Kentucky Highway Use Tax Bond

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What is a Kentucky Highway Use Tax Bond?

The Kentucky Division of Motor Carriers requires that certain users of highways in Kentucky post a Highway Use Surety Bond. The bond guarantees timely payment of tax, penalties, and interest as provided by KRS 138.655 through 138.725, which impose certain duties, obligations, and liabilities upon users of highways. The bond also guarantees timely filing of quarterly reports as are required by law, and other information as may be required by the Department. The bonded principal must also keep and preserve open for inspection by the Department such records, papers, and files as the Department may require, and shall fully and faithfully comply with the terms of the law and the regulation.

This surety bond covers the use of any vehicle by a lessee of the principal, and the tax due because of such use unless such lessee holds a license from the Department and files regular reports. This bond can be terminated by the surety upon written notice to the Department and principal given by registered mail sixty (60) days in advance. Lastly, the bond amount must be equivalent to $1,000 or four months’ tax liability, whichever is greater, not to exceed $50,000 per KRS 138.655 through 138.725.

Note that there is a separate bond required for fuel tax, transporter, or gasoline dealers and also a separate bond for highway encroachment or construction.

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Highway Use Tax Bonds And Getting Your Kentucky Business License/Registration

Any motor carrier traveling through Kentucky with a declared vehicle weight equal to or greater than 59,999 pounds must register for the Kentucky Highway Use Tax (KYU) under KRS 138.660. In order to register, the motor carrier complete the Kentucky Trucking Application form TC 95-1 which is available online at drive.ky.gov. Ongoing quarterly taxes can also be filed online by registering for the KYU E-File Application. The state processes all incoming applications typically within 7 to 14 business days of the receipt of the application. When the application is fully processed, the motor carrier receives notice of issuance with the new tax license number and the necessary quarterly tax forms to be filed.

It's important to note that the KYU number is different than IFTA. KYU establishes the fuel tax, surtax, and Kentucky Weight Distance Tax (KYU). KYU is a highway usage tax based on Kentucky mileage and KYU taxable vehicles are those over 59,999 pounds. IFTA is a fuel tax based on fuel consumed by a vehicle within a specific IFTA jurisdiction. IFTA taxable vehicles start at over 26,000 pounds or 3 or more axles regardless of weight.

Additional Kentucky Highway Use Tax Bond Resources & Links

Commonwealth of Kentucky Motor Carriers