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These surety bonds are general for all states.
Learn more about highway tax use bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
Some states require commercial trucking companies to purchase a highway use tax bond. This is a type of license bond and is often a prerequisite for using public highways. The bonds are also referred to as heavy vehicle use tax bonds and mileage use tax bonds. The bond guarantees that the trucking company will pay all taxes and fees, plus any penalties and interest, owed to the state and federal government.
The bond requirement applies to trucking companies that operate fleets of commercial vehicles on public highways in a given state. In some states, whether or not a bond is required depends on factors such as the weight of the company’s fleet vehicles.
In a highway use tax bond agreement, the obligee is the state authority that licenses motor carriers and requires the bond, the trucking company is the principal, and the company underwriting and issuing the bond is the surety.
If the principal fails to pay the taxes it is assessed—or otherwise violates the terms of the bond or applicable laws and regulations—the obligee can file a claim against the bond. The surety will verify that the claim is valid. If it is, the surety will make payment to the obligee. However, the principal is legally obligated to reimburse the surety for the amount paid to the obligee.
The obligee determines the required bond amount (or penal sum) for each license applicant based on such factors as the number of vehicles the company operates, the vehicle weights, and how the highway use tax is reported in that state. But the principal will pay only a small percentage of that amount as the annual premium for the bond.
This can be as low as 1% for low-risk applicants with the best credit, but it can be higher for applicants with poor credit. To determine the premium rate, the surety will take into account the applicant’s personal credit history, and personal and business financial statements.
If you’re seeking a highway use tax surety bond to meet licensing requirements in a state that requires bonding, our experts know exactly what to do to help you. Give us a call today, or request a convenient online quote.
