what is a Bid Bond
How to Get Your Contractor License
Government and the Fuel Tax
International Fuel Tax Agreement
The international Fuel Tax Agreement is a an agreement between Canada and the 48 continental states (Alaska and Hawaii don’t have to comply). This agreement is supposedly an easier way to help determine the amount of tax, and the calculation of that tax, for fuel sellers, fuel mixers and other large users of fuel.
Unfortunately, this “easier way” is not so easy. The calculations can become convoluted very quickly and many large corporations must have very sophisticated computer programs that help them determine their fuel usage and taxes.
Fuel Tax Exceptions
What makes it even more difficult is that there are lots of exceptions to the general rules. So, IFTA does allow for certain incentives to be given out. It’s these exceptions that have completely swallowed the rule. IFTA is now a large complicated beast.
Given the complexity that IFTA now creates, most states require that sellers and mixers of fuel have a guarantee that the proper amount of tax be paid to the state. This guarantee is called a surety bond. This surety bond (called a fuel tax bond) has a third party guarantee that any seller of fuel will pay all of their taxes. If they do not pay all of their taxes, then the surety will have to pay those taxes. If the surety does pay the taxes, they will try and recover any payments from the original mixer of fuel.
The Federal Government and Surety Bonds
Just What is the Role of Federal Government in the Surety Bond Industry?
Why do businesses need to have bonds?
Nearly all (90%) of businesses that need surety bonds are to satisfy a federal government regulation. When dealing with the federal government the bond requirement is built into the federal acquisition regulations. Many states have similar regulations, called Little Miller Acts. In many cases bonds are needed to get a certificate or to carry out a service for the government.
What are the business reasons that bonds are required?
Bonds can be required for an assortment of factors. If the principal is carrying out services for the government the bond protects the tax payer’s investment. This additional action additionally assists the consumer by doing away with shifty companies and gives an easier ways of economic choice.
Not all bonds merely shield the obligee – there are bonds that could safeguard the bonded company as well. Integrity bonds shield the company from theft or other damages caused by a dishonest worker.
What is the difference between surety bonds and insurance?
Insurance coverage protect the business that is insured from slip and falls to fires. Insurance policies have a deductible while bonds do not. For insurance coverage, you have the ability to pick and choose the proper type of coverage that you believe you need. Surety bonds, however, are given on a “take it or leave it” basis, with very little to no room for coverage choices.
Bonds are more of a reverse insurance plan. Surety bonds protect the obligee, not the business. The obligee can be the state, federal government or it can be an exclusive obligee such as an additional company or a bank. If a bond claim develops the damaged celebration progressed could get economic payment up to the mentioned bond amount unless pointed out in the bond kind.
Without Guaranty bonds required by the federal government fraud would certainly be more common and the customer would certainly be out countless more bucks yearly.
Stimulus funds and surety bonds
The government has reserved a substantial amount of stimulus funds for infrastructure projects. In order to be awarded stimulation funds a service provider need to first bid on the project if there are the lowest bidder the specialist will certainly be awarded the job.
Before the construction firm can begin the task the professional will need to contact a carrier for an performance bond. A performance bond is different than a payment bond. These bonds are called for to protect the tax payer’s money that is funding the project. If the specialist skipped on the job the tax payer would certainly lose their financial investment on the infrastructure project without the protection provided by the surety bond.
If the principal is carrying out support services for the federal government the bond protects the tax payer’s financial investment. Guaranty bonds protect the obligee, not the company. If a bond case develops the broken celebration developed can obtain monetary settlement up to the mentioned bond quantity unless specified in the bond form.
The role of the federal government in most bond contracts is simply irrefutable and really cannot be avoided. However, this roadblock should be viewed as an advantage, once you learn the obvious ins and outs of the federal bidding process. Thus, it pays to take the time to learn how to bid on federal jobs and to also work with a good surety company to get qualified so that you can bid on a variety of federal and local government jobs.
The training provided by the government in learning how to bid on federal jobs can be daunting. However, be sure to use other resources so that you can pick the brains of those that have gone on before. Facebook and LinkedIn have multiple groups that have posted about going through this exact thing. Don’t forget about Twitter, where you can get quick tips about the bidding process (and many times, tips about good jobs to bid on). Finally, see your local chamber of commerce or local think tank where they usually have many resources for smaller contractors. If you’re a minority, be sure to become minority qualified so that you can qualify for jobs that are held out specifically for minority contractors. There are many jobs that go unfulfilled as there aren’t enough minority contractors to perform the work required.