KRS 138.330 — Dealer's and transporter's financial instrument

(1) (a) Every dealer or transporter required to be licensed under KRS 138.310 shall
file with the department a financial instrument in an amount not to exceed
three (3) months' estimated liability as computed by the department or five
thousand dollars ($5,000) whi chever is greater, or in the case of a new
licensee in the minimum amount of five thousand dollars ($5,000) until such
time as an estimated three (3) months' liability can be established, provided
that the maximum amount of any financial instrument may be reduced to an
amount sufficient in the opinion of the department, considering the financial
rating and reputation of the company, to insure payment to the department of
the amount of tax, penalties and interest for which the dealer or transporter
may become liable.
(b) The financial instrument shall be on a form and with a surety approved by the
department.
(c) The dealer or transporter shall be the principal obligor and the state the
obligee.
(d) The financial instrument shall be conditioned upon the promp t filing of true
reports by the dealer and transporter and the payment by the dealer to the State
Treasurer of all gasoline and special fuel excise taxes imposed by the state,
together with all penalties and interest thereon, and generally upon faithful
compliance with the provisions of KRS 138.210 to 138.340.
(2) If liability upon the financial instrument is discharged or reduced, whether by
judgment rendered, payment made, or otherwise, or if in the opinion of the
department any surety on the financial in strument has become unsatisfactory or
unacceptable, the department may require the licensee to file a new financial
instrument with satisfactory sureties in the same amount, failing which the
department shall cancel the license of the licensee in accordance with the provisions
of KRS 138.340. If a new financial instrument is furnished as provided above, the
department shall cancel and surrender the financial instrument for which the new
financial instrument is substituted.
(3) If upon hearing, of which the licensee shall be given five (5) days' notice in writing,
the department decides that the amount of the existing financial instrument is
insufficient to insure payment to the state of the amount of tax, penalties, and
interest for which the licensee is or may become liable, the licensee shall, upon the
written demand of the department, file an additional financial instrument in the
same manner and form with a surety thereon approved by the department, in any
amount determined by the department to be necessary, failing which the department
shall cancel the license of the licensee in accordance with the provisions of KRS
138.340.
(4) Any surety on a financial instrument furnished as required by this section shall be
released from all liability to the state acc ruing on the financial instrument after the
expiration of sixty (60) days from the date upon which the surety has lodged with
the department a written request to be released, but this request shall not operate to
release the surety from any liability already accrued or which shall accrue before the
expiration of the sixty (60) day period. The department shall promptly, upon receipt
of a request, notify the licensee who furnished the financial instrument, and unless
the licensee, before the expiration of the sixty (60) day period, files with the
department a new financial instrument with a surety satisfactory to the department
in the amount and form prescribed in this section, the department shall cancel the
license of the licensee in accordance with the prov isions of KRS 138.340. If an
approved new financial instrument is filed, the department shall cancel and
surrender the financial instrument for which the new financial instrument is
substituted.