Fuel taxes

Before 1986, when The International Fuel Agreement (IFTA) was adopted, trucking industry had to obtain tax stickers for each state they operated and prepare a tax report and pay the fuel tax based on the mileage they drove for each particular state during a year period.

After IFTA was adopted, a quarterly fuel tax report is filed by the carriers. The tax report is used to calculate the amount of net tax, or refund, and to transfer taxes from collecting states, to states where taxes are owed. The purpose of IFTA was to make it easier for truck drivers to pay their taxes and to distribute revenues more evenly among states. The truck driver purchases gasoline when and where is required, preserves the fuel receipts and mileage records in each state, and submits a single quarterly IFTA report to his home jurisdiction. The report is then reviewed, and the taxes collected are distributed to each jurisdiction based on the reported mileage travelled in each jurisdiction. If the operator collects more tax than is required by the filing, the operator will get a refund or credit for the excess amount paid. If the tax liability exceeds the tax paid, the operator is responsible for paying the difference when completing the quarterly report.

IFTA was created to make it easier for truckers to calculate their taxes and for states authorities to collect them. One of the issues is that gasoline taxes differ widely throughout the states. On the IFTA Quarterly Fuel Tax Return, the operator completes his fuel tax report at the end of the fiscal quarter, detailing such information as all the miles driven in all states and all the fuel gallons purchased. The form contains a formula for average miles per hour, which is used to estimate the due taxes in each state based on the miles driven.