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What are Fuel Taxes?
Fuel taxes are a type of tax imposed by the government on the sale of motor fuels such as gasoline, diesel, and other petroleum-based fuels. These taxes are collected by federal, state, and local governments and are generally calculated as a percentage of the total sale price of the fuel. To comply with fuel tax requirements, carriers must adhere to the regulations of the International Fuel Tax Agreement (IFTA), maintain detailed records of fuel purchases and usage, calculate taxes owed for each jurisdiction, and file IFTA returns and make payments to their base state every quarter.
History
Before the introduction of fuel taxes and the International Fuel Tax Agreement (IFTA), truck drivers were required to obtain a fuel permit from each state they traveled through. This meant that drivers and carriers had to make frequent stops at ports of entry to purchase these permits, resulting in wasted time and additional route miles to reach the purchasing centers. In the 1980s, officials from Arizona, Iowa, and Washington began discussing the possibility of a unified permit system. The idea was to establish a single permit that would cover all states and provinces, with taxes assessed by a central authority and distributed to each jurisdiction based on the number of miles driven within their borders.
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Over the next 15 years, almost all of the lower 48 states in the US and 10 Canadian provinces joined the agreement. The benefits of this system were clear: it eliminated the need for drivers to purchase multiple permits and made tax collection more efficient and streamlined. Today, the IFTA remains a vital part of the trucking industry, simplifying the process of fuel tax collection and distribution for carriers and governments alike.
How do they work?
Fuel taxes and the International Fuel Tax Agreement (IFTA) establish a unified system for the collection and distribution of fuel taxes across multiple jurisdictions. Carriers register with their base state, keep detailed records of fuel purchases and miles traveled, and make quarterly payments to their base state. This ensures that fuel taxes are collected and distributed fairly across all jurisdictions and provides a cost-effective way for carriers to comply with fuel tax laws while enabling governments to collect the revenue needed to fund transportation-related projects.
International Fuel Tax Reporting
IFTA reports are calculated quarterly, and carriers may owe or be credited money based on the difference in fuel tax rates between the states where they purchased fuel and where they used it. If a carrier purchases fuel in a low-cost state and operates in a high-tax state, they may owe taxes at the end of the quarter. Conversely, if a carrier purchases fuel in a high-tax state and operates in a low-tax state, they may receive a credit at the end of the quarter.
Reporting Months
January - March
April - June
June - September
October - December
Quarters
1st
2nd
3rd
4th
Due Date
April 30th
July 31st
October 31st
January 31st
Our Services
We can help carriers with their fuel tax reporting by providing accurate calculations, detailed fuel tax reports, and assistance with filing IFTA returns and making payments to their base state. Our team of experts stays up-to-date with the latest regulations and can help carriers avoid costly penalties and fines. We understand that fuel tax reporting can be a time-consuming and complicated process, which is why we offer professional services to streamline the process and give carriers peace of mind. With our help, carriers can focus on their core business operations and leave the fuel tax reporting to us.