The director may, when necessary and advisable in order to
secure the collection of the tax, require any person subject to the tax to file
with the department a bond in an amount as the director may fix, or in lieu of
the bond, securities approved by the director in an amount as the director may
prescribe. Pursuant to the statutory authorization in Iowa Code sections
423.35 and
452A.66, the director has
determined that the following procedures will be instituted with regard to
bonds:
(1)
When
required.
a. Classes of business.
When the director determines, based on departmental records, other state or
federal agency statistics, or current economic conditions, that certain
segments of the petroleum business community are experiencing above average
financial failures such that the collection of the tax might be jeopardized, a
bond or security will be required from every licensee operating a business
within this class unless it is shown to the director's satisfaction that a
particular licensee within a designated class is solvent and that the licensee
previously timely remitted the tax. If the director selects certain classes of
licensees for posting a bond or security, rule making will be initiated to
reflect a listing of the classes in the rules.
b. New applications for fuel tax permits.
Notwithstanding the provisions of paragraph "a" above, the
director has determined that importers will be required to post a bond in the
amount of $25,000 and other applicants for a new fuel tax permit will be
requested to post a bond or security if (1) it is determined upon a complete
investigation of the applicant's financial status that the applicant would
likely not be able to timely remit the tax, or (2) the new applicant held a
prior fuel tax license and the remittance record of the tax under the prior
license falls within one of the conditions in paragraph "c"
below, or (3) the department experienced collection problems while the
applicant was engaged in business under the prior license, or (4) the applicant
is substantially similar to a person who would have been required to post a
bond under the guidelines as set forth in "c" or such person
had a previous fuel tax permit revoked. The applicant is "substantially
similar" to the extent that said applicant is owned or controlled by persons
who owned or controlled the previous licensee. For example, X, a corporation,
had a previous fuel tax permit revoked. X is dissolved and its shareholders
create a new corporation, Y, which applies for a fuel tax permit. The persons
or stockholders who controlled X now control Y. Therefore, Y will be requested
to post a bond or security.
c.
Existing licensees-amount of bond or security. The simultaneous late filing of
the return and the late payment of the tax will count as one delinquency. See
rule
701-259.24 (452A). However, the
late filing of the return or the late payment of the tax will not count as a
delinquency if the license holder can satisfy one of the conditions set forth
in Iowa Code section
421.27, penalty waiver.
(1) Suppliers will be requested to post a
bond or security when they have had one or more delinquencies in remitting the
fuel tax or timely filing monthly returns during the past six months.
The bond or security will be an amount sufficient to cover
six months' fuel tax liability or $5,000, whichever is
greater.
(2) Restrictive
suppliers will be requested to post a bond or security when they have had two
or more delinquencies in remitting the fuel tax or timely filing monthly
returns during the past 12 months.
The bond or security will be an amount sufficient to cover 12
months' fuel tax liability or $2,000, whichever is greater.
(3) Blenders will be requested to post a bond
or security when they have had two or more delinquencies in remitting the fuel
tax or timely filing monthly returns during the past six months.
The bond or security will be an amount sufficient to cover 12
months' fuel tax liability or $2,000, whichever is greater.
(4) Compressed natural gas, liquefied natural
gas, and liquefied petroleum gas dealers and users will be requested to post a
bond or security when they have had two or more delinquencies in remitting the
fuel tax or timely filing monthly returns during the past 12 months. The bond
or security will be an amount sufficient to cover 12 months' fuel tax liability
or $500, whichever is greater.
d. Eligible purchasers and end users will be
required to post a bond or security when they have failed to pay the tax to a
supplier. They will not be allowed to register as an eligible purchaser or end
user again until the bond or security requirement has been complied with.
The bond or security will be an amount sufficient to cover
six months' fuel tax based on previous purchases.
e. Waiver of bond. If a licensee has been
requested to post a bond or security or if an applicant for a license has been
requested to post a bond or security, upon the filing of the bond or security
if the licensee maintains a good filing record for a period of two years, the
licensee may request that the department waive the continued bond or security
requirement. Importer bonds will not be waived.
(2)
Type of security or
bond. When it is determined that a licensee or applicant for a fuel
tax permit is required to post collateral to secure the collection of the fuel
tax, the following types of collateral will be considered as sufficient: cash,
surety bonds, securities, or certificates of deposit. "Cash" means guaranteed
funds including, but not limited to, cashier's check, money order, or certified
check. If cash is posted as a bond, the bond will not be considered filed until
the final payment is made, if paid in installments. A certificate of deposit
must have a maturity date of 24 months from the date of assignment to the
department. An assignment from the bank must accompany the original certificate
of deposit filed with the department for the bank to be released from
liability. When a licensee elects to post cash rather than a certificate of
deposit as a bond, conversion to a certificate of deposit will not be allowed.
When the licensee is a corporation, an officer of the corporation may assume
personal responsibility for the payment of fuel tax. Security requirements for
the officer will be evaluated as provided in 259.21(1) above as if the officer
applied for a fuel tax license as an individual.
This rule is intended to implement Iowa Code sections
423.35 and
452A.66.
Notes
Iowa Code r.
701-259.21
ARC 1805C, IAB
1/7/15, effective 2/11/15; ARC
2247C, IAB 11/25/15, effective 12/30/15; ARC 6508C, IAB 9/7/22, effective
10/12/22; Editorial change: IAC
Supplement 10/18/23
Adopted by
IAB
March 19, 2025/Volume XLVII, Number 19, effective
4/23/2025
