Fuel tax holidays and IFTA fuel prices for land lines

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Tax relief looks good on paper and can even be a financial benefit in many cases. With fuel prices continuing to rise, several states have implemented tax exemptions in an effort to reduce costs for consumers.

However, for truckers, it’s not as simple as paying less when you fill up.

Due to the International Fuel Tax Agreement, knowing exactly what to report and how to report it will help avoid future fuel tax issues.

Recent “tax holidays” have created IFTA compliance issues due to internal system requirements such as total gallons being equal to gallons paid in tax, according to a note signed by IFTA executive director Carmen Martorana Jr.

The issue of a carrier declaring more total gallons than the tax credit given to it in a jurisdiction is not new, the memo says. Yet “a jurisdiction must provide a method in which a carrier can report the total fuel placed in a qualifying motor vehicle, whether the fuel was paid for by tax or can be substantiated by a receipt.”

The IFTA statement varies by jurisdiction.

In some cases, carriers must report any untaxed or unreceived fuel on the “other” jurisdiction line of the report. This line is also used for operations without membership with a zero tax rate.

A pause in fuel tax collection will result in a difference between the total gallons and the paid gallons reported by the carrier. If it is necessary that the total fuel entered in the mpg calculation equal the taxed gallons, a carrier should be advised to report the untaxed portion of fuel in the “other” (non-member) line so that no credit be calculated for these gallons.

Connecticut, Georgia, Maryland and New York are among the states that recently implemented such a pause in fuel tax collection.

Example

A New York transporter bought 800 gallons of fuel in New York

800 × 59.5% (using New York percentage chart) = 476 gallons

The carrier would report 800 gallons in the total gallons field used to calculate mpg and in the zero-rated gallons field for New York it would report 476 gallons. The difference between the two amounts, 324 gallons, would be entered on the “other” jurisdiction line with a zero tax rate and no tax credit paid.

If the total gallons used for mpg purposes are not required to equal the zero-rated gallons, the carrier would include all gallons purchased in New York in the total gallons for mpg calculation and in the New York line for zero-rated gallons, enter 476 gallons.

“This issue of total gallons not equaling zero-rated gallons will apply whenever a carrier has untaxed or unreceived fuel,” Martorana said. LL

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