Understanding IFTA & Road Taxes

Discussion in 'Ask An Owner Operator' started by double yellow, Jul 30, 2014.

  1. double yellow

    double yellow Road Train Member

    5,946
    10,065
    Aug 28, 2011
    State of Jefferson
    0
    Ok, I think I understand, but I'd like to confirm. And before someone says "just subtract the tax from the pump price" let me clarify: I'm asking about those pesky states with surchages...


    For example, say you're traveling from Denver, CO to Hampton, VA via I70/I64. Is this the correct road tax cost for this run at a 6.5 mpg quarterly average:


    [TABLE]
    [TR]
    [TD][/TD]
    [TD]Miles[/TD]
    [TD="width: 83"]Fuel tax[/TD]
    [TD="width: 96"]Surcharge[/TD]
    [TD="width: 128"]Fuel tax @ 6.5mpg[/TD]
    [TD="width: 140"]Weight-distance/mile[/TD]
    [TD="width: 141"]__Weight_distance_cost[/TD]
    [TD="width: 108"]__Total_“Road_tax”[/TD]
    [/TR]
    [TR]
    [TD]Colorado[/TD]
    [TD]174[/TD]
    [TD]$0.205[/TD]
    [TD][/TD]
    [TD]$5.49[/TD]
    [TD][/TD]
    [TD]$0.00[/TD]
    [TD]$5.49[/TD]
    [/TR]
    [TR]
    [TD]Kansas[/TD]
    [TD]424[/TD]
    [TD]$0.260[/TD]
    [TD][/TD]
    [TD]$16.96[/TD]
    [TD][/TD]
    [TD]$0.00[/TD]
    [TD]$16.96[/TD]
    [/TR]
    [TR]
    [TD]Missouri[/TD]
    [TD]250[/TD]
    [TD]$0.170[/TD]
    [TD][/TD]
    [TD]$6.54[/TD]
    [TD][/TD]
    [TD]$0.00[/TD]
    [TD]$6.54[/TD]
    [/TR]
    [TR]
    [TD]Illinois[/TD]
    [TD]128[/TD]
    [TD]$0.434[/TD]
    [TD][/TD]
    [TD]$8.55[/TD]
    [TD][/TD]
    [TD]$0.00[/TD]
    [TD]$8.55[/TD]
    [/TR]
    [TR]
    [TD]Indiana[/TD]
    [TD]123[/TD]
    [TD]$0.160[/TD]
    [TD]$0.110[/TD]
    [TD]$5.11[/TD]
    [TD][/TD]
    [TD]$0.00[/TD]
    [TD]$5.11[/TD]
    [/TR]
    [TR]
    [TD]Kentucky[/TD]
    [TD]185[/TD]
    [TD]$0.281[/TD]
    [TD]$0.148[/TD]
    [TD]$12.21[/TD]
    [TD]$0.0285[/TD]
    [TD]$5.27[/TD]
    [TD]$17.48[/TD]
    [/TR]
    [TR]
    [TD]West Virginia[/TD]
    [TD]189[/TD]
    [TD]$0.357[/TD]
    [TD][/TD]
    [TD]$10.38[/TD]
    [TD][/TD]
    [TD]$0.00[/TD]
    [TD]$10.38[/TD]
    [/TR]
    [TR]
    [TD]Virginia[/TD]
    [TD]298[/TD]
    [TD]$0.202[/TD]
    [TD]$0.010[/TD]
    [TD]$9.72[/TD]
    [TD][/TD]
    [TD]$0.00[/TD]
    [TD]$9.72[/TD]
    [/TR]
    [TR]
    [TD][/TD]
    [TD][/TD]
    [TD][/TD]
    [TD][/TD]
    [TD][/TD]
    [TD][/TD]
    [TD][/TD]
    [TD][/TD]
    [/TR]
    [TR]
    [TD]Total:[/TD]
    [TD]1771[/TD]
    [TD][/TD]
    [TD][/TD]
    [TD]$74.95[/TD]
    [TD][/TD]
    [TD][/TD]
    [TD]$80.22[/TD]
    [/TR]
    [/TABLE]



    Now here are the lowest Pilot/Flying J pump prices for this route as of today (note that the Indiana price has an asterisk saying "tax exempt" -- does that mean the $0.16 has already been subtracted? Or the $0.11? both? Or does "tax exempt" mean exempt from other non-applicable state taxes?). So is this the correct "true cost" of fuel:

