International Fuel Tax Agreement Audit Assistance

Primary Contact: Stephen Adu, Branch Supervisor (502)782-4077

 
The International Fuel Tax Agreement (IFTA) is an agreement among the United States and Canadian provinces to simplify the reporting of fuel used by Interstate/Inter-jurisdictional motor carriers. Upon application, the carrier's base jurisdiction will issue credentials, which will allow the IFTA license to travel in all IFTA member jurisdictions.

Additional information may be obtained from International Fuel Tax Association, Inc.

Global Positioning System (GPS) has been required by Federal Regulations for safety and most GPS systems do not meet IFTA record keeping requirements.  Please review the IFTA Record Retention Requirements.  The retention period for safety regulations is a six month period; however, the retention period for IFTA is four years.

Record Retention Requirements

1. Each licensee shall maintain a complete record of all motor fuel purchased, received, or used in the conduct of its business. The fuel records shall contain at least the following information:
1. The date of each receipt of fuel
2. The name and address of the person from whom purchased or received
3. The name of the purchaser of the fuel
4. The number of gallons of fuel received
5. The type of fuel
6. The vehicle or equipment into which the fuel was placed
7. Fuel recaps for each qualified motor vehicle for each jurisdiction in which the qualified motor vehicle is operated
8. If applicable, complete records on power takeoff use of motor fuel
2. Each licensee shall maintain detailed distance records that show operations on an individual-vehicle basis. The distance records for each qualified motor vehicle shall contain at least the following information:
1. Beginning and ending date of each trip
2. Vehicle Identification Number (VIN) or vehicle unit number
3. Trip origination and destination
4. Route traveled on trip
5. Trip beginning and ending odometer readings
6. Total distance of each trip
7. Jurisdictional distance of each trip
8. Both taxable and nontaxable usage of fuel
9. Distance traveled for taxable and nontaxable use and
10. Distance recaps for each qualified motor vehicle for each jurisdiction in which the qualified motor vehicle is operated.
3. The distance records produced wholly or partly by a vehicle-tracking system, including a system based on global positioning system (GPS) for each qualified motor vehicle shall contain at least the following information:
1. Original GPS or other location data for the vehicle to which the records pertain
2. Date and time of each GPS or other system reading (intervals sufficient to validate the total distance traveled in each jurisdiction)
3. Location of each GPS or other system reading
4. Beginning and ending odometer reading
5. Calculated distance between each GPS or other system reading
6. Route of the vehicle's travel
7. Total distance of trip
8. Jurisdictional mileage of each trip
9. Vehicle Identification Number (VIN) or vehicle unit number
10. Distance recaps for each qualified motor vehicle for each jurisdiction in which the qualified motor vehicle is operated
4. In order for a licensee to obtain credit for a tax-paid fuel purchase a receipt or invoice, a credit card receipt or automated vendor-generated invoice or transaction listing shall be maintained by the licensee. An acceptable receipt or invoice for tax-paid fuel purchased shall not have been altered or indicate erasures and shall contain at least the following information:
1. The date of purchase of fuel
2. The name and address of the person from whom purchased
3. The number of gallons purchased
4. The type of fuel
5. The price per gallon of the fuel purchased or the total amount of the sale
6. Unit number of the motor vehicle into which the motor fuel was placed and
7. Purchaser's name. (In the case of a lease agreement, receipts are acceptable in either name, provided the records firmly indicate the legal connection to the reporting party.)
5. A licensee shall not apply for credit for withdrawal from licensee-owned, tax-paid bulk fuel storage unless the following detailed records are kept:
1. Date of withdrawal
2. Number of gallons withdrawn
3. Fuel type
4. Unit number of the motor vehicle or equipment into which the fuel was placed and
5. Purchase and quarterly beginning and ending inventory records to substantiate that tax was paid on the bulk purchase.
6. A licensee with bulk fuel shall:
1. Account separately for tax-paid fuel purchased as storage or bulk from fuel purchased over the road
2. Retain a copy of each delivery ticket and receipt for storage or bulk fuel
3. Maintain bulk fuel inventory reconciliations. Records shall be maintained to distinguish fuel placed in a qualified motor vehicle from other uses
4. Maintain support for each tax-paid purchase by receipt, invoice, credit card receipt, automated vendor-generated invoice or transaction listing
5. Identify the vehicle by the registration plate number of unit number, because only a vehicle identified with the fuel tax licensee's operation may be reported for mileage or fuel consumption.
7. A separate total shall be compiled for each of the following fuel types used by a fuel tax licensee:
1. Gasoline
2. Diesel
3. Kerosene
4. Gasohol
5. Liquid petroleum gas
6. Compressed natural gas
7. Bio-Diesel
8. Other
8. Each licensee shall retain the information required for a period of four (4) years from the date of filing the tax report based on these records, except when a "Consent of Extension of Statutory Limitation of Time for Assessment" has been filed with the Division of Road Fund Audits to extend the four (4) year statutory period limitation.
9. If the records required to be maintained are insufficient, incomplete, or unavailable for the auditor to complete an audit, the auditor may examine any other records of the license that might assist in establishing the tax liability of the licensee
10. Both the lessor and lessee involved in the short or long-term lease of motor vehicles shall maintain sufficient records, including copies of the leases and any supplemental agreements, to allow determination at any time of the entity responsible for reporting or payment of the taxes.
11. Records may be retained on any computerized or condensed record storage system if the system has been pre-approved by the Transportation Cabinet's Division of Road Fund Audits.
12. If a licensee chooses to use an on-board electronic data recording system in lieu of or in addition to trip reports for tax reporting, the devices, record keeping, data collection, reporting, and licensee responsibility shall comply with Section P540 of the IFTA Procedures Manual, which can be found at:

https://www.iftach.org/manuals/2017/PM/Procedures%20Manual%20Janaury%202017.pdf

13. A licensee subject to an IFTA license who operates exclusively in intrastate commerce and for which all of the mileage traveled is taxable may choose to maintain quarterly odometer readings on an individual motor vehicle basis rather than the more detailed records.
14. A licensee subject to an IFTA license applying for a refund pursuant to Section 11 of 601 KAR 1:200 shall, in addition to the other requirements, maintain the following records:
1. Proof of power-take-off exemption percentage including how the percentage was calculated
2. Listing of bulk fuel storage which includes:
1. Location of bulk fuel storage
2. Capacity of bulk fuel storage and
3. Whether tanks are designated for "on" or "non" highway use
3. Kentucky Revenue Cabinet Motor Fuels Tax Refund Permit Number and Kentucky. Revenue Cabinet Sales and Use Tax Number, if applicable;
4. Equipment listing for each motor vehicle on which the refund is being requested including:
1. Vehicle type
2. Use of power-take-off
3. Vehicle unit number
4. Vehicle identification number and
5. Type of fuel used in each vehicle

Downloadable documents