Commonly Asked Question – How Does the International Fuel Tax Agreement (IFTA) work?

There are numerous state and federal licenses that you will be required to obtain now that you are running on your own.  Basically, these are all just new and fun ways state and federal tax agencies have developed to tax you for driving on their roads.  I can imagine a state taxing authority sitting around thinking of the fact that a trucker was driving on their roads but they might have bought the fuel in another state and that state was getting all of the tax revenues from that fuel purchase (taxes were paid at the pump when you bought the fuel) and they were not getting any of the tax revenue because fuel was not bought at a pump in their state.  Obviously, that was extremely bothersome to every taxing authority and they needed to come up with some burdensome and expensive way to get tax revenue from the truckers when you had the audacity to buy fuel in another state but drive on their roads.  So they came up with IFTA.

Basically, in a very simplified format here is how IFTA works.  Let’s say you purchase 100 gallons of fuel in Oklahoma.  At the time of the purchase you paid Oklahoma $0.13 per gallon in taxes or in total $13.00 in taxes.  You get 5 miles per gallon so you ran 500 miles on that 100 gallons, of which 250 miles you drove in Oklahoma and 250 miles you drove in Texas.  Obviously, you burned 50 gallons of gas in each state.

Under this example, you owe Oklahoma $6.50 (50 gallons burned in Oklahoma x $0.13 Oklahoma state diesel tax) and you owe Texas $10.00 (50 gallons burned in Texas x $0.20 Texas state diesel tax) in essence you owe $16.50 ($10.00 + $6.50) in IFTA taxes.  Now you have already paid Oklahoma $13.00 in taxes at the pump so Oklahoma owes you a $6.50 credit but you owe $10.00 to Texas.  Therefore, IFTA will collect the additional $3.50 you owe in fuel taxes at the end of the quarter and take that along with your $6.50 overpayment to Oklahoma and send Texas $10.00.  Now everyone is happy because they have their money.

Basically, that is IFTA.  But it becomes a little more complicated when you have to figure it out for all the states. 

Then there are 4 additional states, NY, NM, KY and OR who charge a weight distance tax for every mile you drive in their state

IFTA

The International Fuel Tax Agreement is an agreement between forty-eight states and ten Canadian provinces requiring interstate motor carriers to report how much fuel they use within the boundaries of a state, and pay fuel taxes based upon those reports.  The fuel tax enables jurisdictions to levy taxes on motor carriers who travel on their roads, not just on motor carriers who purchase fuel within the state.  Quarterly IFTA reports must be filed in your base jurisdiction. 

A motor carrier is required to have an IFTA license if the motor vehicle is used, designed, or maintained for transportation of persons or property and;

  1. Has two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds; or
  2. Have three or more axles regardless of weight, or
  3. Is used in combination, when the weight is such combination exceeds 26,000 pounds registered gross vehicle weight.

TBS will file for your IFTA license for $50.00 plus state fees.

New Mexico

All motor carriers operating vehicles in New Mexico with a gross vehicle weight over 26,000 pounds need a New Mexico weight distance tax account.   When the account is opened quarterly reports must be filed.  This is in addition to an IFTA license.

TBS will open a New Mexico weight distance account for $57.25 for the first vehicle plus $5.50 for each additional vehicle.

Kentucky

All motor carriers operating in Kentucky with a combined weight of 60,000 pounds or more are subject to weight distance tax.  Such carriers are required to open a KYU account.  Once the account is opened quarterly reports must be filed.

The motor carrier is no longer required to display the KYU number on their truck. Vehicles are verified through your USDOT number.   However, you are required to update your inventory list of trucks with Kentucky as it changes.  This is in addition to an IFTA license.

TBS will open your KYU account for $50.00.  There is no per truck fee.

New York

New York Highway Use Tax (HUT) is a weight distance tax imposed on all carriers operating in motor vehicles in excess of 18,000 pounds on New York highways.  You are required to open a HUT account and register each vehicle that travels in New York.  This is in addition to an IFTA license.

TBS will open your NY Hut account for $65.00 for the first truck and $15.00 for each additional truck.  This services takes 4-6 weeks. Expedited 24-48 hr service is also available for an additional $100 per truck.

Oregon

Oregon Highway Use Tax is a mileage tax which is assessed against all carriers with a gross vehicle weight over 26,000 pounds.  You need an Oregon Weight Receipt and Tax Identifier receipt if you plan to travel through Oregon.  Once you have the account you will have to file monthly reports.  Oregon will also require a bond be filed to open the account.  Oregon does not charge a fuel tax fee in addition to their mile tax.

TBS will open your Oregon account for $358.00 for one truck and includes $2000 required bond.

Quarterly Fuel Tax Reporting

TBS offers quarterly fuel tax reporting for our clients for $50.00 per quarter per truck.  This includes the completion of your IFTA, Kentucky, New Mexico, New York, and Oregon reports.  We will also be happy to provide you with breakdown of the fuel tax cost associated with each truck, so that you can allocate the cost on a per truck basis.

