taxes

Fuels Taxes Frequently Asked Questions

IFTA

Qualified Motor Vehicles

A qualified motor vehicle includes vehicles having three or more axles regardless of weight. Is the trailing unit of a combination vehicle included when determining the number of axles?

No. The number of axles on the power unit is the determining factor, and the number of axles of a trailing unit has no bearing on the determination.

Are mobile-home toters, wreckers and well drilling rigs qualified motor vehicles?

When a vehicle meets the definition of "qualified motor vehicle" by weight when pulling a trailing unit, but does not when operated alone, it is considered a qualified motor vehicle, whether or not it is pulling a trailing unit. However, enforcement personnel cannot require that a decal or IFTA license is displayed when the vehicle does not meet the definition. For example, if a mobile-home toter is operating through a member jurisdiction, is not pulling a trailing unit and otherwise does not meet the definition of qualified motor vehicle, it's possible that the vehicle has never been qualified for IFTA. Therefore, enforcement personnel cannot cite the driver for failure to display IFTA credentials. Owners of these vehicles may choose a fuel trip permit if they only occasionally travel interstate.

Is a pickup truck that occasionally pulls a trailer and exceeds the 26,000-pound (11,797-kilogram) threshold a qualified motor vehicle?

Yes. If the vehicle, when traveling in combination, meets the IFTA weight requirement, it is considered a qualified motor vehicle (combination means both the two-axle vehicle and the trailing unit). As such, proper IFTA credentials or a fuel trip permit will be required for interstate travel. If the pickup is licensed under IFTA, all operations (including those when the pickup is not used in combination) must be reported for the license year.

IFTA Licensing

In cases involving lessee/lessor agreements, which party is responsible for licensing under IFTA?

If the lease is for a period of 30 days or more, the parties may stipulate which party (the lessor or the lessee) will report and pay the fuel tax. If the lease is for a period of less than 30 days, the lessor will report and pay the fuel tax unless the lease contract designates the lessee as the responsible party and the lessor has a copy of the lessee's valid IFTA license.

Does a farmer need to be licensed under IFTA?

A farmer whose operations and vehicles meet the IFTA requirements for licensing should either obtain an IFTA license or purchase fuel trip permits. However, some jurisdictions rule that fuel used by motor vehicles in farming operations is tax exempt. If this is the case of the jurisdiction in which the farmer is based, but is not the case in another member jurisdiction in which the farmer travels, the farmer should license under IFTA. While the operations for the base jurisdiction are exempt from taxation, the farmer will use the IFTA tax return to report and pay taxes to other jurisdictions in which he travels.

Can a carrier be licensed under IFTA in more than one member jurisdiction?

Yes, a carrier that has fleets of qualified motor vehicles registered throughout member jurisdictions can be licensed for IFTA in each one. However, if all qualified motor vehicles are owned by the same company operating under the same federal employer identification number (FEIN) and one jurisdiction revokes the carrier's IFTA license, then all IFTA licenses the carrier holds are revoked until cleared.

For IFTA licensing, can a licensee consolidate fleets that would otherwise be based in two or more IFTA jurisdictions into one jurisdiction?

If a licensee is registered in more than one jurisdiction, it can reduce the number of jurisdiction registrations to one state. However, each affected jurisdiction must approve the consolidation.

Does IFTA provide for a maximum number of miles traveled in another IFTA jurisdiction before IFTA licensing is required?

No. IFTA licensing is not based on miles traveled in jurisdictions. A carrier based in an IFTA member jurisdiction and traveling to at least one other jurisdiction is required to

  • license under IFTA, or
  • purchase fuel trip permits for all the IFTA jurisdictions he travels in, including his base jurisdiction, if no more than five entries into the state are made during a calendar year.

Note: A round trip through Texas constitutes two separate entries, even when the round trip is completed within 20 days. For example: a trip originating in Arkansas, traveling through Texas to New Mexico, and then the return trip to Arkansas would require the purchase of two Texas trip permits.

Do member jurisdictions require an application to renew IFTA licenses?

