Alabama law uses bonds and seized fuel to secure fuel taxes

Certain fuel license applicants must file a surety bond, and the commissioner may require a licensee to provide an additional bond. The rules cover public sellers and fleet producers of compressed or liquefied natural gas, and certain motor fuel suppliers, terminal operators, exporters, blenders, importers, and distributors. Some license types have no bond requirement. The commissioner may require an additional bond if the surety is unsatisfactory, plans to cancel the bond, or the commissioner finds the bond too small to cover expected taxes. A new or additional bond may not exceed two months of the licensee’s average monthly excise tax owed. An applicant files a bond after the department approves the license application.

The department may cancel a license if a licensee does not provide a required bond or appeal the requirement. This applies to licensees notified that the department requires a new, additional, or replacement bond. A licensee may provide the requested bond or appeal to the Alabama Tax Tribunal. The response period runs from when the department mails its notice, but the enrolled text does not clearly show its length.

The commissioner must seize and secure illegally handled motor fuel until the related tax, interest, and penalties are assessed and paid, and may sell the fuel to cover an unpaid assessment. This applies to motor fuel illegally imported into, transported, delivered, stored, or sold in Alabama. Any money left after the assessment and sale costs are paid goes back to the fuel’s owner. The commissioner may sell the fuel if the assessment remains unpaid for the period stated in the law; the enrolled text does not clearly show that period.