UCR - UniFIED Carrier Registration

UCR is the new annual registration system for interstate motor carriers:

There are basically five (5) categories of interstate transportation operations that require UCR:

  1. Operations requiring a USDOT number for interstate transportation
  2. Operations requiring a MC or MX number from the FMCSA
  3. Interstate brokers
  4. Interstate leasing companies
  5. Interstate freight forwarders

UCR replaces the Single State Registration system (SSRS) along with the Interstate Exempt registrations, D-1 cab cards or bingo stamps and Interstate Private Carrier registration required by some states.

TBS will apply for your UCR registration for $50.00 plus state fees.

Form 2290

The 2290 tax year runs from July 1 to June 30 and the due date to pay the tax is August 31.  If you purchase your vehicle after August 31 then you must pay your tax by the last day of the month following the month you put your truck on the road.  Also, you must have a EIN to file the 2290, you may not use your social security number.

TBS will file will and hand deliver your 2290 to the IRS and get you a stamped copy for $50.00 plus IRS fees. 

Federal Employer Identification Number (EIN)

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit number that the IRS assigns to business entities. The IRS uses this number to identify taxpayers that are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, non-profit organizations, trusts and estates, government agencies, certain individuals and other business entities.

TBS will apply for your EIN number for a fee of $25.00.

US DOT Number

Companies that operate commercial vehicles transporting passengers or hauling cargo in interstate commerce must be registered with the FMCSA and must have a USDOT Number. Also, commercial intrastate hazardous materials carriers who haul quantities requiring a safety permit must register for a USDOT Number. The USDOT Number serves as a unique identifier when collecting and monitoring a company’s safety information acquired during audits, compliance reviews, crash investigations, and inspections.

TBS will apply for your USDOT number for $50.00.

Standard Carrier Alpha Codes (SCAC)

SCACs are required when doing business with all U.S. Government agencies and with many commercial shippers including, but not limited to, those in the automobile, petroleum, forest products, and chemical industries as well as suppliers to retail businesses and carriers engaged in railroad piggyback trailer and ocean container drayage. Carriers who use the Uniform Intermodal Interchange Agreement (UIIA) are required to maintain a valid SCAC. The petroleum industry uses SCACs in their integrated software programs that expedite the movement of bills of lading, pipeline tickets, product transfer orders, and inventory data. Many commercial shippers and receivers utilize SCACs in their freight bill audit and payment systems.

TBS will apply for your SCAC code for $100.00.

Process Agents – BOC-3 Form

A process agent is a representative upon whom court papers may be served in any proceeding brought against a motor carrier, broker, or freight forwarder.  Every motor carrier, or forwarder registered with the Federal Highway Administration must list the name and address of an agent from each state.  Brokers are required to list process agents in each state in which they have an office and in which they write contracts.

TBS will file process agents for $50.00.

Intrastate Authorities

Many states require a separate authority if you pick-up and deliver a load within the borders of one state.  The type of authority you will need is Intrastate Authority.  If you are doing this type of work please contact us, so that we can tell you what, if any authority you will need for this type or work.

Please call for a quote.

IRP – International Registration Plan

IRP, also called Apportioned Registration, is a method of registering fleets of vehicles that travel in two or more member jurisdictions. All states (except Alaska and Hawaii), and 10 Canadian provinces are members of the plan.

Motor carriers that qualify for IRP must register fleets of vehicles in their home or “base” jurisdiction. A fleet, for IRP purposes, is comprised of one or more vehicles that pay registration fees in multiple states. The base jurisdiction collects the appropriate registration fees and distributes them to the other jurisdictions in which the carrier requested IRP registration. IRP registration fees are determined by the type of operation requested (private, for-hire, or rental) and by the:

  • Percentage of miles traveled in each member jurisdiction 
  • Registered gross weight of each vehicle 

IRP distributes the registration revenue among the member jurisdictions. Each member jurisdiction receives its proportional share of registration fees for each vehicle registered under the IRP fleet. Cost varies by state – call for quote.

Factoring – Purchasing your accounts receivable for immediate cash

Truck Insurance

KCK Insurance Agency, LLC, an affiliate company, specializes in helping truckers with their insurance requirements.  Often, the most expensive and important part of getting your authority is insurance.

KCK is an independent insurance agent specializing in Truck Insurance.  We have contracts with most major insurance companies and will price your insurance with all of them before bringing you a quote.  We will then select the most competitive quote which meets your needs and supply that to you.  In other words we do all of the leg work.

KCK is licensed to write in the following states:
trucking insurance map
Licensed states: Arkansas, Arizona, Colorado, Georgia, Florida, Illinois, Iowa, Indiana,
Kansas, Kentucky, Michigan, Missouri, Nevada, Ohio, Oklahoma, Tennessee, Texas, Utah, Wisconsin, Wyoming.

 
Truckers Bookkeeping Service, LLC SM   1-800-207-7661    © 2007