Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 259 - Administration › Rule 701-259.21 - Bonding Procedure

Current through Register Vol. 47, No. 3, July 24, 2024
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 anew fuel tax permit will be
				requested to post a bond or security if (1) itis 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 701-67.24 (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.