IRS Form 928 – Taxable Fuel Bond

IRS Form 928 – Taxable Fuel Bond – Businesses handling gasoline, diesel fuel, or kerosene face strict IRS excise tax rules under IRC sections 4041(a)(1) and 4081. The IRS Form 928, officially titled Taxable Fuel Bond, serves as a critical compliance tool for certain registrants under Form 637. It guarantees payment of federal excise taxes on taxable fuels.

This comprehensive guide, based on official IRS sources including the current Form 928 (Rev. September 2017), Internal Revenue Manual (IRM) 4.24.2 (updated as of 2025), Publication 510 (Rev. December 2025), and related regulations, explains everything you need to know. Whether applying for new registration or maintaining existing status, understanding Form 928 helps avoid suspension, revocation, or penalties.

What Is IRS Form 928 (Taxable Fuel Bond)?

Form 928 posts a surety bond (or equivalent security) required under IRC section 4101 for registration related to taxable fuels. The bond ensures the principal (the business or individual) pays all excise taxes, files required returns, and complies with regulations—protecting the U.S. government from nonpayment or fraud.

Key details from the official form (OMB No. 1545-0725):

• Revision date: September 2017 (still the current version as of February 2026; no updates issued).
• Bond types: Original, Strengthening, or Superseding.
• Fuel types covered: Gasoline, Diesel Fuel, or Kerosene excise tax.
• Download the official PDF: https://www.irs.gov/pub/irs-pdf/f928.pdf

The bond creates a continuing liability (no fixed expiration) and remains in effect until canceled with proper notice or replaced.

Who Must File IRS Form 928?

You must complete Form 928 if the IRS requires a bond as a condition for:

• Initial approval of Form 637 registration (Application for Registration for Certain Excise Tax Activities), or
• Retaining an existing Form 637 registration.

This applies specifically to activities involving gasoline, diesel fuel, or kerosene under IRC 4101. Common scenarios include:

• Failing the Acceptable Risk Test (e.g., prior penalties for fraud, false statements, tax evasion, or revoked prior registration by the applicant or related persons).
• Failing the Adequate Security Test (inadequate financial resources or unsatisfactory tax history for paying expected liabilities).

Activity letters on Form 637 that often trigger bond requirements (per IRM 4.24.2):

• K — Buyer of kerosene for feedstock purposes.
• M — Blender of taxable fuel outside the bulk transfer/terminal system.
• S — Enterer, position holder, refiner, terminal operator, or throughputter of taxable fuel (required for most; optional for non-position-holder throughputters with no expected tax liability).

Bonds do not apply to registrations under IRC 4222, 4662, or 4682. Not every Form 637 applicant needs one—only those the IRS determines pose a collection risk.

Purpose of the Taxable Fuel Bond

The bond secures timely collection of taxes on:

• Gasoline, diesel, and kerosene removals/sales.
• Related penalties and interest.

It supports the IRS’s goal of preventing tax evasion in the fuel supply chain (refineries, terminals, importers, blenders, etc.). If the principal fails to pay, the surety (bonding company) pays the IRS, then seeks reimbursement from the principal.

How Is the Bond Amount Determined?

The IRS sets the amount to cover a representative period of expected tax liability:

• General rule: Expected tax liability under IRC 4041(a)(1) and 4081 for a 6-month period.
• Terminal operators: Expected liability of other persons for fuel removed at their racks (treated as taxable) for a 1-month period.

Factors considered (IRM 4.24.2 and Form 928 instructions):

• Financial capabilities.
• Tax history (filing, deposits, payments).
• Volume of fuel handled.
• Overall compliance risk.

The IRS may increase/decrease the amount as circumstances change. In high-risk cases, no upper limit applies beyond the calculated expected liability. Strengthening bonds (additional amount) or superseding bonds (new full bond) may be required if fuel volume increases significantly or risk rises.

How to Complete and File Form 928?

Step-by-step (from official instructions):

1. Check the box: Original / Strengthening / Superseding bond.
2. Specify fuel: Gasoline, Diesel Fuel, or Kerosene.
3. Part I – Bonding: Enter principal (your business) and surety details, bond amount in words and numbers, effective date, and bond number.
4. Conditions: The form outlines standard obligations (no fraud, file returns, pay taxes, comply fully).
5. Surety cancellation clause: Surety can cancel with 60 days’ written notice to principal and IRS.
6. Part II – Signatures: Signed under penalties of perjury by authorized principal (individual, corporate officer, partner, fiduciary) and surety representative.
7. Part III – IRS Approval: IRS official approves, assigns registration number, and returns a copy.

Where to file: In duplicate with the specific IRS employee (Excise Tax examiner or registration group) who required the bond. Do not send to the general IRS addresses listed in the Paperwork Reduction Act section.

Qualifying sureties: Must appear on the U.S. Department of the Treasury’s Circular 570 list of acceptable sureties (available at fiscal.treasury.gov). Corporate sureties are most common; cash or U.S. obligations may also qualify in some cases.

Who may sign as principal:

• Individual: The individual.
• Corporation: President, vice president, or principal officer.
• Partnership/unincorporated: Authorized member/officer.
• Trust/estate: Fiduciary.

Maintaining, Strengthening, or Canceling the Bond

• Continuing liability — Monitor quarterly tax liability. Contact your IRS contact if it changes substantially.
• Changes in business (ownership >50%, management, volume) may require a new or strengthened bond.
• Cancellation — Surety provides 60-day notice; IRS may require replacement to avoid registration suspension/revocation.
• Release — After full compliance, expiration of assessment periods, or substitution, the IRS returns or cancels the bond.

Failure to post a required strengthening/superseding bond can result in suspension or revocation of your Form 637 registration.

Penalties for Non-Compliance

• Registration revocation/suspension → Loss of ability to handle fuels tax-free or claim credits/refunds.
• IRC 6719 penalty: $10,000 initial + $1,000 per day for failure to register/reregister.
• Trust fund recovery penalties or criminal charges for willful nonpayment/fraud.
• Collection from the bond itself (principal remains liable to reimburse surety).

Download IRS Form 928 and Related Resources

• Official Form 928 PDF: https://www.irs.gov/pub/irs-pdf/f928.pdf
• Form 637 Instructions (for the underlying registration).
• Publication 510, Excise Taxes (Rev. December 2025) — Covers fuel taxes, credits, refunds, and registration overview.
• IRM 4.24.2 — Detailed procedures for Form 637 and bonds.
• Treasury Circular 570 — List of approved sureties.

For the latest, always check IRS.gov/forms-instructions-and-publications.

Frequently Asked Questions (FAQs)

• Is Form 928 required for all fuel businesses?
  No — only when the IRS specifically requires it for Form 637 approval/retention due to risk factors.
• Can I use a cash bond instead of a surety?
  In some cases, yes (U.S. obligations or other IRS-approved security), but surety bonds via Form 928 are standard.
• How long does approval take?
  Varies; coordinate directly with your assigned IRS Excise Tax employee.
• Does the bond expire?
  No — it is continuous until properly canceled or superseded.
• Where can I find a surety company?
  Search the Treasury Circular 570 list or contact licensed surety agents specializing in federal excise/fuel tax bonds.
• Need help with Form 637 or bonds?
  Consult a tax professional experienced in excise taxes or contact the IRS Excise Tax unit assigned to your application.

Stay compliant with IRS Form 928 and taxable fuel rules to protect your business operations in the fuel industry. Always verify the latest requirements directly on IRS.gov, as excise tax rules can be updated by legislation or regulations.

This article is for informational purposes only and is not tax or legal advice. Consult a qualified tax professional or the IRS for your specific situation.