Some jurisdictions require the licensee to submit a renewal application, but Texas-based carriers that are eligible for license renewal will automatically be issued a current year license and decals. The Comptroller's office may deny a license renewal if a carrier

  • Fails to file any IFTA return,
  • Fails to remit IFTA tax amounts due any member jurisdiction,
  • Is delinquent for any Comptroller-administered taxes or fees,
  • Has not reported interstate travel in the preceding six quarters, or
  • Is an entity that has had its registration with the Texas Secretary of State forfeited or cancelled.

Bonding

When can a base jurisdiction require a bond?

If Texas is the base jurisdiction, the Comptroller's office may require a bond if a licensee fails to file returns or remit tax due on time. It may also be required if, during an audit of an IFTA licensee, severe problems are indicated and member jurisdictions' interests must be protected.

Credentials

Does an IFTA licensee need to obtain decals from each member jurisdiction?

No. The credentials issued by a licensee's base jurisdiction allow that licensee to travel through all member jurisdictions without further licensing requirements.

For purposes of the International Registration Plan (IRP), what credentials are required for a carrier with fleets of qualified motor vehicles registered in two different states?

Example: A carrier has a fleet of qualified motor vehicles registered in Texas and also has a fleet registered in Arkansas, and approval has been granted for the consolidation of such fleets with Arkansas as the base jurisdiction. Arkansas IFTA licenses and decals should be displayed on all qualified motor vehicles the carrier operates through IFTA jurisdictions, regardless of the fact that the qualified motor vehicle may be displaying a Texas plate.

Quarterly Tax Returns

What information is included on an IFTA tax return when a licensee travels on a fuel trip permit?

Miles traveled while using a fuel trip permit should be included on Form 56-102, IFTA Fuel Tax Report Supplement (PDF) (used to file IFTA tax quarterly), in total IFTA miles (Item A) and as part of the total IFTA miles (Item H) traveled in the applicable jurisdiction, but not as taxable miles (Item I) traveled for that jurisdiction. Fuel purchases, while operating under a fuel trip permit should be included in total gallons consumed (Item D) to calculate the miles per gallon and in the tax paid gallons (Item L) purchase (if taxes were paid at the time the fuel was purchased) for the appropriate jurisdictions.

Can the operations (miles traveled and gallons consumed) of qualified motor vehicle(s) that only travel within one jurisdiction be reported on the IFTA tax return?

Yes. A licensee may include the travel and gallons consumed of qualified motor vehicles that operate exclusively within a jurisdiction by obtaining IFTA decals for the intrajurisdictional vehicle(s). Once decaled, the intrajurisdictional vehicle(s) must continue to be reported until either the expiration date of the decal or the vehicle(s) are no longer under the control of the licensee.

Which tax rate chart should a licensee use when amending an IFTA tax return?

Jurisdiction tax rates may change from quarter to quarter, so a licensee must use the tax rate chart for the specific quarter being amended. Contact the Comptroller's office or visit www.iftach.org for the current tax rate chart.

Can a base jurisdiction waive interest a licensee owes to other member jurisdictions?

Interest due to member jurisdictions cannot be waived by a base jurisdiction without written approval from the other member jurisdictions.

Is interest calculated for jurisdictions with a credit when filing an IFTA tax return after the due date?

No. Interest is not earned from a jurisdiction on delinquent tax returns.

Can a licensee report more tax paid gallons purchased than total gallons consumed?

Using Form 56-102, IFTA Fuel Tax Report Supplement (PDF), the total tax paid (Item L) gallons purchased should never exceed the total gallons consumed (Item D). Licensees with bulk storage should include in tax-paid gallons the number of gallons actually removed from their bulk storage and delivered into their IFTA-qualified vehicles.

What information should be reported for total non-IFTA miles?

Using Form 56-102, IFTA Fuel Tax Report Supplement (PDF), non-IFTA miles (Item B) include only the miles traveled in the non-IFTA jurisdictions of the Northwest Territories and Yukon Territory of Canada, Mexico, Alaska and the District of Columbia. Miles traveled in Oregon and the miles traveled while utilizing a fuel trip permit should be included in the total IFTA miles (Item A) and in the total IFTA miles (Item H) for the appropriate jurisdictions.

What are "gap miles"? Should they be included on the quarterly IFTA fuel tax report?

