Arkansas Code of 1987 (2023) › Title 26 - TAXATION (§§ 26-1-101 — 26-82-119) › Subtitle 5 - STATE TAXES (§§ 26-50-101 — 26-65-108) › Chapter 56 - SPECIAL MOTOR FUELS TAXES (§§ 26-56-101 — 26-56-804) › Subchapter 2 - DISTILLATE SPECIAL FUELS (§§ 26-56-201 — 26-56-232) › Section 26-56-204 - Licenses and bonds for suppliers and users, etc., generally

(a)
(1)
(A)
No person shall commence operations as a supplier, user, or off-road consumer of distillate special fuel without first procuring a license for that purpose from the Secretary of the Department of Finance and Administration. The license shall be issued and remain in effect until revoked as provided in this section.
(B)
(i)
Any person holding or applying for a supplier's license after August 1, 1987, shall make an election to operate either as a pipeline importer or first receiver. Once having made an election in writing filed with the secretary, the election will remain in force until such time as the supplier makes another written election to change the supplier's status.
(ii)
The election and any change therein shall take effect on the first month following filing of the election.
(iii)
The secretary may promulgate such forms and rules as may be necessary to ensure uniformity with federal usage of exemption certificates issued for nonhighway diesel purchases.
(b)
(1)
Each application for a license or registration as a supplier, user, or off-road consumer of distillate special fuel, and each license or registration, shall have as a condition that the applicant and holder shall comply with the provisions of this subchapter.
(2)
(A)
Each annual registration as a user or off-road consumer shall have as a further condition that the applicant shall not deliver or permit delivery into the fuel supply tanks of motor vehicles any distillate special fuel which have been purchased tax-free by the applicant.
(B)
A taxable use of distillate special fuel purchased tax-free by an applicant for an annual registration as a user or off-road consumer, in addition to the penal provisions prescribed in this subchapter, at the discretion of the secretary shall forfeit the right of the applicant to purchase distillate special fuel tax-free.
(c)
(1)
Every supplier shall file with the secretary a surety bond of not less than one and one-half (11/2) times or one hundred fifty percent (150%) of the prior six (6) months' average distillate special fuel tax due which is based upon the gallonage of distillate special fuel to be sold or distributed as shown by the application for a license if the applicant has not previously been engaged in the business of a supplier, or as shown by sales for the previous year if the applicant previously has been engaged in the business in this state. However, no bond shall be filed for less than one thousand dollars ($1,000).
(2)
If the secretary deems it necessary to protect the state in the collection of distillate special fuel taxes, the secretary may require any supplier to post a bond in an amount up to three (3) times or three hundred percent (300%) of the prior six (6) months' average distillate special fuel tax due.
(3)
(A)
However, the secretary is authorized to waive the posting of bond by any licensed supplier organized and operating under the laws of Arkansas and wholly owned by residents of this state who has been licensed for a period of at least three (3) years and who has not been delinquent in remitting distillate special fuel taxes during the three-year period immediately preceding application by the supplier for waiver of bond.
(B)
If any supplier whose bond has been waived by the secretary as authorized in subdivision (c)(3)(A) of this section, subsequently becomes delinquent in remitting distillate special fuel taxes to the secretary, the secretary may require that the supplier post a bond in the amount required in this section, and the supplier shall not be eligible to petition for a waiver of bond for a period of three (3) years thereafter.
(d)
(1)
Each application of an interstate user for a license shall be accompanied by a surety bond of a surety company authorized to do business in this state, in favor of the secretary, satisfactory to the secretary, and in an amount to be fixed by the secretary of not less than one thousand dollars ($1,000) nor more than fifty thousand dollars ($50,000), guaranteeing the payment of any and all taxes, penalties, interest, attorney's fees, and costs levied by, accrued, or accruing under this subchapter.
(2)
Any violation of this subchapter shall be cause for revocation of any license issued under this subchapter.
(e)
(1)
The bond or bonds shall be issued by a surety company qualified to do business in Arkansas, which shall be executed by the supplier or interstate user as the principal obligor and shall be made payable to the State of Arkansas as the obligee.
(2)
The bond shall be conditioned upon the prompt filing of true reports and the payment by the supplier or interstate user to the secretary of any and all distillate special fuel taxes which are levied or imposed by the State of Arkansas, together with any and all penalties and interest thereon, and generally upon faithful compliance with the provisions of this subchapter.
