IFTA Bond

Why is an IFTA Bond Required?

The International Fuel Tax Agreement was created because states found that fuel taxes were unevenly distributed across a trip. Specifically, the state where the trip starts and and the state where the trip ends tend to get the vast majority of the fuel taxes.

This is because most every trip starts and ends with filling up the fuel tanks.

Why Do Fuel Taxes Exist?

One of the purposes of a fuel tax is to collect money for public and Federal road system's:

• Maintenance
• Repair
• Replacement

This includes highways, the road systems shipping companies use to transport their cargo.

What is a Passthrough State?

A passthrough state is a state that is traveled through to get to the end destination of the trip.

These passthrough states incur the wear and tear of their road systems from these vehicles and they don't receive any direct fuel tax because the vehicle never stops to fill up.

This is why IFTA was created.

It requires the shipping company to calculate the appropriate sales tax owed to a state based on the mileage traveled in the state, but only for qualified motor vehicles.

What is a Qualified Motor Vehicle?

A qualified motor vehicle is a vehicle that meets any of these qualifications:

• Any vehicle with three or more axles
• Two axle vehicles with a gross weight of more than 26,000 pounds
• A vehicle used in combination with a trailer with a gross weight of more than 26,000 pounds
• If your fleet is traveling across state lines or into Canada

All qualified motor vehicles are required to obtain an IFTA license.

The IFTA license is issued by the individual states. This is where you'll learn the tax rates you're required to pay for that individual state.

What States Require an IFTA Bond?

The states that require an IFTA fuel tax bond are:

• Arizona
• Illinois
• Kansas
• Michigan
• Missouri
• Montana
• Texas

The IFTA fuel tax bond is set by the individual states and you're only required to purchase the bond if you're going to be traveling through the state.

For example, Arizona has a flat $5,000 bond amount while states like Texas and Montana have a variable bond amount based on the shipper's estimated quarterly tax liability, but never less than $500.

Other states like Colorado have no bond requirement unless you've failed to pay taxes in the past.

What Is The Cost of an IFTA Bond?

The cost to purchase an IFTA fuel tax surety bond is based on a rate quoted by a surety. A surety is the insurance company that underwrites surety bonds.

Every surety will use these factors when determining an individual application to determine a rate:

• The personal credit of the owner or owners
• Prior experience and shipping history of the company
• The financial standing of the company
• Prior bond claims, if applicable

While each surety (generally) uses these same factors to determine a rate, they also use their own underwriting guidelines. This means the rates quoted by each surety can vary enough to save you hundreds of dollars on the price.

BOX: Quoted Rate x Bond Amount = Price You Pay

Because Arizona has a fixed bond amount, we are able to secure a low fixed price, with zero credit check, of $100. You can purchase your Arizona IFTA bond today.

Here's example pricing using an assumed bond amount of $7,000. The rates in this table range from really good to about average.

How To Save Money Purchasing Your IFTA Bond

This is why, if you want to save money, you should use a specialized surety agency to purchase your IFTA bond.

As a surety agency, we will use our network of A rated sureties to price shop for you and find the lowest possible rate and price.

We price shop for you for free and when. you get pricing, you're under no obligation to purchase.

You have nothing to lose. Get your pricing now so you can get this done and keep your shipping schedules.

How Long Does The IFTA Fuel Tax Bond Last?

All surety bonds have a term. The term is the length of time the bond remains active before it must be renewed for another term.

IFTA bonds have a 12 month bond term from the effective date. The effective date is chosen by you when you purchase the bond.

This is another great reason to work with Surety Bonds Direct. We manage this process for you.

As your bond expiration date approaches, your bond specialist will reach out to you 30 to 40 days in advance to make renewing you bond fast and easy.

If you no longer will be traveling through a state requiring the bond, you can let the bond expire.

What Happens After You Purchase Your IFTA Bond?

Once you complete your purchase, our bond issuance team will get to work to prepare your bond with the:

• Correct bond form
• Necessary signatures
• Seals
• Power of Attorney

Most states that required the IFTA tax bond, allow us to email it to you. This speeds the process up so you can submit it and keep your schedules on time.

Some states require the original bond. This means we need to mail the bond to you. Make sure you get your pricing now and get this process done. You don't want the time it takes to mail the bond to be the reason you have to shift shipping schedules.

Getting Your IFTA Licenses

Getting your IFTA license is done on the state level.

Each state has its own:

• Fees
• Fuel tax percentage
• Possibly bond amount
• Application process

Click below to get the licensing information for the states that require a bond.

• Arizona IFTA license
• Illinois IFTA license
• Kansas IFTA license
• Michigan IFTA license
• Missouri IFTA license
• Montana IFTA license
• Texas IFTA license