Form Mf 04-7 - Motor Fuel Distributor - 5 Day Revocation Page 9
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10Bonds may be required when a licensee fails to file timely reports,
when he fails to remit the proper tax, when the Department has
twice received a Non-Sufficient Funds check as payment, or when
an audit indicates problems severe enough that, in the Director’s
discretion, a bond is required to protect the interests of the
Department. If a bond is required, it shall be equal to at least twice
the estimated average quarterly tax liability.
The average tax
liability upon which the bond is based shall be determined by
taking into consideration the amount of motor fuel expected to be
used in all jurisdictions by such applicant. The penalty fixed by
the Department shall be such as, in its opinion, will protect the
State of Illinois against the failure to pay the amount hereinafter
provided . . . . 86 Admin. Code ch. I, Sec. 500.305(b).
As ABC has admitted that it has tendered checks to the Department that have been returned for
insufficient funds, the Department, by law, is authorized to require a bond.
ABC also argues that the $227,900 amount bears no reasonable relation to the tax
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liability of ABC
and in fact violates Section 3 of the Act. ABC owed the Department $100,000
at the time of the hearing. ABC gave the Department a check for $86,000 that it did not have
sufficient funds to cover. The Department has attempted to have ABC file a bond since 2000 to
no avail. Only after ABC got this latest request to file a bond did it change its method of
operations, and that was in the middle of 2003.
There is nothing that mandates that ABC must continue to pre-pay its tax liability to its
supplier, as it is currently doing. There is nothing that stops ABC from again buying a truck stop
and accruing significant additional liabilities, as it did with the truck stop. The rule states that if
a bond is required, it shall be equal to at least twice the estimated average quarterly tax liability.
Based upon ABC’s past history with the Department, I conclude that a $227,900 bond is
reasonable to expect of ABC.
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One of ABC’s exhibits was a listing of its motor fuel liabilities from August 2002 through July 2003. The average
monthly liability shown on the document is $50,057.91. The actual returns were not submitted. The document was
obviously prepared in anticipation of litigation.
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