Commercial Surety Bonds

The U.S. Army Transportation Command (ARTRANS), formerly known as the Military Surface Deployment and Distribution Command (SDDC), is responsible for overseeing the global movement of military equipment and supplies via surface transportation. This includes truck, rail, and port logistics. To participate in the military freight network, carriers and brokers must obtain a performance bond through the ARTRANS Freight Carrier Registration Program (FCRP). This bond is required before bidding on or transporting Department of Defense (DoD) freight shipments. Without this bond, carriers are not eligible to move SDDC loads. The bond guarantees the carrier's compliance with contract terms, such as timely pickup and delivery, adherence to DoD safety and security regulations, and performance standards. It is important to note that this performance bond does not replace cargo insurance. Carriers must maintain active cargo insurance that meets the DoD’s minimum coverage requirements.

Fuel tax bonds are a type of commercial surety bond required by state and federal governments from businesses involved in selling, distributing, or transporting motor fuel, including gas, diesel, and alternative fuels. Importers, distributors, blenders, suppliers, carriers, dealers, and IFTA participants may all be required to obtain one as a condition of their operating license. These bonds serve as a financial guarantee that all applicable fuel taxes will be paid in full and on time. They involve three parties: The principal, the obligee, and the surety. If a claim is filed and paid out, the business must reimburse the surety. Failure to secure a required bond can result in penalties, license revocation, or legal action. Requirements and bond amounts vary by state, which is why many transportation professionals choose PFA. Our team brings the industry experience and proven expertise that ensures your business stays compliant.

Highway use tax bonds are required by certain states for trucking companies and businesses operating heavy commercial vehicles on public roads. These bonds guarantee that carriers pay all required highway use taxes. These fees are collected to fund road maintenance and infrastructure improvements. Both large national fleets and smaller regional operators may be subject to this requirement, particularly interstate carriers and freight companies crossing state lines. Like other surety bonds, they involve three parties: the principal (the trucking company), the obligee (the state agency), and the surety (the bond provider). If a company fails to pay its highway use taxes, the state can file a claim against the bond, and the carrier must reimburse the surety if a claim is paid. Non-compliance carries serious consequences, including suspended operating authority, permit revocation, heavy fines, and lasting reputational damage.

A motor vehicle dealer bond is a commercial surety bond required in most U.S. states for businesses that sell new or used vehicles. Rather than protecting the dealer, this bond serves as a financial guarantee for consumers, creditors, and state agencies, ensuring dealers comply with licensing laws, handle title transfers properly, and pay all required taxes and fees. It also acts as a testament to a dealership's credibility, reinforcing ethical pricing, services, and customer interactions. If a dealer engages in fraud, misrepresents a sale, or fails to meet legal obligations, an affected party can file a claim against the bond. The surety compensates the claimant, and the dealer is then obligated to reimburse the surety. Dealers who fail to maintain this bond risk license suspension, financial penalties, or business closure.

A customs commercial bond is required by U.S. Customs and Border Protection (CBP) for importers bringing goods into the United States. Any commercial shipment valued over $2,500 (or any commodity subject to additional federal rules) must have a customs commercial bond. The bond ensures that all duties, taxes, and fees are paid and that customs regulations are followed. Three parties are involved: the importer, CBP, and the bond issuer. If an importer fails to meet their obligations, CBP can file a claim against the bond. Without a valid bond, goods may be delayed or denied entry at the border. There are two bond types: single-entry bonds, which cover one shipment, and continuous bonds, which cover multiple entries across all U.S. ports for one year. For frequent importers, continuous bonds are faster and more cost-effective.

A sales tax bond is a commercial surety bond required by state or local governments from businesses that collect sales taxes. It ensures that businesses correctly collect, report, and remit sales taxes to the appropriate authorities. While any retailer selling taxable goods and services may need one, these bonds are commonly required when applying for a sales tax permit. Some states limit the requirement to high-risk industries, such as businesses selling alcohol, tobacco, or motor fuel, while others apply a broader mandate. The bond involves three parties: the principal (the business), the obligee (the tax authority), and the surety (the bond provider). If a business fails to remit collected taxes, the government can file a claim against the bond. Businesses who fail to comply with sales tax bond requirements may face fines, license suspension, lost revenue, and significant legal consequences.

An Ocean Transportation Intermediary (OTI) bond is required by the Federal Maritime Commission (FMC) for companies operating as ocean freight forwarders (OFFs) or non-vessel-operating common carriers (NVOCCs). The FMC oversees all ocean-based shipping between U.S. organizations and foreign countries. This bond ensures that OTIs follow FMC rules and meet their contractual obligations. Required bond amounts vary by business type. Ocean freight forwarders must post $50,000, NVOCCs must post $75,000, and registered NVOCCs based outside the U.S. must post $150,000. The bond involves three parties: the principal (the OTI), the obligee (the FMC), and the surety (the bond issuer). Any company that advertises or operates as an OTI must have this bond in place. Operating without one can result in heavy penalties or the loss of FMC licensing.

A custodial bond is a commercial surety bond required by government agencies for individuals or businesses that manage property, goods, or funds on behalf of others. In the customs industry, these are known as C2 and C3 bonds, and are required by U.S. Customs and Border Protection (CBP) for operations that transport or warehouse cargo that has not yet entered U.S. commerce or had duties paid. This is often used by bonded carriers, bonded warehouses, centralized freight stations, and international carriers. The bond guarantees that the custodian will safely receive, handle, and dispose of bonded merchandise in full compliance with CBP regulations. This includes maintaining accurate records, using authorized modes of transport, and redelivering merchandise to CBP upon demand. Bond amounts are determined by the type of activity and are subject to the Port Director's discretion. Failure to maintain a custodial bond can result in penalties, loss of licensure, or legal action.