...
Motor fuel which is placed into the fuel tank of a qualified motor vehicle from bulk storage, and for which tax has been paid to the jurisdiction where the tank is located, is considered a tax-paid bulk fuel purchase and credit may be taken for it on the carrier’s IFTA return. Credit is taken in the quarter in which the fuel is placed into the supply tank of the IFTA qualified vehicle.
Scope
Under the International Fuel Tax Agreement (IFTA) there are provisions for carriers with bulk fuel tanks. The licensee normally has fuel delivered into fuel storage facilities and fuel tax may or may not be paid at the time of delivery. Licensees using bulk fuel tanks should confirm whether tax is paid, or not paid, at the time of delivery.
Regulatory citations
- The International Fuel Tax Agreement Articles of Agreement
Key definitions
- Bulk fuel: Fuel delivered into fuel storage facilities by the licensee.
Summary of requirements
The licensee’s records must:
- Identify the quantity of fuel taken from the licensee’s bulk tank and placed in qualified motor vehicles. The quantity cannot be a guess; the licensee must have some type of meter or device that measures the number of gallons/liters removed from the bulk tank.
- Differentiate between fuel placed into the qualified vehicles and fuel placed into other, non-IFTA vehicles, such as pickup trucks or special equipment.
Licensees have specific recordkeeping requirements regarding bulk fuel. In addition to the withdrawal logs, licensees must maintain quarterly reconciliation records of the bulk fuel tanks. For example:
Beginning Inventory + Purchases - Withdrawals (should match log) = End Inventory
The licensee must retain the following records for its bulk storage facilities:
- Receipts for all deliveries,
- Quarterly inventory reconciliations for each tank,
- Capacity of each tank, and
- Bulk withdrawal records for every bulk tank at each location.
The base jurisdiction will not allow a licensee tax-paid credit for fuel withdrawn by the licensee from its bulk fuel storage facilities unless the licensee produces records that show:
- The purchase price of the fuel delivered into the bulk storage includes tax paid to the member jurisdiction where the bulk storage is located, or
- That the licensee has paid fuel tax to the member jurisdiction where the bulk storage is located.
The licensee must produce audit records that contain the following elements for each withdrawal from its bulk storage facilities:
- Location of the bulk storage from which the withdrawal was made,
- Date of the withdrawal,
- Quantity of fuel withdrawn,
- Type of fuel withdrawn, and
- Identification of the vehicle or equipment into which the fuel was placed.
In the event of an audit, some auditors also expect the licensee to periodically record physical tank readings (stick readings) of tank levels.