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Looking Both Ways

Taxes Only Truckers Have to Pay

By John Mueller, CDS, COSS
Posted Nov 26th 2013 9:34AM

FUEL MILEAGE TAXES – METHODOLOGY  EXPLAINED

This post of Look Both Ways will help you get a grip on fuel/mileage taxes.  Most of you pay them, but don’t understand the methodology that goes into coming up with that Tax Due figure.



Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman
Yeah, I'm the taxman

Should five percent appear too small
Be thankful I don't take it all
'Cause I'm the taxman
Yeah, I'm the taxman

If you drive a car I'll tax the street
                               George Harrison


IFTA Fuel Taxes are required from vehicles that travel Interstate that have 3 axles or more, or that have GVW of 26,001 lbs. or more.  If vehicles travel only Intrastate, then all taxes due are paid at the pump at time of purchase – unless based in IN, KY or VA.  Why is that not the case in IN, KY or VA?   You’ll be able to answer that question after reading this blog.

Most fuel and mileage taxes are paid on a Quarterly Basis.  Some states have “mileage” type taxes, such as Weight-distance taxes, Highway Use taxes or Ton-mile taxes.  There are also a few states that have yearly “property valuation” type taxes that are paid on an annual basis in addition to fuel and mileage taxes.

Most Carriers file these taxes as a fleet and then charge back to their independent contractors based on each contractor's individual performance.  Most Carriers assume responsibility for fuel/mileage taxes because if their Owner Operators neglected to file and pay the taxes due, the carrier becomes responsible for taxes due, plus penalties and interest.  Paying the taxes due as a fleet just ensures that the taxes get paid.

Prior to IFTA (International Fuel Tax Agreement), each state had its own individual fuel tax registration, forms and fuel tax decals.  Some states required a Fuel Tax License and even required the purchase of a Surety Bond (yes – like the bonds required now of freight brokers).  There was no uniformity as to vehicles subjected to tax from state to state.  In those days you would see “fuel decals” from many states on placards attached to truck because there were so many required decals.  I’m telling my age!


In order to compile or complete an IFTA tax form you need to gather detailed mileage and fuel purchase information, by state, for the previous 3 month quarter.  The IFTA form will be computed as a summary (total) of all your vehicles subject to the taxes.  If you run multiple trucks, having the previous information broken down by truck, will assist in computing taxes due from each truck in order to charge back to each truck owner.

To determine Miles per Gallon, divide total miles by total gallons.

Below is a condensed example of Ohio’s IFTA Tax Form.  This tax form can be completed on line via a well constructed Excel spreadsheet.  Each state’s fuel tax rates are listed in the very left column. You would only fill in miles in each state and gallons purchased in each state.   The spreadsheet is automatic and calculates after data is entered.  The form can be found at http://www.tax.ohio.gov/portals/0/forms/excise/international_fuel_tax_agreement-ifta/IFTA_DieselSchedule3rdQuarter.xls










Enter Total Miles Traveled Everywhere - All Jurisdictions:

 


Tax

Enter Total Gallons Placed in Vehicles



 


Due

Enter Miles per Gallon (MPG) - round to 2 decimal places

 


$0.00



















Diesel Schedule








D3

D1


D4

D5

D6

D7

D8

D9

Tax



Total

Taxable

Taxable

Tax Paid

Net Taxable

Net Tax

Rate

Jurisdiction

Miles

Miles

Gallons

Gallons

Gallons

Due

$0.2800

Ohio

OH

 

 

 

 

 

 

$0.1600

Indiana      

IN

 

 

 

 

 

 

$0.1100

 

IN-s

Surcharge

 

 

 

 

 

$0.2790

Kentucky   

KY

 

 

 

 

 

 

$0.1350

 

KY-s

Surcharge

 

 

 

 

 

$0.3600

Michigan

MI

 

 

 

 

 

 

$0.3810

Pennsylvania

PA

 

 

 

 

 

 

$0.3470

West Virginia

WV

 

 

 

 

 

 

$0.1900

Alabama

AL

 

 

 

 

 

 

$0.2600

Arizona

AZ

 

 

 

 

 

 

$0.2250

Arkansas

AR

 

 

 

 

 

 

$0.4530

California

CA

 

 

 

 

 

 

$0.2050

Colorado

CO

 

 

 

 

 

 

$0.5490

Connecticut

CT

 

 

 

 

 

 

$0.2200

Delaware

DE

 

 

 

 

 

 

$0.3307

Florida

FL

 

 

 

 

 

 

$0.1840

Georgia   

 GA

 

 

 

 

 

 

$0.2500

Idaho

ID

 

