IFTA question

Disclaimer: Although we run an IFTA cloud calculator site (IftaBoss.com) I am not employed by, or speaking as, an authority for any government entity or state and federal tax authority. Ultimately, the FINAL authority on all tax-related regulations rests with your home jurisdiction of record (the state or province you pay your IFTA to) and the U.S. Dept of the Treasury. Any response I give concerning taxation is purely for informational discussion purposes and shall not be used as a "final answer" for tax purposes. It is the filer's ultimately responsibility that all tax filings are accurate and meet the regulations and exemption for their jurisdiction of record. (sorry, the lawyers make me say that on this kind of post here in the "sue-happy States of America.")

@redoctober83 Back to your question. There is a scenario in the official instruction which speaks about your situation. Although I have done a TON of IFTA work, I actually have not spoken to a user yet that has invoked the "mixed tank" refund on their Form 4136. But this forum has a huge sampling of drivers and maybe one will chime in to demonstrate having used this "data-based guesstimation" method without being audited for it.

To read the full Excise and Credits instruction, go HERE. You will see on page on page 18, this scenario:

Example. Hazel owns a refrigerated truck. It has a separate motor for the refrigeration unit. The same tank supplies both motors. Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. Therefore, 10% of the fuel is used in an off-highway business use.

"Off Highway Business Use" of fuel is exemption category number 8 on the current Form 4136. This exemption includes "generators" and other motors that are NOT used to propel the vehicle. (i.e. reefers and APU's.) You can find the exemption categories on Page 17. These are fuel purchases for which you can get credit back on your taxes if you meet those criteria by filing Form 4136 with your taxes.

If you are not taking advantage of Form 4136 fuel exemptions (and you have a reefer or APU) then you are giving the government a LOT of free money.

The key to it (of course) is documentation. If you have a separate tank for your non-propulsion (business use) motor, then it is easy. Fill it and keep its receipt separate from those for the propulsion tank. If you do not have a separate tank, then you need a scientific way to "prove beyond a sketchy doubt in an audit" that your claimed credit is legit. For example, be able to pull the MPG data from the truck computer and then extrapolate out the extra gallons above that as those used in a reefer or APU.

LASTLY - IN ADDITION to the federal credit we are discussing here, MANY STATES ALSO have a similar credit for non-propulsion business fuel! So once you wrap your head around the federal credit, check your IFTA filing home state rules and see if you can get even MORE back on your state business income taxes.

Hope that defines things better for you.

Don from DieslBoss and IftaBoss