Gap miles are the difference in the miles recorded for a trip on your trip sheet and the actual miles traveled based on the beginning and ending odometer or hubmeter readings for that trip. Gap miles are usually an audit issue. Generally, audited gap miles are allocated to the jurisdiction(s) where the travel most likely occurred. You should make every effort to make sure miles traveled are accurately reported on your quarterly IFTA tax report.

Can a licensee use a fleet fuel card to document fuel purchases?

Yes. Fleet fuel card receipts are acceptable as long as the receipt documents the delivery of fuel into a specific vehicle. This requirement can be satisfied by

  • Assigning a fuel card to a specific vehicle and only using that card to refund that particular vehicle, or
  • Writing on the hard copy of the fuel receipt the identity (i.e., unit number or license plate number) of the vehicle into which the fuel is delivered when the a fuel card is used for multiple vehicles

It is an audit issue if the fuel card receipts do not identify the vehicle into which the fuel is delivered. A monthly summary of miles traveled and fuel consumed by each licensed vehicle is also required.

How do I calculate penalties and interest for past due IFTA taxes?

The minimum penalty is $50 or 10 percent of your total tax liability, whichever is greater. The minimum penalty applies to all late reports, including no operations, no tax due and credit reports.

Interest is assessed on all delinquent taxes for each month or fraction of a month beginning on the first day after the due date. The interest rate is adjusted each year on January 1. The current interest rate is available on our IFTA Web page.

Jurisdiction interest begins to accrue one day after the report is due through the report postmark date. Once the report is filed, additional interest accrues on any net tax due until the total net tax due is paid in full.

Records Kept by Licensees

How long must a licensee maintain records to support information reported on an IFTA quarterly tax return?

Records must be kept for four years from the due date of the return or the date the return is filed, whichever is later.

Credits and Refunds

How long does a licensee have to request a refund of a credit or to use a credit to offset a tax liability?

A licensee has eight calendar quarters after the calendar quarter in which the credit is earned to either request a refund or use the credit to offset an IFTA tax liability. For example, if a credit accrues in the third quarter, 2014, the licensee has until Oct. 1, 2016, to request a refund or to apply the credit toward a liability.

Can a licensee claim a tax refund or credit for motor fuel consumed by power take-off units, auxiliary power engines or other off-highway equipment on the quarterly IFTA tax report?

No. The IFTA tax report cannot be used to claim a refund for tax-exempted uses of motor fuel other than for tax-exempt miles as discussed on page 5 of the International Fuel Tax Agreement Texas Guidebook (PDF). An IFTA return must report all fuel delivered into IFTA-licensed vehicles and all miles traveled. A separate refund request for exempted uses must be made directly to each jurisdiction in which the motor fuel was consumed.

Are tax-exempt miles and tax-exempt fuel consumption the same in all IFTA member jurisdictions?

No. Jurisdictional laws vary greatly, and carriers must check with each jurisdiction.

Biodiesel Fuel and Renewable Diesel Fuel

How does a licensee report biodiesel fuel/renewable diesel fuel and biodiesel fuel/renewable diesel fuel blends purchased and used in Texas?

Biodiesel fuel/renewable diesel fuel and biodiesel fuel/renewable diesel fuel blends, such as B-20, are included in the total gallons consumed (Form 56-102, IFTA Fuel Tax Report Supplement (PDF), Item D) to calculate a fleet's average miles per gallons. It is presumed that biodiesel fuel/renewable diesel fuel and biodiesel/renewable diesel fuel blends are consumed in the jurisdiction where the fuel was purchased. Biodiesel fuel that is purchased in Texas and delivered into the fuel supply tank(s) of IFTA-licensed motor vehicles is considered consumed in Texas. Therefore, biodiesel fuel/renewable diesel fuel and biodiesel fuel/renewable diesel fuel blends purchased in Texas should be included in the tax paid gallons (Item L) for Texas. See Texas Administrative Code Rule 3.443.

Can a licensee request a refund for tax paid to a jurisdiction other than Texas on biodiesel fuel or biodiesel fuel blends that are actually consumed in Texas?