 

 

 

 

 

$0.4300

Illinois

IL

 

 

 

 

 

 

$0.2250

Iowa

IA

 

 

 

 

 

 

$0.2600

Kansas

KS

 

 

 

 

 

 

$0.2000

Louisiana

LA

 

 

 

 

 

 

$0.3120

Maine

ME

 

 

 

 

 

 

$0.2775

Maryland

MD

 

 

 

 

 

 

$0.2400

Massachusetts

MA(1)

 

0

 

 

 

 

$0.2100

Massachusetts

MA(2)

 

 

 

 

 

 

$0.2850

Minnesota

MN

 

 

 

 

 

 

$0.1800

Mississippi

MS

 

 

 

 

 

 

$0.1700

Missouri

MO

 

 

 

 

 

 

$0.2775

Montana

MT

 

 

 

 

 

 

$0.2630

Nebraska

NE

 

 

 

 

 

 

$0.2700

Nevada

NV

 

 

 

 

 

 

$0.1800

New Hampshire

NH

 

 

 

 

 

 

$0.1750

New Jersey

NJ

 

 

 

 

 

 

$0.2100

New Mexico

NM

 

 

 

 

 

 

$0.4085

New York

NY

 

 

 

 

 

 

$0.3760

North Carolina

NC

 

 

 

 

 

 

$0.2300

North Dakota

ND

 

 

 

 

 

 

$0.1300

Oklahoma

OK

 

 

 

 

 

 

$0.0000

Oregon

OR

 

 

 

 

 

 

$0.3200

Rhode Island

RI

 

 

 

 

 

 

$0.1600

South Carolina

SC

 

 

 

 

 

 

$0.2200

South Dakota

SD

 

 

 

 

 

 

$0.1700

Tennessee

TN

 

 

 

 

 

 

$0.2000

Texas

TX

 

 

 

 

 

 

$0.2450

Utah

UT

 

 

 

 

 

 

$0.3100

Vermont

VT

 

 

 

 

 

 

$0.2020

Virginia           

VA

 

 

 

 

 

 

$0.0350

 

VA-s

Surcharge

 

 

 

 

 

$0.3750

Washington   

WA

 

 

 

 

 

 

$0.3290

Wisconsin        

WI

 

 

 

 

 

 

$0.2400

Wyoming       

WY

 

 

 

 

 

 

$0.3348

Alberta

AB

 

 

 

 

 

 

$0.8433

British Columbia

BC

 

 

 

 

 

 

$0.5208

Manitoba

MB

 

 

 

 

 

 

$0.7142

New Brunswick

NB

 

 

 

 

 

 

$0.6138

Newfoundland

NL

 

 

 

 

 

 

$0.5729

Nova Scotia

NS

 

 

 

 

 

 

$0.5320

Ontario

ON

 

 

 

 

 

 

$0.7514

Prince Edward Is

PE

 

 

 

 

 

 

$0.7514

Quebec

QC

 

 

 

 

 

 

$0.5580

Saskatchewan

SK

 

 

 

 

 

 

Non-IFTA Miles

 

OT

0

 

 

 

 

 



















TOTALS



0

0


0


$0.00


In the above example you will see that one state – Massachusetts – changed its fuel tax rate in the middle of the tax quarter.  Now you need to breakdown fuel purchase records, and MA miles traveled into two periods – the first period to be taxed at 24 cents, and the second period to be taxed at 21 cents.  More work for us!


Fuel taxes are a “pay now – or pay later” type deal.  In earlier times Truckers would put some effort into figuring how much fuel their truck would consume in each state, and purchase sufficient fuel in each state to offset the taxes due – making little or no taxes due to most states.  In today’s world it takes too much time to get off the highway, locate a fuel stop, wait in line at the fuel island, and work your way back to your intended route for this to be an easy task.  It can still be accomplished, but only through careful planning.  Your time is worth more than the fuel tax savings – besides the “surcharge” states of IN, KY and VA will almost always have a tax due if you travel in them.

The “surcharge” states have a tax rate just as the other states.  The tax rate in these states is made up of a lower “pump” rate, combined with a “surcharge” to arrive at their “tax rate”.   Let’s look at Indiana for an example.   Indiana charges you only 16 cents per gallon at the pump.  They add an 11 cent per gallon surcharge to each gallon making their total tax rate 27 cents per gallon.  Say your truck averages 10 miles per gallon and you travel 1000 miles in Indiana the previous fuel tax quarter.   You would have consumed 100 gallons of fuel in Indiana.  Even if you purchased 100 gallons of fuel in IN, you would still owe 100 times 11 cents or $11.00 in fuel taxes to the state of Indiana.   Now think about this – suppose you purchased 1000 gallons of fuel in Indiana because the fuel is so cheap due to the low tax rate at the pump.   You now burn 400 gallons of Indiana fuel in the state of Ohio and 500 gallons of Indiana fuel in the state of Pennsylvania.  How does this affect your taxes due?  Well, chances are, using this very simple example, you would have under purchased  fuel in Ohio by 400 gallons, and underpurchased fuel in the state of Pennsylvania by 500 gallons.   You would have a tax credit in Indiana based on 900 gallons. 

