How to File & Report Motor Fuel Tax

If your business uses commercial trucks, you'll be required to pay the Motor Carrier Fuel Tax. Ignoring this obligation can create big problems for a business that range from heavy fines to government investigations. State tax agencies around the country require users of commercial trucks to record all fuel usage. In compliance with Canadian provinces, all lower 48 states participate in the International Fuel Tax Agreement (IFTA) to simplify fuel reporting.

Tracking and Paying Fuel Taxes

The most important thing is that you keep records of the gallons of fuel purchased for your commercial trucks. This applies for any fleet with vehicles that use gasoline, diesel fuel, gasohol, propane and natural gas. Here's how it works:

  • A single fuel tax license allows your vehicle(s) to travel in all IFTA jurisdictions.
  • You file a single tax report for travel through all jurisdictions.
  • You keep operational and travel records for your vehicles.

Each state's Department of Revenue (DOR) or Department of Motor Vehicles (DMV) handles the administration of commercial fuel taxes. You can locate your state's IFTA page on this list provided by the Federation of Tax Administrators. Most states have online portals that allow you to file and pay your IFTA tax reports online.

Non-IFTA State Miles: What You Need to Know

Miles traveled in Hawaii, Alaska, the District of Columbia and several Canadian provinces are considered non-IFTA state miles. However, you will still be able to report these miles using the same IFTA portal and forms. They are simply reported as non-IFTA miles.

Information Needed When Filing Quarterly IFTA Reports

When filling out your reports, you'll be using a special schedule for each type of fuel purchased during a trip. You will be sharing records for both miles traveled and total gallons purchased. Additionally, you will break down your trips based on how many miles were covered by state to determine the interest owed in each state you traveled in. If your vehicles don't travel out of state, you'll need to submit the full yearly total for fuel purchases within your state when completing your non-IFTA form.

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What States Require for IFTA Registration

While IFTA is a multi-jurisdiction program, you'll need to register with your state using the portal provided by your state. You will need to be registered as a business with your state. In addition to filling out an application, you will be required to request and pay for decals for your fleet. Once registered, you will be provided with a unique IFTA number for your business.

Prior to beginning the process, check with your state's requirements for qualifying vehicles that can be registered. Specific requirements regarding axles and a gross vehicle weight may apply.

Why IFTA Registration Benefits Companies

IFTA registration benefits companies by providing a streamlined way to handle taxes without the need to deal with multiple jurisdictions every time you report and pay fuel taxes. As a result, there is less concern about audits stemming from missed reports or unpaid taxes. If your company is audited, you will typically only be working with tax auditors from a single taxing jurisdiction who are able to reference your entire reporting history.