Your argument is that you aim to end with zero owed to IFTA at the end of the quarter. That means you're factoring that decision into your fuel-buying. Not every two-state setup is going to be equal pretax price and only varying in state tax. Telling someone to fuel in high tax states was a misnomer. And I did show you the math. Here: You argued that it was a moot point. You failed to comprehend that saving money on fuel ($6.43 less for pretax diesel) and paying more at the pump for IFTA ($7.69) was not just 'cancelling eachother out'. Your fuel tax owed is owed regardless if you paid into it. If you fueled in Oregon every time ($0.00 state tax) and drove in California every day, you're still going to pay the same amount in fuel tax to IFTA whether you're writing them a check at the end of the quarter or not. However, your argument was to fuel in California because it 'banks' money into your IFTA account, but that's not considering whether that's the best buy. Your argument was that these magical 'both states are the same pre-tax' scenario is misguided. Especially trying to tell someone who wants to learn the best way to buy diesel. Caring at the pump whether this will over or under fund your IFTA account is not the mindset needed when making a fuel purchase. I've fueled many times in New Jersey on my way to the northeast. New Jersey is 17.5c tax and Connecticut is 54.9c tax. Now, if the price of diesel in NJ MINUS TAX is 3.80 and the price of diesel in CT MINUS TAX is 3.80... I'm filling up in New Jersey. HOWEVER, that rarely works out that way. Usually CT is still more expensive pre-tax. If it's 4.40 in CT (all in) and it's 4.00 in NJ, buying fuel in CT would be a waste of money. The OP in this thread didn't realize that Oregon was untaxed diesel and was costing himself money by not realizing how IFTA worked BEFORE he filled up. Sometimes Oregon is the better deal. Sometimes California is. It just depends. You have to figure the price, subtract out the CA tax, and see whether it's better or not. One thing I love about NASTC's fuel network is that I get a printout every day showing what my prices will be at every one of their stops that offer cost-plus. And it also shows you the base fuel price without the state tax to easily compare.
But that's not 'optimizing IFTA', that's just buying the cheaper diesel ($3.80 at the pump in Georgia is more expensive diesel than $3.80 at the pump in Florida). Which is the deciding factor on whether to fuel up or not. Now, if you haul a reefer, you're looking for cheapest overall price for the reefer, or if you can find untaxed off-road diesel (which is becoming more and more rare). Still, I know of a few off-road diesel places in PA, but it's still cheaper to just pay the tax to Ohio or Indiana for reefer.
Sly Fox, when someone states "assuming all pretax diesel is the same", they are using it as example, it's not misguided, kinda like you did with NJ & CT. I am well aware that the pretaxed price is not all equal, all the time. I think I have clearly demonstrated that I understand how IFTA works, which is why you chimed in. Now you may not agree with fueling in the highest taxed state, that's fine, but it doesn't mean I'm wrong. I was giving advice to the OP how to avoid that $700 bill, and the best example yet is the NJ & CT example you posted, I would never fill in NJ with the pretax price being the same. If someone feels all fluffy inside paying less in NJ cool, those people are usually the same people that think they have all this extra money to play with, until the IFTA man comes knocking. Once again you misquoted me, some one else stated that their goal was to net $0, which is a great goal BTW. Some day you will get it!!
I fill in NJ almost every time to the Northeast, and still only owe IFTA around $80-$125 a quarter. If you know going in, it is not a problem. However, he owes the $700 no matter what. So, he's not avoiding the bill. Being aware that he owes it, no matter what, would've been the proper thing. Not telling him that he'll magically have money to pay toward his plates.
I think I know where everyone is getting confused with each other. I may not, who knows, but I'm going to try. Vang. With you, you're wanting to come out at $0 for the year. Which is fine. That's better than paying in money to IFTA. From that perspective I can see where you're coming from. If they're getting back $135 (which after the refund would equal out to your $0 for the year) why even worry about it if it comes out to the same. Valid point. It would make things much easier on everyone if that were the case. However, the idea of shopping around for cheaper fuel is where the point lies. Let's forget the over/under amount for IFTA. Let's just get down to the initial cost of fuel. If you pay $.5 less in one state vs. the next, then that's still $.5 per gallon you save in your pocket. I think I understand it right. I may not, though. I still have more research to do as well.