Indiana .16 times 900 = ($144.00) CR
Ohio .28 times 400 = $112.00 tax due
Pennsylvania .3810 times 500 = $190.50 tax due
Calculated TOTAL tax due - $158.50

Did you save any money by purchasing less expensive fuel in Indiana?   The correct answer is NO - you just paid later.


KY Weight Distance Tax
Kentucky’s Weight Distance tax is charged by the mile for all miles traveled in the state by all vehicles having a combined gross weight or licensed weight in excess of 59,999 pounds, excluding farm licensed vehicles.  The tax rate is $.0285 cents per each mile traveled in or through the state of Kentucky.  Again, any vehicles less than 60,000 pounds are exempt from this tax.


NM Weight Distance Tax
New Mexico imposes a weight-distance tax on commercial vehicles with a declared gross vehicle weight in excess of 26,000 pounds. This tax is based on vehicle weight and miles traveled on New Mexico roads.  The tax rates are listed below.


To qualify for a One-Way Haul rate, the motor vehicle must (1) customarily be used for one-way hauls; (2) have traveled 45% or more miles for the registration year empty of all load; and (3) be
classified as a one-way hauler by the registrant, owner or operator who has made a sworn application to the department to be classified as a one-way hauler for the registration year.



NY Highway Use Tax
All vehicles having GVW over 18,000 pounds are subject to the New York Highway Use Tax.  The tax is applicable only on miles NOT travelled on the ThruWay.  In other words – toll miles are exempt from this tax.  You can file under the “Gross Weight Method” or under the “Unloaded Weight Method”.  Please contact the State for detailed filing information.  Listed below are the tax rates for the NY HUT:






 


OR Ton Mile Tax
Oregon imposes a mileage tax on all vehicle with GVW more than 26,000 pounds.   See the chart below for the per miles rate in Oregon.




Oregon offers a free service called Trucking Online.  According to the state it´s the best way to conduct trucking-related business with the Oregon Department of Transportation´s Motor Carrier Division. It´s an Internet-based service that allows a trucking company to use a home or office computer to connect with computers in Salem and complete various transactions electronically. It´s a fast, convenient way for a company to obtain credentials, file reports, and look up information about its account, all intended to make it easier to keep on truckin´ in Oregon.

For more information please visit Oregon’s Trucking Online Website at:
http://www.oregontruckingonline.com/cf/MCAD/pubMetaEntry/index.cfm?fuseAction=faq


Even more taxes imposed on trucking companies...
In addition to above, the carrier you are leased onto probably pays the following:

AR Ad Valorem Tax assessed from Arkansas Annual Carrier Report – assesses taxes based on Total number of Units (Cars/Vans/Pickups, Medium 2-axles and Heavy 3-axle, along with trailers), the Average Manufacture Year of this equipment, and the Total Current Market Value (In US Dollars) of the listed equipment.   It  takes  literally days to compile this tax form for our entire fleet, only to receive a bill for $184.00.  Dear State of Arkansas – please just send the bill!

and

KS Motor Carrier Property Tax Rendition which is based on the miles travelled in the Kansas divided by the total miles everywhere (for the vehicles that entered Kansas the previous year) and also is affected by the market value of the submitted vehicle listing with Kansas miles in the previous year.


AND even more taxes imposed on trucking companies...
If your trucking company has “Intra-state” Authority – the right to pick up and deliver within a particular state, some states impose “Corporation” type taxes based on the business conducted within that state.  Ohio, Illinois and Indiana are a partial listing of states that impose even more taxes on Motor Carriers that conduct intra-state business within their state.


WOW!   That’s a whole lot of taxes, a whole lot of work to compute the taxes due, and a whole lot of technical stuff just to comply.


Disclaimer: This blog is NOT intended to give legal advice, nor be a substitute for any training required by the Regulations.
 
Till the next blog,  Thank you drivers for all you do! Please be safe!



Click here to read more of my blogs!

©John Mueller, CDS, COSS
jmueller@PTLLLC.com
www.PTLLLC.com

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