By Vic Lance, Lance Surety Bond Associates.
Motor fuel wholesalers in New York state will soon have to comply with a new set of regulations and requirements. Recently signed Senate Bill S6409C introduces a number of legislative amendments which, among other businesses and industries, also concern motor fuel wholesalers in NY.
As of December 1, 2016, wholesalers will be required to register, file returns and obtain a fuel tax surety bond. For an overview of the new requirements, read on below.
New Regulatory Requirements for NY York Motor Fuel Wholesalers
Part UU of Senate Bill S6409C is described as amending “the tax law, in relation to requiring wholesalers of motor fuel to register and file returns.”
According to Section 2 of Part UU, motor fuel wholesalers will need to register with the NY Department of Taxation and Finance which will issue their license. The section also states that when registering, all current provisions of registration of motor fuel distributors will also apply for the registration of fuel wholesalers, unless the Commissioner of Taxation and Finance deems some of them unnecessary for the protection of tax revenues.
Section 3 spells out the surety bond requirements for wholesalers. No specific surety bond requirement or amount is mentioned in this section. Instead, the section states that the Commissioner may require a wholesaler to obtain a fuel tax surety bond in an amount deemed necessary by the Commissioner so as to secure the wholesaler’s performance of their duties and responsibilities in relation to the Department and the state provisions.
A surety bond, in this case, would guarantee that motor fuel wholesalers in NY state pay their taxes duly and comply with state regulations governing their business. It also guarantees that they fulfill other requirements of the bill, such as to file reports. If a bonded wholesaler fails to comply with all requirements or, for example, commits fraud a claim can be made against their bond.
Accordingly, failure to obtain or maintain a bond when required to or comply with other requirements can also result in a revocation or refusal of a wholesaler’s license.
In addition, Section 3 of Part UU states that wholesalers are required to file a tax return with the Department on or before the twentieth of each month concerning the amount of gallons of fuel which the wholesaler has purchased and sold in the preceding month.
Finally, Sections 4 & 5 specify the conditions and circumstances under which a wholesaler may have to pay or be entitled to a credit or refund in taxes.
What Do Wholesalers Need to Do?
At this point a lot of the consequences of the bill for wholesalers are still not fully clarified. The maximum bond amounts and the conditions under which applicants will need to get bonded are yet to be specified.
Given that the requirements come into force on December 1, the Department will list the necessary requirements and provide the necessary forms within the coming months. Still, motor fuel wholesalers would do best to consult the Department in advance in order to prepare for the coming changes.
Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps business owners get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.