Electric vehicles and reporting under IFTA

Scope

The International Fuel Tax Agreement (IFTA) is an agreement among member jurisdictions (the lower 48 United States and 10 Canadian provinces) for the collection and distribution of fuel use tax revenues.

Regulatory citations

• International Fuel Tax Agreement — Articles of Agreement
• 49 CFR 392.2 — Applicable operating rules

Key definitions

• Base jurisdiction: The member jurisdiction where qualified motor vehicles are based for vehicle registration purposes.
• Jurisdiction: A state of the United States of America, the District of Columbia, a province or territory of Canada, or a state of the United Mexican States.
• Total distance: All miles or kilometers traveled during the tax reporting period by every qualified vehicle in the licensee’s fleet, regardless of whether the miles or kilometers are considered taxable or nontaxable by a jurisdiction.

Summary of requirements

Various alternative fuels – including electricity – must be reported on tax returns under the International Fuel Tax Agreement (IFTA).

With more states charging fuel taxes on electric vehicles (EVs), motor carriers must know how to report operations of electric-powered qualified motor vehicles in their fleets.

Two calculation methods: By the mile or by kilowatts used

Some jurisdictions impose tax on electricity consumed in qualified motor vehicles by applying a tax rate to the net taxable fuel – kilowatt hours (kWh).

Other jurisdictions impose that tax by applying a tax rate to the taxable distance in the state.

How to report qualified electric vehicles under IFTA

States have discretion as to the actual format of quarterly returns, whether reporting is done with paper forms or via electronic filing. However, certain basic elements must be included in the reports. Detailed records are required to substantiate the returns.

Report the total distance in the jurisdiction for the vehicles reporting EV as a fuel type.

Report the taxable distance in the jurisdiction for the vehicles reporting EV as a fuel type. Report “zero” for taxable distance in jurisdictions that do not impose tax on EV as a fuel type.

Report as tax paid fuel any electricity placed into the supply storage unit of the EV on which tax was paid. Retain documentation as proof of tax payment.

Report, as part of total fuel, any electricity placed in the supply storage unit of the EV. For jurisdictions that do not tax electricity as a fuel or impose a consumption tax on taxable distance, electricity purchased in those jurisdictions must still be reported as part of total fuel. This allows calculation of the correct consumption rates and appropriate fuel taxes.

Calculate a consumption rate (xx.yy per kWh) for the EV fuel type by dividing the total distance by the total fuel rounded to two decimal places (similar to the MPG or KPL calculation).

To calculate tax: