then, the bond will be acquired by the state or government bodies responsible for tax collection. Fuel tax bond is a way of making sure that the fuel sellers pay their taxes on time. And if they fail to do so, the government bodies can impose penalties. Let’s try to understand the concepts of fuel tax bond in detail.
What is a fuel tax bond?
Before proceeding to the in-depth details of fuel tax bond, let’s try to understand what a surety bond is. The surety bond is highly misinterpreted as a way of insurance. Well, that’s not the case always. Surety bonds involve three parties mainly the principal, the surety and the obligee. Here, the principal is responsible for doing the works, the surety is responsible for backing up the principal by providing a surety bond, and the obligee is responsible for acquiring the bond from the principal. Should the principal fail to deliver quality work, and should the obligee encounter losses due to failed contracts, it’s the surety that will compensate the obligee on principal’s behalf.
Fuel tax bond is nothing but a surety bond purchased by the fuel sellers. Here, the fuel seller is the principal, the surety is the bond providing company, and obligee is referred to the government body responsible for collecting taxes. Just like all other surety providers, the fuel tax bond providing company provides backup to the fuel seller initially. If the seller fails to pay tax or cause some damages to the public in an indirect way, the surety will compensate the obligee for any losses encountered. Generally, the state bodies recommend sellers to obtain a bond during their licensing periods. It helps to avoid unnecessary hassles involving tax payments.
To purchase the fuel tax bond, you need to apply online. Nowadays, no more you need to wait for days to purchase a bond. The surety bonds are available online, and ready to be downloaded once you make the payment. All you need to do is, fill out the few details required, and download a two-page document containing the bond essentials.