Oregon Fuel Tax Bond
The Oregon Fuels Tax Group Division of the Oregon Department of Transportation (ODOT) oversees licensing for motor vehicle fuel dealers, use fuel sellers, and use fuel users. ODOT requires license holders to provide a Fuel Tax bond to guarantee payment of required monthly taxes.
Jet cuts out the middleman to offer the lowest prices with the most efficient process, saving you time and money on your fuel tax bond purchase.
How Much Does the Fuel Tax Bond Cost?
Your Fuel Tax Bond costs as low as $100 per year with monthly payment options starting at $10. The bond limit varies based on the monthly tax payments of the fuel business. Below are examples of Jet’s pricing at different bond amounts:
| Bond Limit | Monthly | Annual |
|---|---|---|
| $10,000 | $10 | $100 |
| $25,000 | $25 | $250 |
| $50,000 | $38 | $375 |
The cost of the bond factors in the personal credit of the business ownership. Even without stellar credit, fuel businesses will find that Jet’s rate remains the lowest.
Jet’s monthly payments have the lowest down payments and overall cost. Traditional insurance companies offer financing options with high down payments and high percentage APRS.
How is the Fuel Tax Bond Amount Determined?
The required bond amount is set at twice the estimated monthly tax for the fuel dealer, seller or user. For example, if the monthly tax payment is $3,000, the required bond amount is $6,000.
The Motor Vehicle Fuel Dealer Bond limit starts at a minimum of $1,000 and can go up to $250,000. In cases where ODOT takes disciplinary action against the license holder, the bond requirement can be up to $1,000,000.
Use Fuel Seller Bonds are required to hold a minimum bond amount of $100. Use Fuel User Bonds are required to have a minimum $10 bond amount. For both the Use Fuel Seller and Use Fuel User Bonds, there is no maximum limit.
How Is the Fuel Tax Bond Filed?
The ODOT Fuels Tax Group provides an online system for licensees to provide their tax reports and bonds. License holders must submit the bond online through the Oregon Fuels Tax System. For help using their system, see the Fuel Tax Group’s User Guide.
Jet makes the process easy by providing an electronic copy of the required bond promptly after payment. This bond copy can be uploaded directly into the online system.
The Fuel Tax Bond can be mailed into ODOT for licensees who are grandfathered in, or do not have the online capabilities. The address to file the bond is:
Oregon Department of Transportation
Fuels Tax Group MS 21
355 Capitol St NE
Salem, OR 97301-3871
How Do I Avoid a Fuel Tax Bond Claim?
A license holder must keep and submit accurate fuel records along with payment to the state in a timely manner to avoid any claims or fines. Bond claims are a result of a license holder failing to accurately report and pay their fuel tax. ODOT will give a 4% tax credit to those that make timely payments, but a 10% fee if payment is late.
While Jet’s claims department always works hard to defend our clients from frivolous claims, there is only so much we can do in the case of a government agency claiming it did not receive due taxes. Maintaining accurate, thorough records and submitting your tax payments on time will prevent claims.
What Happens If a Claim is Filed on My Fuel Supply Bond?
Before ODOT will file a claim, they will give the license holder time to rectify the tax payment. The timeframe to make a late tax payment is determined on a case-by-case basis by the Fuel Tax Group of ODOT. If payment cannot be made in full, ODOT may offer a monthly payment option.
If you do not pay the required monthly fuel tax to ODOT, then ODOT will file a claim on the bond to collect the due tax. In the event of a claim, Jet is required to pay ODOT for the taxes due. You are required to reimburse Jet for the payout, otherwise the license will be placed in suspension.
Unlike a business insurance policy, which protects you from unforeseen accidents, a surety bond guarantees the state will receive the due taxes. You are ultimately responsible for your own actions and therefore must reimburse the surety company for any claims paid. Think of the surety as providing you a letter of credit that ensures you will make tax payments.
What Is the Difference Between a Fuel Dealer, Seller, and User?
The Oregon Department of Transportation will commonly refer to motor vehicle fuel dealers as “dealers,” use fuel sellers as “sellers,” and use fuel users as “users.” Motor vehicle fuel dealers and use fuel sellers both sell fuel, but differ in the type of fuel sold. The State of Oregon defines motor vehicle fuel as gasoline or jet fuel. Use fuel is defined as diesel fuel, biodiesel, propane, compressed natural gas, and all other fuels used to propel vehicles that are not motor vehicle fuel.