(f)
(1)
In the event that liability upon the bond filed pursuant to this section by the supplier or interstate user with the secretary shall be discharged or reduced, whether by judgment rendered, payment made, or otherwise, or if in the opinion of the secretary any surety on the bond shall have become unsatisfactory or unacceptable, then the secretary may require the filing of a new bond with a satisfactory surety in the same form and amount; failing which, the secretary shall immediately cancel the license of the supplier or interstate user.
(2)
If a new bond shall be furnished, the secretary shall cancel the bonds for which the new bond shall be substituted.
(g)
(1)
(A)
If the secretary determines the amount of the existing bond is insufficient to ensure payment of the tax, interest, and penalty the supplier or interstate user currently owes or may owe, the secretary may issue a written demand that the supplier or interstate user file an additional bond in the same manner and form with a surety company approved by the secretary.
(B)
The supplier or interstate user may seek administrative relief from the decision of the secretary by filing a written protest under the Arkansas Tax Procedure Act, §
26-18-101
et seq., or by filing a petition under the Independent Tax Appeals Commission Act, §
26-18-1101
et seq.
(C)
A hearing on the distributor's protest or petition shall be held within twenty (20) days of the date of the filing of the protest or petition, and a decision shall be issued within fifteen (15) days of the date of the hearing.
(2)
If the supplier or interstate user fails to timely seek administrative relief from the decision of the secretary, the secretary shall cancel the license of the supplier or the interstate user immediately.
(h)
(1)
Any surety on any bond furnished as provided in this section shall be released and discharged from any and all liability to the State of Arkansas accruing on the bond after the expiration of sixty (60) days from the date upon which a surety shall have lodged with the secretary written request to be released and discharged. However, the request shall not operate to relieve, release, or discharge the surety from any liability already accrued or which shall accrue before the expiration of the sixty-day period.
(2)
Upon receipt of notice of the request, the secretary shall promptly notify the supplier or interstate user who furnished the bond, and unless the supplier or interstate user on or before the expiration of the sixty-day period files with the secretary a new bond with a surety company satisfactory to the secretary in the amount and form as provided in this section, the secretary shall immediately cancel the license of that supplier or interstate user.
(3)
If a new bond shall be furnished as provided in this section, the secretary shall cancel the bond for which the new bond shall be substituted.
(i)
In lieu of furnishing a bond or bonds executed by a surety company as provided in this section, any supplier or interstate user may furnish a bond or other instrument in a form prescribed by the secretary of equal, full amount to the amount of the bond or bonds required by this section, which will provide security or payment of all amounts as described in this section and in compliance with all provisions of this subchapter.
(j)
(1)
A supplier may operate under his or her supplier's license as a dealer or as a user without securing a separate license, but he or she shall be subject to all other conditions, requirements, and liabilities imposed by this subchapter upon a dealer or a user.
(2)
A licensed supplier, but not a dealer, may use distillate special fuel in motor vehicles owned or operated by him or her without securing a separate license as a user, subject to all conditions, requirements, and liabilities imposed herein upon a user.
(k)
(1)
Any violation of this subchapter shall be cause for revocation of any license issued pursuant to this subchapter.
(2)
(A)
Should his or her license be revoked, any supplier or user may bring an action against the secretary in the circuit court of the county of his or her domicile within fifteen (15) days of the date of revocation to determine whether or not the supplier or user has in fact violated any of the provisions of this chapter.
(B)
If the circuit court determines that the provisions of the law have been violated by the supplier or user, it shall affirm the secretary's action in revoking the license.
Amended by Act 2021, No. 593,§ 32, eff. 1/1/2023.
Amended by Act 2019, No. 315,§ 3023, eff. 7/24/2019.
Amended by Act 2019, No. 910,§ 4034, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 4033, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 4032, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 4031, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 4030, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 4029, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 4028, eff. 7/1/2019.
Acts 1965 (1st Ex. Sess.), No. 40, ch. 2, §§ 7, 8; 1967, No. 357, § 2; 1980 (1st Ex. Sess.), No. 46, § 1; A.S.A. 1947, §§ 75-1247, 75-1248; Acts 1987, No. 985, § 12; 1987 (1st Ex. Sess.), No. 20, § 8; 1993, No. 618, §§ 4, 5; 1993, No. 1026, § 2; 1995, No. 777, §§ 4-6; 1997, No. 1212, §§ 4, 5.