Audits: Fuel tax

Record keeping requirements

The International Fuel Tax Agreement (IFTA) and International Registration Plan (IRP) require motor carriers to maintain detailed distance and fuel records for each individual vehicle. The records must be summarized monthly, quarterly, and annually by fleet and by jurisdiction.

Required information

The monthly distance and fuel summary for each vehicle must include all of the following, with detailed supporting documents:

  • Carrier name
  • Vehicle fleet number
  • Unit number or vehicle identification number
  • Beginning and ending odometer or hub odometer reading for each trip
  • Starting and ending date of trip
  • Trip origin, pick-up locations, fueling locations, and delivery destinations
  • Routes of travel
  • Distance by jurisdiction
  • Total trip distance
  • Original fuel invoices that include date, customer and seller name, gallons, fuel type, fuel taxes, location, and unit number

How long records must be kept

Type of record Time kept
IFTA (fuel tax) 4 years from the date the fuel tax return was due or filed, whichever is later
IRP (prorate) 3 years after the close of that application registration year

Bulk fuel storage records

If you maintain a bulk fuel storage facility and keep the required records, you may get credit for tax paid on fuel withdrawn from that bulk storage facility and used in your:

  • IFTA-licensed highway vehicles.
  • Non-highway equipment.
  • Licensed highway vehicles used off-road.
  • Licensed highway vehicles equipped with power take off devices.

Required records

To get this fuel tax credit, you must maintain the following records:

  • Date the fuel was withdrawn from bulk storage
  • Number of gallons or liters withdrawn from bulk storage
  • Fuel type
  • Purchase and inventory records showing that tax was paid on your bulk fuel purchases
  • For highway-licensed vehicles, number of miles the vehicle was operated, highway and non-highway miles
  • For highway-licensed vehicles, the unit number of the vehicle into which the fuel was placed.
  • For non-highway equipment, a description of the equipment into which the fuel was placed.

Where to list bulk fuel amounts

  • Tax-paid gallons withdrawn from your bulk storage and placed in IFTA-licensed vehicles should be reported under "Tax-paid gallons" on your IFTA quarterly return.
  • Gallons of fuel used in vehicles or equipment that qualify for a refund should be placed in the appropriate sections on the refund claim form.

How accounts are selected for an audit

The majority of businesses and individuals we audit are chosen at random. The rest are selected based on the nature of their tax liability or business operations.

How to prepare for an audit

To complete your audit as quickly and easily as possible, you should:

  • collect all the required records for the audit period.
  • make all the records available for your first meeting with the auditor.

Information covered in an audit

An audit will cover one or more of the following areas:

  • Fuel: Amounts and classifications of taxes and fees reported on your tax return.
  • Deductions and Exemptions: Amounts, classifications, and documentation included with your tax return.
  • Mileage: Total and jurisdictional miles submitted on your reports and/or applications.

Number of years included in an audit

Type of Audit Audit Period
Fuel Tax Up to 5 previous years
IRP (prorate) Up to 3 previous licensing periods

When and where audits are held

The auditor will contact you to schedule a convenient time and place to meet, and describe the records you'll need. An audit appointment can take place at:

  • Your place of business.
  • Any prorate and fuel tax office.
  • Your accountant's or attorney's office.
  • Any public area, such as a restaurant, coffee shop, or library.

What to expect at an audit

We'll review the completeness and accuracy of following types of records:

  • International Registration Plan (IRP) applications
  • Fuel tax returns
  • Refund claims
  • Heating oil returns

If the audit finds that records are missing or inadequate, we may adjust your tax paid credits, fuel consumption, jurisdictional distance, and monies owed. You may also receive helpful instructions and information to help you fill out your returns in the future.

Time needed for an audit

The time the audit will take depends on the type of audit being done and the condition of your records.

After the audit

  • The auditor will tell you of any differences found during the audit and explain any tax adjustments before finalizing the audit.
  • You'll be given a copy of all audit documentation.
  • The audit will be processed using the following procedure:
If you… Your file will be… You'll receive…
Overpaid your taxes Referred to our headquarters in Olympia for authorization of your refund. A refund 2-3 weeks after the 30-day appeal period has ended.
Underpaid your taxes Finalized by the auditor Notice of the amount you owe and instructions on how to pay it.

Audit appeals

You may appeal the audit results within 30 days from the date you receive the audit report by writing to:

Audit Section
Department of Licensing
PO Box 9228
Olympia WA 98507-9228

If you file an appeal before the payment due date, you won't have to make payment until after your protest is resolved. However, you may want to pay any portion of the audit that you aren't appealing to avoid additional interest charges. Interest continues to accrue on any amount ultimately found to be due.

Frequently asked questions

Will the information I show the auditor be kept confidential?

All information you provide will be maintained in strict confidence. You should be aware, however, that we have information-sharing agreements with the Internal Revenue Service and other agencies and jurisdictions.

Where can I get help establishing and maintaining records?

We recognize state and international rules governing prorate and fuel taxes are very complex, and are happy to help you establish and maintain effective reporting and record keeping. Contact a prorate and fuel tax office for more information.

Related information

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