28-5631. Bonds; amount; failure of security

A. A supplier shall file a bond with the director on a form approved by the director with a surety company authorized by the Arizona corporation commission to transact business in this state as surety on the bond. The supplier shall be the principal obligor, and this state shall be the obligee on the bond. The bond shall be conditioned on the prompt filing of true reports and the payment by the supplier to the director of all motor fuel taxes that are levied or imposed by this state, together with all penalties and interest on the taxes, and generally on faithful compliance with this article.

B. The director shall fix the total amount of the bond required of a supplier and may increase or reduce the amount at any time, subject to the limitations provided in this article. In fixing the total amount of the bond required of a supplier, the director shall require a bond in an amount equal to two times the director's estimate of the supplier's monthly tax, determined in a manner the director deems proper. The total amount of the bond required of a supplier shall be at least five thousand but not more than five million dollars.

C. A supplier may request in writing that the director return, refund or release a bond required pursuant to this section. The director may return, refund or release a bond if the director determines that the supplier has continuously complied with this article for at least the previous three consecutive years. If the director determines that the return, refund or release of the bond would jeopardize state revenues, the director may elect to retain the bond or may reimpose a requirement for a bond. A person who is aggrieved by a decision of the director pursuant to this subsection may request a hearing pursuant to section 28-5924.

D. If liability on the bond filed by the supplier with the director is discharged or reduced or if in the opinion of the director a surety on the bond given has become unsatisfactory or unacceptable, the director may require the supplier to file a new bond with satisfactory sureties in the same amount. If the supplier fails to file a new bond as required, the director shall cancel the license of the supplier immediately. If the new bond is furnished by the supplier, the director shall cancel and surrender the bond for which the new bond is substituted.

E. If on a hearing, of which the supplier was given five days' notice in writing mailed to the supplier's last known address, the director decides that the amount of the existing bond is insufficient to ensure payment to this state of the amount of the tax, penalties and interest for which the supplier is or may become liable, the supplier, on the written demand of the director, shall immediately file an additional bond in the same manner and form with a surety company on the bond approved by the director in an amount determined by the director as necessary to secure at all times payment by the supplier of all taxes, penalties and interest due under this article. If the supplier fails to file an additional bond as required, the director shall cancel the license of the supplier immediately.

F. A surety on a bond furnished by a supplier shall be released and discharged from all liability to this state accruing on the bond on the last day of the month that includes the sixtieth day after the date on which the surety files with the director a written request to be released and discharged. The request does not relieve, release or discharge the surety from liability already accrued or from liability that accrues before the last day of the month that includes the end of the sixty day period. On receipt of notice of the request, the director shall promptly notify the supplier who furnished the bond and shall cancel the license of the supplier immediately, unless the supplier, on or before the last day of the month that includes the end of the sixty day period, files with the director a new bond with a surety company satisfactory to the director in the amount and form provided in this section. If the new bond is furnished by the supplier, the director shall cancel and surrender the bond for which the new bond is substituted.

G. This section does not relieve a supplier of the supplier's duty to file the verified monthly report required by this article.