Yes, if the licensee shows that the total gallons of biodiesel fuel or biodiesel fuel blends purchased in the IFTA jurisdiction is greater than the amount of total gallons of diesel fuel used in that jurisdictions by all diesel-powered motor vehicles the licensee operated during the reporting quarter. IFTA licensees who overpay the tax on biodiesel fuel or biodiesel fuel blends by way of their IFTA tax return may request a refund from the Comptroller. Use Form 06-106, Texas Claim for Refund of Gasoline and Diesel Fuel Taxes (PDF), and include purchase invoice(s) and the IFTA tax return on which the tax was paid to Texas.

Petroleum Products Delivery Fee

What is the Petroleum Products Delivery (PPD) Fee?

Texas assesses a delivery fee on all petroleum products when they are withdrawn from a bulk facility and delivered into a cargo tank or barge, or imported into the state in a cargo tank or barge for delivery to another location for distribution or sale.

Defined as fuels for motor vehicles or aircraft, "petroleum products" include gasoline, gasohol, other alcohol-blended fuels, aviation gasoline, kerosene, distillate fuel oil, and #1 and #2 diesel fuel. The fee is not assessed on naphtha-type jet fuel, kerosene-type jet fuel, or petroleum products destined for use in, or feedstock for, chemical manufacturing.

How is the PPD fee calculated?

The Texas Commission on Environmental Quality (TCEQ) sets the amount of the petroleum product delivery fee rates, which is based on the total net temperature-corrected quantity delivered.

Petroleum Products Delivery Fees (Effective Sept. 1, 2015)
Gallons Delivered (All Petroleum Products) Fee
Less than 2,500 $ 1.70
2,500 but less than 5,000 $ 3.45
5,000 but less than 8,000* $ 5.45
8,000 but less than 10,000* $ 6.95
10,000 or more, per 5,000 gallon increment $ 3.45

*For gasoline deliveries of at least 7,000 but less than 8,000 gallons (whether single product type or split load), special rules continue to apply:

  • If the gasoline portion of the delivery is less than 7,000 gallons, the fee is $ 5.45/gal.
  • If the gasoline portion of the delivery is at least 7,000 gallons, the fee is $ 6.95/gal.

On split loads, the PPD fee is based on the total of gasoline and diesel fuel and not a separate fee on each product. If there is less than 7,000 gallons of gasoline in the split load, the fee is based on the total net temperature gallons of all products withdrawn. If there are 7,000 gallons or more of gasoline in a split load, the fee is based on the presumption that the withdrawal is into a cargo tank with a capacity of at least 8,000 gallons but less than 10,000 gallons. See Rule 3.151(d) Imposition, Collection, and Bonds or Other Security of the Fee for more information.

Calculating the PPD Fee: Examples
Example 1 Example 2 Example 3 Example 4 Example 5
Gasoline Gallons 5,000 7,000 8,100 7,050 7,500
Diesel Fuel Gallons 2,500 700 300 0 3,000
Total Gallons 7,500 7,700 8,400 7,050 10,500
Delivery Fee Due $5.45 $6.95 $6.95 $6.95 $10.40
Who collects the fee?

Bulk facility operators and petroleum products importers collect the PPD fee, then report and pay their collections to the state. All bulk facility operators and importers must have a Petroleum Products Delivery Fee Permit.

A bulk facility includes pipeline terminals, rail and barge terminals, and associated underground and aboveground tanks, connected or separate, from which petroleum products are withdrawn and delivered into a cargo tank or barge for transport.

Who is exempted from the PPD fee?

The fee is not assessed when fuel is exported to another state or delivered to another bulk facility, an electrical generating plant or a common carrier railroad for its exclusive use. Withdrawals from a bulk facility into a cargo tank or barge are also exempted from the fee when the entire withdrawal, prior to any delivery into intermediate storage, is delivered into the fuel supply tanks of vessels or boats.

Persons exempt from the fee must request in writing a letter of exemption from the Comptroller. The Comptroller's letter of exemption or a copy must be given to the seller each time exempt purchases are made.

What is the fee used for?

Revenue from the fee is used to fund the Petroleum Storage Tank Remediation account, a groundwater protection program that TCEQ administers.