Trucking companies: Tools for IFTA and HUT reporting, fuel tax prep, and frequent tax changes

As any fleet manager knows, taxes can be complicated when overseeing a fleet of commercial vehicles. Beyond the usual income tax and business taxes your business pays annually, fuel tax reporting is on your checklist too. This is true particularly if your drivers are crossing state lines while on the job. When you partner with a fleet card company, the data provided can make these complex tasks feel a whole lot lighter.

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How does fuel tax reporting work?

Most trucking businesses – those in class seven or eight – drive in multiple states. When your vehicles enter a new state your company must pay that state’s fuel tax. This is typically a usage type of tax.

What this means is you pay for the miles you drive on each state’s roads. Typically you pay the tax at the pump. However, oftentimes drivers fuel in the state where they are based, and then travel across state lines. This can mean doing a lot of driving in other states. This means your drivers aren’t buying enough fuel in a given state to offset the tax that was incurred based on the mileage driven in that state.

At the end of the quarter you need to correct those discrepancies. Correction involves paying for the travel in other states and reimbursement for the fuel tax dollars paid in your drivers’ home states. A fuel card program, especially one that offers fuel tax reporting, can help you organize and prepare for these payments.

What is IFTA and what do fleet managers need to report based on IFTA?

The 1996 International Fuel Tax Agreement (IFTA) is an agreement between the lower contiguous 48 U.S. States and Canada. It simplifies fuel tax reporting for fleet trucking companies. It takes what was once an onerous process and simplifies it for fleet managers. Here’s how it works: with IFTA, drivers are required to track how much fuel they use and how far they drive in each state. This information is reported quarterly and the states/provinces all share the tax revenue based on IFTA reporting.

Do I have to file multiple reports for each state in which my drivers travel?

No, that’s the beauty of IFTA. Here’s an example: With a fleet that’s based in Utah, because of IFTA, they only have to file one report to the state of Utah. They then pay whatever tax balance they owe to the state of Utah. In the past, each fleet had to file different tax reports in every state in which they drove. This made for a burdensome process. IFTA requires that companies report both mileage and fuel purchased in each state. The beauty is it can be recorded in a single report.

How does using a fuel card help me with IFTA reporting?

As long as you’re using a fuel card like WEX’s fleet card, all the necessary details to meet the individual state requirements for fuel tax reporting are automatically reported to you. This happens in real time as your drivers fuel their vehicles. When you use a fleet card like WEX’s fuel cards, the card captures the pertinent fueling data required by IFTA. This includes the number of gallons purchased, the type of fuel purchased, date, time, truck number, invoice number, and the location of the purchase.

How does using a fleet card differ from fueling up with a Mastercard or Visa?

When using a Mastercard or a Visa, the reporting is less robust. Those cards will not provide you with the level of specific data you need for fuel tax reporting. You will only see a lump sum on your statement. Let’s say your driver buys fuel, oil and additives, a corn dog, a drink, and a bottle of washer fluid. On your credit card statement you’re simply going to see a transaction at Pilot, or Flying J, or any number of other truck stops for $437. There will be no line item detail. With Mastercard and Visa, drivers must hold on to detailed receipts. With those receipts, the fleet manager must parse out the line items that are relevant to fuel tax reporting. Fuel cards simplify and streamline this time-consuming process.

How do you get that necessary fuel tax data from your fleet card provider?

With a fuel card like WEX’s, customers get with spending breakdowns to help assist with tax reporting. These reports include all the necessary details to easily see a state-by-state breakdown of the number of gallons of fuel purchased. Those reports can be generated on demand. Alternatively, they can be scheduled and pushed to fleet managers with any desired frequency. Reports can be run on demand, daily, weekly, monthly, quarterly, or annually.

How can GPS tracking tools help with pulling fuel tax data?

GPS navigation tools like Geotab or Verizon Connect provide data to help track the roads your fleet has traveled. Most GPS providers also provide a state-by-state breakdown of mileage. This includes a record of routes taken through each state, meeting the reporting requirements of IFTA. The GPS systems typically cover road-tracking required by IFTA and fleet card providers typically share the fuel purchase side of the data.

