Fleet GPS Tracking Systems Help Automate IFTA Fuel Tax Calculations

truck fleet fuel tax pumping gasFleet GPS tracking data combined with tax software can ensure private fleet operators in the US that you aren’t overpaying on your International Fuel Tax Agreement (IFTA) taxes. For most fleet managers, calculating IFTA taxes is a tedious but necessary administrative task. The good news is that this process can be automated if a fleet manager uses GPS tracking/telematics devices in its trucks, along with fuel cards and IFTA tax reporting software (or a tax consultant that uses this kind of software).  Then the mileage driven in each state and fuel expenses for each vehicle can be automatically uploaded into the software and the proper IFTA paperwork can quickly be produced.

Using a GPS Tracking System combined with proper tax software can make this process much more manageable and less labor intensive. If you have a large fleet of over 50 vehicles, then there is a good chance you have an employee whose only job is to handle this paper-intensive task. If you are paying an administrator say $38,000 year to manage this process, investing in a Fleet GPS Tracking System is a no-brainer. While a fleet operator would probably never buy a telematics solution solely to eliminate an administrative position, it can contribute to the ROI offered by fleet telematics solutions.

Since truckers typically operate across state lines they often need to calculate their usage in various locations. GPS position reports are a good way to do this as not only would it report your GPS location but it would also report the exact time for each position report. Ideally, you could automate this process with reporting transmitted in real-time as you go.

Most people would agree that tax rebates, if they don’t require too much effort, are great because it is found money. Many fleets are leaving money on the table in the form of unclaimed tax rebates.  For example, if a truck driver is driving around the warehouse, or fuel is being used to power an auxiliary power unit (APU) for in-cab heating, then that truck is not tearing up a state’s roads for that portion of the fuel budget.  Several states recognize this reasoning and offer tax credits for non-highway vehicle use, however, these tax credits and the necessary supporting documentation vary state by state.  To maximize these rebates, a company is advised to use a tax consulting firm with expertise in truck fleet taxes.  The fleet manager needs to sign a form authorizing its telematics and fuel card provider to release the required data to the tax consultant.

A tax consultant can work with customer support at FieldLogix GPS Fleet Management to better understand the Fleet GPS tracking data and then import the data into a tax software program.  Inputs include vehicle identification, miles traveled, the location of the travel, and specific trigger events, which are coupled with idling alerts to prove the truck was not moving.  This is then linked to the fuel card data for gallons purchased by state and gallons consumed in each state.  Additionally, fleet managers need to know that they cannot take a GPS unit off one truck and put it in another.  This will make the data trail very complicated.

What is IFTA?

IFTA is an agreement among 48 US states (except Alaska and Hawaii) and Canadian provinces (except Nunavut and Yukon) to simplify the reporting of fuel used by motor carriers operating in more than one jurisdiction.  An operating motor carrier with an IFTA license must file a quarterly fuel tax report and must display one decal per qualifying vehicle it operates under the IFTA license. This fuel tax report is used to calculate the net tax or refund due and to redistribute taxes from collecting states to states that it is due.

The fundamental purpose of the IFTA Tax is to allocate taxes according to where the actual fleet vehicle was driving, not where the fleet operator or vehicles are based.  For example, if a fleet of heavy trucks crosses roads in several states, then a portion of the fuel tax the fleet operator pays in his state needs to go to the other states to compensate them for road wear and tear.  Therefore, fleet operators need to use a GPS Fleet Tracking System to record the exact mileage each fleet vehicle travels in each state. Then fleet management can accurately calculate the amount of fuel taxes owed in each state.  The various states are then obligated to share these tax revenues based on the mileage traveled in different jurisdictions.

This tax is required for motor vehicles used, designed, or maintained for transportation of persons or property and:

  • Has two axles and a gross vehicle weight rating or registered gross vehicle weight  in excess of 26,000 pounds, and/or
  • Has three or more axles regardless of weight, and/or
  • Is used in combination, when the weight of such combination exceeds 26,000 pounds gross vehicle or registered gross vehicle weight.