Rinker, my reply is just to try to clarify the price of fuel because you said, "let's just get down to the initial cost of fuel." Which is unclear if you mean pump price (fuel price with state fuel tax) or fuel price without the state fuel tax. Pump price (the price shown at the pump) cannot be compared across state lines because the pump price includes the state fuel tax (which is different state to state). State fuel tax must be subtracted from the pump price in order to compare the price of the fuel. So in Rinker's example that would only be fifty cents per gallon savings IF comparing the prices between the two locations AFTER taking out the states fuel tax charged at the pump. If only comparing the pump price without adjusting for the fuel tax charged at the pump YOU COULD BUY MORE EXPENSIVE FUEL WHILE PAYING A LOWER PUMP PRICE. I hate to be repetitive, but just for the sake of clarity... to compare fuel prices across state lines fuel tax must be deducted from the pump price (Pump Price - Fuel Tax = Fuel Price).
Oops. Yeah, sorry about that. I meant Fuel Price after taking out the state taxes. If you compared with state taxes, then you'd just be trying to get to $0 instead of saving money, right?
No. Anything I say will not be to try to get your return to come out to zero because there is no reason to try to do that. Trying to make your quarterly IFTA come out to zero is a waste of time and is a stupid thing to try to do. The problem with comparing the price shown on the pump of different states is that those prices include the state fuel tax. Each state sets its own tax and so usually that amount will be different from one state to the next. The state fuel tax charged at the pump for diesel in Pennsylvania is currently $0.51 per gallon. The state fuel tax charged at the pump in Maryland is currently $0.2775 per gallon. So if you want to buy some fuel today and you're deciding between PA and MD and both locations your looking at are $4.00 per gallon pump price and you want to buy the lowest cost fuel you would buy from the PA location. Or let's say the pump price is $4.10 in PA and $4.00 in MD. If you want to buy the lowest cost fuel you would still buy in PA even though the pump price is higher because the cost of the fuel is still lower. The reason is because the state fuel tax is included in the pump price and that amount is different for every state. PA 4.00 - .51 = $3.49 Second example: PA 4.10 - .51 = $3.59 MD 4.00 - .2775 = $3.7225 Using the second price for PA ($4.10) you will pay more at the time of the fill up because of the state fuel tax difference, but since the state that you ultimately pay isn't affected by where you buy your fuel then it doesn't matter that you're paying a higher pump price during this purchase. You pay each state their fuel tax on the fuel you use in their state. That's why it doesn't matter how much tax you pay at the pump. If you found lower prices in high tax states but most of your miles were in lower tax states at the end of the quarter you'll end up with a refund because the whole quarter you were paying more tax then you needed to. If you reverse the scenario then you'll end up owing fuel tax because the whole quarter you weren't paying enough fuel tax. But either way the fuel tax paid won't be different because it's based on your fuel mileage for the quarter and how many miles in each state and therefore has NOTHING to do with how much fuel tax you paid at the pump. The tax paid at the pump will be distributed to the states you drove in. Add up all the fuel tax owed to all the states you drove through you owe a total fuel tax of $X. Then depending on how much fuel tax you paid at all of your fuel purchases will determine if you over paid or under paid, but either way you still owe $X.
Your pretty clear on what I was trying to say. Only thing is when I refer to "pretax diesel", I am referring to fuel that has yet to be taxed, or shopping for the cheapest price. Some disagree with the method of being ahead or trying to net $0, or state it's stupid. However they haven't helped the OP, which BTW is who I was replying to. It's not a waste of time either. If one is searching for the lowest "fuel price" they undoubtedly seen the tax rate. So it's not a waste of time, it's just not their way. The process of trying to net zero will also give the OP a clearer understanding of what they need to move a particular load in real time, not 3 months later.