Using a combination tool that aggregates GPS tracking data with fuel card spend data helps make tax reporting seamless and easy

A combination of GPS data and fleet card data provide the ideal scenario for IFTA fuel tax reporting. Third-party systems like WEX’ provide’s compile everything you need for IFTA reporting into one handy package. WEX’s reporting engine pulls all the necessary fuel data – even if your fleet is not not using WEX’s fuel card. Then WEX pulls GPS data from any provider and generates a report easily entered into your quarterly report.

Using three data points – dispatch data, fuel purchase data, and GPS data – to give your fleet managers the best combination of information for tax reporting

The third piece of information useful for IFTA reporting is dispatch data. This data is critical in the event that a driver’s GPS device malfunctions. This is how the dispatch data can save the day for you. Here’s an example: Driver A is scheduled to leave Oklahoma City and pick up a load in Houston today. She is expected in Tampa on Saturday, at 10 AM. If her GPS malfunctions, a partner like WEX creates a perfect breadcrumb path using dispatch data. This path shows her route. WEX’s FuelTax system detects fuel purchasing instances and pieces together a trip based on timing and locations visited.

Why is it important to be accurate in your fuel tax reporting?

When filing IFTA or individual fuel tax reports, states can run a reporting audit. If you report data exhibiting significant gaps, your trucking business can incur audit fees and penalties. To avoid these penalties, WEX assigns an individual representative to your fleet account to scan your data for all anomalous data. This WEX representative then works to correct those exceptions prior to your filing. On the offhand chance that your company faces an audit, that same WEX representative would support your business through that audit.

How do you stay on top of all the state moratoriums and tax reporting changes that happen?

Changes to fuel tax reporting requirements can happen frequently. Tax rate changes and moratoriums also happen occasionally. WEX’s full service handles all of the different tax rate changes for you. The WEX team also provides support in the event of a state tax moratorium. When preparing your fuel tax reporting data WEX accounts for all requirements.

WEX stays up-to-date on future developments in tax reporting. One example of this is jurisdictions newly taxing EV units and other alternative fuels like liquid hydrogen. Pennsylvania was the first state to tax EV units and Indiana just passed a bill to tax EV units effective January 1, 2024.

What are some state-by-state outlier tax reporting requirements?

Some states have additional tax reporting requirements of which you’ll need to be aware. For example, the State of New York has a different mileage tax beyond the required reporting within IFTA. Other states with additional reporting requirements include New Mexico, Kentucky, Oregon, and Connecticut.

Partnering with a company like WEX helps you mitigate these complicated tax structures. Highway use tax (HUT) reports are one example of additional reporting you might need that WEX can provide.  Another example is a weight tax where carrying heavier loads means an additional tax in Oregon. Oregon also taxes based on the number of axles on a truck.

What about Canadian tax reporting?

WEX supports a Canadian carbon tax report, which is based on fuel purchased and used. This is an additional carbon tax to offset Canadian miles driven and the environmental impact of those miles.

There are a lot of fuel tax nuances, and at a moment’s notice a lot of these requirements can change. With a service that provides you with all that necessary legwork you’ll save time, and alleviate unnecessary money anxieties. Think of it as similar to relying on a tax professional for business or personal taxes.

How sharing fuel card data benefits the trucking industry as a whole

WEX provides its customers with a tax reporting service aggregating all the necessary data and removing any fuel tax reporting headache from your plate.

Additionally, WEX is willing to share its data with other providers. Take a GPS company like Geotab. In the case of fuel taxes, their data makes up half of the equation. What’s needed is the fueling data to complete the picture. WEX shares its fuel data with Geotab, equpping them with all the information they need for providing a fuel reporting service to customers. WEX provides its customers with tools to easily share data with third parties allowing simpler reporting processes.

To address the many different kinds of tax reporting required, find a fleet card partner to relieve some or all of that burden. WEX provides that information to you as a package. Pulling purely fuel purchasing data from WEX’s reporting is another option. Create your own full package of fuel tax reporting necessary to run your business with WEX.

WEX is a leading, global fintech solutions provider, simplifying payments and back-end business processes in the fleet management, benefits management, and corporate payments areas.  To learn more, please visit the company’s About WEX page.

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