By Todd Bryant
Last November West Virginia introduced new licensing and bonding requirements for fuel industry professionals in the state who pay the West Virginia motor fuel tax. As of then, a number of such professionals who are required to get a business license from the state tax department must also get a motor fuel tax bond. Read on below for all the details.
West Virginia Motor Fuel Industry Professional Licensing Requirements
Chapter 11, Article 14C (§11-14C) of the West Virginia Motor Fuels Excise Tax Act specifies the professions who are required to obtain a fuel tax related license. According to §11-14C-10 these are:
- A supplier which includes a refiner
- A permissive supplier
- An importer
- An exporter
- A terminal operator
- A blender
- A motor fuel transporter
- A distributor
- A producer/manufacturer
- An alternative-fuel bulk end user
- A provider of alternative fuel or
- A retailer of alternative fuel
These professions are more specifically defined in §11-14C-2 and their descriptions can also be found on the WV State Tax Department’s website. Furthermore, if a person practices more than one of the above professions, he or she is required to obtain a separate license for each type of activity unless determined otherwise by the commissioner overseeing licensure.
West Virginia Motor Fuel Industry Professional Bonding Requirements
As stated in §11-14C-13, some of the above professionals must also obtain a continuous motor fuel tax surety bond when getting licensed. Depending on the nature of their activity the amount of their surety bonds may differ.
The purpose of the motor fuel tax surety bond is to guarantee that licensees comply with state regulations and in particular with the Motor Fuels Excise Tax Act and pay all taxes which are due. In other words, the bond serves as a protection for the state and the public and guarantees that licensees will pay their West Virginia motor fuel tax.
Here are the amounts which professionals may expect to have to obtain when getting licensed.
1. To obtain a license, suppliers, permissive suppliers and terminal operators have to obtain a surety bond in the minimum amount of $100,000 or an amount equal to three months’ tax liability, depending on whichever is greater. The maximum amount of the bond is $2 million.
2. Importers must also post the same type of bond as suppliers but only under a number of conditions, as specified in §11-14C-13-4. These include whether motor fuel tax has been paid in the state from which the fuel originates or not, and whether the seller is a permissive supplier.
If the importer (as per §11-14C-13-5) is a permissive supplier, they have to obtain a motor fuel tax bond in the minimum amount of $2,000 or an amount equal to three months’ tax liability, depending on whichever is greater.
3. Distributors, exporters and blenders must post a surety bond in the amount of $2,000 or an amount equal to three months’ tax liability, depending on whichever is greater. The maximum amount for the surety bond of these professionals is $300,000.
4. Motor fuel transporters are not required to post a bond.
5. Producers and manufacturers, alternative-fuel bulk end users, providers of alternative fuel and retailers of alternative fuel do not need to post a bond either, unless they fail to pay the motor fuel remit tax which they owe as specified by the Act. If this is the case, they may be asked to obtain a bond as well.
Additionally, those licensed as both distributors and importers can also be required to obtain a bond, depending on what kind of importer they are.
If you have questions or wonder whether this applies to you, make sure to contact the state tax department and request their advice and assistance.
As a fuel industry professional, is there anything you’d like to add? What do you think of the new requirements? Leave us a comment, we would be happy to hear from you!
Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping business owners get bonded and start their business.