Use fuel users differ from both because they buy fuel instead of distributing it.
| Fuel Dealers, Sellers, and Users | ||
|---|---|---|
| Licensee Name | What They Do | # of Businesses in Oregon |
| Motor Vehicle Fuel Dealer | Sells gasoline and jet fuel | 850 |
| Use Fuel Seller | Sells diesel fuel, biodiesel, propane, compressed natural gas, and all other fuels used to propel vehicles | 1,000 |
| Use Fuel User | Sells diesel fuel, biodiesel, propane, compressed natural gas, and all other fuels used to propel vehicles | 600 |
Use fuel sellers/users and motor vehicle dealers have very similar license requirements and manage their licenses in much of the same ways. You can view the law and regulations for each license in full detail on the Oregon Legislature website.
Can the Fuel Tax Bond Amount Change?
Yes. An ODOT auditor reviews the filed taxes after the first year of licensure, then every three years after. The audit may increase or decrease the bond limit if there is a significant difference to the amount of taxes due.
The Oregon Fuel Tax Group has different thresholds to determine what a significant difference is for bonds higher or lower than $10,000. Bonds lower than $10,000 require a significant difference of $500 to change the bond amount, while bonds higher than $10,000 require a $1,000 difference.
For example, if the required bond amount is currently $9,000, an audit finding the new required amount to be $8,000 would change the bond to $8,000 since the difference is over $500. However, if they found the amount would be $8,750, then no change is required because it is only a $250 difference.
The ODOT can increase the bond specifically for motor vehicle fuel dealers as described above for the following reasons:
- Being late three or more times on filing reports or making payments
- Had three or more checks bounce for insufficient funds
- Failure to maintain or provide a record of purchases, receipts, sales and distribution of motor vehicle fuel as required under ORS 319.390
- Had a motor vehicle fuel dealer license revoked in Oregon or another state
How Is the Fuel Tax Bond Renewed?
This bond is continuous until canceled, therefore no bond renewal notice is required to be sent to the Oregon Department of Transportation. License holders simply need to pay the renewal premium to avoid cancellation of the Fuel Tax Bond.
If you are on monthly payments with Jet, then you don’t have to worry about renewing your Fuel Tax Bond. So long as the automatic payment goes through the bond will remain current with ODOT.
Can I Cancel the Fuel Tax Bond?
Yes, this bond can be canceled at any time. There is a 60-day grace period from when Jet sends cancellation notice to the ODOT Fuel Tax Group before the bond cancellation takes effect. Jet is still responsible for any liability incurred during the life of the bond up until the expiration of the 60 days and will take that into account for refunds. For prepaid annual terms, Jet will send a prorated refund for any time left on the bond. With monthly payments, we will simply collect the remainder due for the 60 days of bonding and request cancellation with ODOT.
Fuel dealers, sellers, and users simply need to send a written request to Jet to cancel the bond. If a bond needs to be reinstated after a cancellation, just let us know and we will send the reinstatement to ODOT so you can get back to business.
Bond or Deposit, Which One Works Better for Me?
The Department of Transportation will accept either a bond or a certificate of deposit as financial assurance. The biggest difference with a certificate of deposit is that fuel tax dealers must surrender their own money in the full amount required whereas a bond will provide the full coverage needed with the fuel tax dealer only paying a small percentage of the limit. The most important factor in making this decision is the amount required by ODOT, calculated by doubling the dealer’s monthly tax payments. The bond is the best option for any business, and even more so for businesses without cash on hand or are looking to invest capital into the business.
Nearly all motor vehicle fuel dealers in the state of Oregon are bonded because paying bond premiums is more feasible than depositing the full required amount. Assuming the required amount is $10,000, then you would either deposit $10,000 to the state treasurer, or pay $200 in premium for the bond to cover $10,000.
Many use fuel sellers and use fuel users are bonded, but the required bond amount for these licenses can be very small making a deposit more suitable. Financial assurance for use fuel sellers could be as low as $100, and use fuel users might only need $10 of coverage. In these cases, it’s easier to post the deposit. However, as the amount required by ODOT increases, the surety bond becomes a more financially sensible option.
License holders on the fence between a bond or deposit should also consider what happens when the required amount increases after an audit. For a deposit, ODOT will require the license holder to submit additional funds to the state treasurer within 30 days before the fuel company incurs penalties.
If you have a bond with Jet, then you simply need to provide the new bond amount. Jet will have to collect any premium due (if applicable) and will immediately file a rider to ODOT satisfying their requirement.
Special Use Fuel User’s License Fee
Use fuel users have another licensing option that reduces the amount of reporting and paperwork. Under ORS 319.535, a person who uses a vehicle that consumes natural gas or propane may pay ODOT annually instead of paying a per-gallon tax. The annual rate is based on the following combined weight base of the vehicle:
| Combined Weight Based | License Fee |
|---|---|
| 0 - 10,000 lbs. | $60 |
| 10,001 - 26,000 lbs. | $300 |
| 36,001 + lbs. | $400 |