    [TABLE]
    [TR]
    [TD][/TD]
    [TD]Pump Price[/TD]
    [TD="width: 83"]Fuel tax[/TD]
    [TD="width: 96"]Surcharge[/TD]
    [TD="width: 128"]"True cost" per gal[/TD]
    [/TR]
    [TR]
    [TD]Colorado[/TD]
    [TD]$3.859[/TD]
    [TD]$0.205[/TD]
    [TD][/TD]
    [TD]$3.654[/TD]
    [/TR]
    [TR]
    [TD]Kansas[/TD]
    [TD]$3.769[/TD]
    [TD]$0.260[/TD]
    [TD][/TD]
    [TD]$3.509[/TD]
    [/TR]
    [TR]
    [TD]Missouri[/TD]
    [TD]$3.599[/TD]
    [TD]$0.170[/TD]
    [TD][/TD]
    [TD]$3.429[/TD]
    [/TR]
    [TR]
    [TD]Illinois[/TD]
    [TD]$3.839[/TD]
    [TD]$0.434[/TD]
    [TD][/TD]
    [TD]$3.405[/TD]
    [/TR]
    [TR]
    [TD]Indiana[/TD]
    [TD]$3.659[/TD]
    [TD]$0.160[/TD]
    [TD]$0.110[/TD]
    [TD]$3.499[/TD]
    [/TR]
    [TR]
    [TD]Kentucky[/TD]
    [TD]$3.699[/TD]
    [TD]$0.281[/TD]
    [TD]$0.148[/TD]
    [TD]$3.418[/TD]
    [/TR]
    [TR]
    [TD]West Virginia[/TD]
    [TD]$3.939[/TD]
    [TD]$0.357[/TD]
    [TD][/TD]
    [TD]$3.582[/TD]
    [/TR]
    [TR]
    [TD]Virginia[/TD]
    [TD]$3.699[/TD]
    [TD]$0.202[/TD]
    [TD]$0.010[/TD]
    [TD]$3.497[/TD]
    [/TR]
    [/TABLE]


    Now lets say you have twin 150 gal tanks and you're adventurous and just want to fill up once. I'm assuming that it would be best to buy your 272.5 gallons in Illinois for a true cost of $927.86. You would have paid $1,046.13 at the pump so you prepaid $118.27 IFTA. Since you only needed to pay $74.95 in fuel tax, you would have a $43.31 refund coming at the quarter. You would also still have to pay a separate $5.27 KYU filing. Correct so far?



    I think so, but here is the hard part. Let's say I fueled in Kentucky. Didn't I pay that $0.148 surcharge at the pump? Meaning does my cost to run Kentucky basically go from $12.21 to $8.00? I've heard it explained two ways -- that that $0.148 is taken out of every gallon but only credited towards miles run in KY (eg they don't refund the surcharge to IFTA). And I've heard that the pump price doesn't have that $0.148 included and that it would have to come from IFTA (this doesn't seem right since a local KY truck would always owe fuel tax?). If it is the later, my true cost would be $931.41. If it is the former, my true cost would be $927.20 -- actually lower than Illinois.


    Thank you very much to all who can elucidate
     
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  3. SemperFiServices

    SemperFiServices Medium Load Member

    379
    230
    Jan 29, 2013
    Indianapolis, IN
    0
    My head hurts now.... I just buy when I need it and pay or get a refund every quarter
     
    bullhaulerswife Thanks this.
  4. Rooster1291979

    Rooster1291979 Road Train Member

    1,308
    1,750
    Sep 4, 2012
    NOLA
    0
    The miles you run in a state divided by your mpg equals the fuel tax owed in that state. Buying fuel in that state just adds money into the kitty to cover your fuel taxes for that state.
     
  5. gokiddogo

    gokiddogo Road Train Member

    8,781
    14,753
    Mar 5, 2012
    Ontario Canada
    0
    Ok I think I see where your confusion is coming from. There are a few states that have a surcharge on top of the IFTA fuel tax, KY, IN, VA, I think it is just those 3. Then there are states that have an additional/different tax - totally unrelated to IFTA. The ones that come to mind are KY, NM, OR, NY. These other additional taxes are paid based on how many miles you run in the state, have nothing to do with how much fuel you bought and your mpg.

    When someone says to take the fuel tax off the price and that is the true price of the fuel, they are correct. Let's take KY and IN for examples. Example - in KY the pump says 4.00. Fuel tax is .2810, so fuel price is 3.719. The surcharge is never already in the pump price, which is why you would always owe if you only fueled in that state. Indiana "tax exempt" basicly means the same thing, I think why they word it like that is because cars have to pay a higher rate for fuel. If Indiana says 3.80 "tax exempt" you have 3.80 - .1600 = 3.64. When you calculate your IFTA, you are only getting credit on the gallons you already purchased, you will always have to pay that extra surcharge, based on the number of gallons you burned in that state. Surcharges are paid at time of IFTA filing - not included in pump price.

    To keep it separate from the other road taxes, those are (except OR) filed quarterly also, easy to file, you take how many miles you ran in the state and are charged a rate per mile and pay that way. They are all different forms and have nothing to do with IFTA. There is no input tax credit for these. Oregon has to be filed monthly when you start out, but if you file in a timely manner every month they will allow you onto a quarterly filing system also.

    Clear as mud now?
     
    double yellow and TAfool Thank this.
  6. double yellow

    double yellow Road Train Member

    5,946
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    Aug 28, 2011
    State of Jefferson
    0
    Thanks -- that's where I was most unsure. The tables in the original post are then correct and you can "just subtract the tax" (but not the surcharge) from the pump price.
     
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