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Before implementation of the International Fuel Tax Agreement (IFTA), there were over 60 different taxing jurisdictions. Each jurisdiction (state) had its own separate return, audit, license, rules, and forms. If a motor carrier operated in any of these jurisdictions it had to comply with the requirements of each state, which made filing returns difficult and time-consuming.
The goal of IFTA is to simply and standardize the reporting of fuel taxes (gasoline, diesel, propane, blended fuels, compressed natural gas, liquid petroleum, and kerosene) by interstate motor carriers. There are four advantages of IFTA:
As of April 1, 1997 all states (except Alaska, Hawaii, and the District of Columbia) were confirmed as members of IFTA.
On April 1, 1987 the fuel tax was set at a rate of 19 cents per gallon upon all fuel sold, used, or received for sale or use in Utah. In 1997 the state legislature increased the rate in a two-step phase. The first rate change occurred on May 1. 1997 when the rate increased by 1/2 cent to 19.5 cents per gallon. The second increase of 5 cents took effect on July 1, 1997 making the rate 24.5 cents per gallon.
Base Jurisdiction. The jurisdiction where qualified motor vehicles are based for vehicle registration purposes, and
Bulk Storage fuel. Fuel kept in a tank that will be redistributed (does not feed an engine). This includes mobile fuel tanks used for fueling other pieces of equipment. Fuel kept in a small tank in the bed of a pickup truck regardless of the size of the container. Bulk fuel may be either dyed or undyed (clear).
Diesel Fuel Dyed. Diesel fuel to be used for purposes other than to operate a motor vehicle upon the public highways of the state. The fuel is dyed (red) in accordance with 26 U.S.C. Sec. 4082 or United States Environmental Protection Agency or Internal Revenue Service regulations. The special fuel tax is not imposed or collected on undyed diesel fuel. However; dyed diesel fuel is subject to sales and use tax.
Diesel Fuel Undyed. Clear special fuel used to operate or propel a motor vehicle upon the public highways of the state.
Fuel tax-paid gallons. Fuel tax was paid at time of purchase or delivery. This includes fuel bought at service stations and bulk fuel. Bulk fuel that is delivered and invoiced but not paid is still tax paid gallons.
Highway. Every way or place, of whatever nature, generally open to the use of the public for the purpose of vehicular travel not withstanding that the way or place may be temporarily closed for the purpose of construction, maintenance, or repair.
Jurisdiction. Jurisdiction means a state of the United States, the District of Columbia, or a province or territory of Canada.
Penalty and Interest. If a taxpayer files late and fails to pay all of the tax due by the due date of the return, penalty and interest are assessed. The assessed penalty is 10 percent of the amount of tax due or $50, whichever is greater. This is a one time assessment. Interest is assessed on the amount of the underpayment of tax. The interest rate for IFTA is 12 percent per annum (year), and is assessed at the rate of 1% per month or partial month until the tax is paid.
NOTE: Payments are credited to your account first to any penalty, second to interest and then to the principle.
Example: A return is due April 30, 1998 and the tax due is $1,000. The return is not filed until June 1, 1998. The penalty is $100 ($1,000 x 10 %). Interest is 2% or $20 (one day into the month is considered a full month). The total due is $1,120. If the payment made is only $1,000 it would be applied in the following manner:
| Penalty | $100 |
| Interest | 20 |
| Principle | 880 |
| Balance due | 120 |
Interest will accrue on the unpaid balance of $120 until it is paid in full
Power Take-off (PTO) Units. Vehicle auxiliary units driven by the main engine that propels a motor vehicle. Examples are garbage trucks and trash compactors, concrete mixer trucks, dump trucks, and sewage pumper trucks, or vehicles with conveyors or other loading or unloading devices.
Registered Vehicles. IFTA registered vehicles are qualified motor vehicles that usually travel in more than one jurisdiction and have IFTA licenses and current decals issued. An IFTA qualified vehicle must meet one of these configurations:
The number of axles applies only to the axles on the power unit, regardless of any trailing units. A power unit with two axles, pulling a trailing unit, with a combined gross registered weight of less than 26,001 pounds is not a qualified motor vehicle. The first three definitions of a qualified motor vehicle refer only to the power unit. The fourth definition refers to the combination of the power unit and the trailer unit.
One of these forms must be used to register or renew an IFTA vehicle:
Special Fuel User. A Special Fuel User permit is required for these four carrier categories:
Carriers meeting one of these criteria will be issued a Special Fuel User Permit. When completing the IFTA Application for Original License (form TC-920), mark block 13 for Special Fuel User Permit (non-IFTA qualified vehicles). A Special Fuel User decal will be provided for these vehicles.
Taxable Gallons. Taxable miles driven in a jurisdiction divided by the average miles per gallon.
Taxable Miles. The total mile traveled in a jurisdiction minus any off-road miles.
Net Taxable Gallons. Taxable gallons minus fuel tax paid gallons for each jurisdiction.
Tax Due. The net taxable gallons times the tax rate for each jurisdiction.
Tax Exempt Fuel. Fuel not delivered into the tanks of your motor vehicle or fuel delivered into the service tanks which is used in the operation of a power take-off unit. This fuel is not subject to the special fuel tax. However, the fuel is subject to sales and use tax.
Tax Exempt Mileage. Miles traveled that are not subject to the special fuel tax. Exempt miles occur when your vehicle operates under a 96 hour fuel trip permit or off highway (not open to the public for motor vehicle travel). The fuel is subject to the sales and use tax.
Utah Off-Road (off-highway) Miles. Miles traveled on restricted roads, not open to the public.
96-Hour Permit. Permits may be purchased at ports of entry or from authorized permit agents on a trip by trip basis. The permit expires when you leave the state or at the end of 96 hours. Carriers who travel infrequently into non-Utah jurisdictions may do so without acquiring the IFTA license. However, intrastate carriers electing this option must obtain a Special Fuel User Permit.