Fuel reporting is important as the money which is generated from fuel taxes goes towards construction and maintenance of highways, roads , bridges and other transportation networks across the nation. Accurate records of fuel purchases, miles run and fuel mileage in each state help calculate the exact fuel tax amount due in each state, which is paid four times (in every quarter) in each fiscal year.
Previously all states had their separate fuel tax laws and standards and fuel tax reporting was individually done for each state. This created trouble for most motor vehicles as each state had different (and sometimes contradicting) fuel tax regulations. In 1968, American Association of Motor Vehicle Administrators (AAMVA) formed a subcommittee to form fuel tax laws acceptable to all states and jurisdictions. In 1986, the IFTA (International Fuel Tax Agreement) was adopted and has been in effect since then.
The IFTA, works to standardize the varied (and often contradicting) laws that many states (48 American states and 10 Canadian provinces) created. Over time, all states have become members of IFTA and gotten rid of most of their own IFTA mandates. Some states have additional requirements for the fuel tax reporting, but the process, as a whole, has become a lot simpler.
When your trucking company operates in many states, it becomes difficult to know which state you should register in. An easier option would be to open an office or a place of business in one place, and register your vehicles and maintain your mileage records in that state. It’s best to contact the local register in the base state in order to register your vehicles in one or multiple states (if and when necessary).
IFTA specifies the parameters to be specified as a qualified vehicle. The parameters mention that the vehicle needs to travel in at least two IFTA jurisdictions and should weigh over 26000 pounds or have 3 or more axles. It could also be a bus that can carry at least 20 passengers. Some jurisdictions require the vehicle to be fueled by diesel, natural gas or propane, while others require gas-powered ones to be licensed for tax reporting.
Every vehicle should apply for an annual license. This license is validated with two decals, one on the left door and the other on the right door. Contact the local DMV (Department of Motor Vehicles) for the application for license of a new vehicle. The IFTA then sends the renewal application every year after that. Once approved, the vehicles must always carry a copy of the license.
Four times every year, every carrier is required to submit a fuel tax report which covers all of its registered and qualified vehicles. A check must accompany each report to cover any due tax payment – usually payable to the base state’s Secretary of State. If you have an accumulated tax credit from tax-paid fuel and if it exceeds the payment you owe, a refund or additional credit will be given to cover future payments.
In order to receive the refunds or tax credits, receipt information from tax-paid purchases should accompany the quarterly fuel tax report. The receipts should have the date of purchase, fuel type, seller’s name and address, purchasers name, vehicle registration number, the total amount of sale and gallons purchased.
All carriers must maintain records of the each vehicle’s mileage reports, in addition to the fuel tax reporting. The mileage reports must be summarized monthly and have information of all the fuel bought at different service stations.
The IFTA rules are extremely specific and at times frustrating but when you compare them with the process of complying with the parameters set by multiple states, IFTA’s regulations are a welcome thing.