Section 40-17-335

Surety bond.

(a) Upon approval of the application by the department, the applicant shall file with the department a surety bond as herein provided:

(1) Except as provided under subdivision (3), the bond amount for an applicant for a license as a supplier, permissive supplier, or terminal operator shall be in the approximate amount of twice the average monthly tax liability, not to exceed two million dollars ($2,000,000).

(2) Except as provided under subdivision (3), the bond amount for an applicant for a license as an exporter, blender, importer, or distributor shall be a minimum of two thousand dollars ($2,000) or the approximate amount of twice the average monthly tax liability, whichever is greater.

(3) The bond for distributors, suppliers, and permissive suppliers who are licensed with the department on October 1, 2012, shall remain at the amount that is filed with the department on that date, except as provided under subsection (b).

(4) For an applicant for a license only as a motor fuel transporter or aviation fuel purchaser, there shall be no bond.

(5) Only one bond shall be required of an applicant for multiple licenses. Except as provided under subdivision (3), the bond amount shall be based on the highest average monthly tax liability of the separate licenses, but shall cover all licenses.

(b) The commissioner may require an additional surety bond from any licensee if: (1) the commissioner determines that the surety on an existing bond is unsatisfactory; (2) a surety notifies the department that it intends to cancel a bond as provided in subsection (d); or (3) the commissioner, after reviewing the financial condition of the licensee, determines that the existing bond of the licensee is insufficient in an amount to insure the prompt payment of all excise taxes that are due or may become due the state by the licensee upon the sale or withdrawal of motor fuel. However, in no case shall a new or additional bond be more than two months of average excise tax owed by the licensee.

(c) The department shall notify a licensee at his or her last known address by first class U.S. mail or, at the option of the department, certified mail, return receipt requested, that it is requiring such new or additional bond for any reason as provided above, and the licensee, within 30 days from the date such notice is mailed by the department, shall either (1) file the new or additional bond as requested by the department, or (2) file a notice of appeal with the Alabama Tax Tribunal as allowed in Chapter 2B of this title. The department may immediately cancel the licensee's license upon the expiration of the 30-day period set out above if the licensee fails to either provide the new or additional bond requested by the department or timely appeal to the Alabama Tax Tribunal.

(d) Any surety on an existing bond furnished by a licensee may notify the department in writing of its intent to cancel the bond. The department shall immediately notify the licensee of the intent of the surety to cancel and the licensee shall have 30 days from the date the notice is mailed by the department to provide a sufficient replacement bond as requested by the department. The department may immediately cancel the licensee's license upon expiration of the 30-day period set out above if the licensee fails to either provide a new replacement bond as requested by the department or appeal the proposed revocation to the Alabama Tax Tribunal within the 30 days as allowed by Chapter 2B of this title. The surety requesting to be released shall remain liable for any liability already accrued or which shall accrue during the 30-day period set out above, but shall not be responsible for any liability which accrues after the 30-day period.

(e) A surety providing a bond must be authorized to engage in business within this state. The surety bonds are conditioned upon faithful compliance with the provisions of this article, including the filing of returns and the payment of all tax prescribed herein. The surety bonds shall be approved by the commissioner as to sufficiency and form, and shall indemnify the state against any loss arising from the failure of the licensee to pay, for any cause, the motor fuel excise tax levied by this article and Article 12A, Chapter 17 of this title.

(Act 2011-565, p. 1084, §16; Act 2015-316, p. 954, §1(b)(6); Act 2015-368, p. 1139, §1(b)(6); Act 2021-146, §2.)