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Individual states levy the fuel taxes on the fuel purchased and consumed within their state. Fuel tax is included in the price you pay at the pump. When you travel through a state, you are required to purchase a certain amount of fuel based on your miles per gallon and the miles traveled in that state. This indicates the amount of fuel you theoretically would have consumed. This ensures that the state will receive its proper fuel tax income for fuel consumption whether you purchased the fuel or not in that state.
For example: You traveled 1,000 miles in Alabama and you get 10 miles to the gallon. You would owe the tax for
1,000 miles divided by 10 mpg = 100 gallons of fuel. If you purchased 100 gallons of fuel in Alabama then you already paid the tax for the 100 gallons you consumed but if you only bought 50 gallons in Alabama then you would owe the tax (at what ever their tax rate is) for the other 50 gallons. If you purchased 150 gallons you may receive a credit for the tax you paid (at the pump) on the 50 gallons surplus purchase.
The International Fuel Tax Agreement (IFTA) has simplified the filing and collection of fuel taxes for all participating states. Similar to the principal of IRP, you only need to file in your base state. The criteria for vehicles subject to fuel taxes and reporting miles is as follows:
* Vehicles having 2 axles or more and a GVWR exceeding 26,000 lbs.
* Vehicles having 3 or more axles regardless of weight
* Vehicles used in combination where the total weight exceeds 26,000 lbs.
Although most states use the same criteria, there may be certain exemptions which apply to specific states in certain situations. You can check with each state’s Fuel Tax Division to see if there are any exemptions that apply to you.
Certain states have what is called a surcharge on the gallons consumed which is calculated and paid only on the quarterly fuel tax report. As of the first quarter of 2008, those states which impose a surcharge are: IN, KY & VA
Either the operator of the vehicle or the carrier can file for an IFTA license (very small fee, if any) from their base state. Then the license holder would file a quarterly report for all miles traveled through each state for all trucks under that license. The base state then distributes the tax due to each state.
To learn how to apply fuel tax rates to your fuel purchasing strategy in order to maximize your savings on the cost of fuel you can contact Linda Yates, The Expediters Consultant at 877-878-4437 or enroll in the Expediter Training Programs.
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