International Fuel Tax Agreement (IFTA) and Interstate User Diesel Fuel Tax
Industry Topics

Refunds

Generally, refunds are processed by your base jurisdiction unless you are requesting a refund for tax-paid fuel used in an exempt manner. Refunds for tax-paid fuel used in an exempt manner must be submitted to the respective jurisdiction in which the fuel was used.

Credits and Requests for Refund

If your completed IFTA quarterly tax return shows that you have overpaid tax for the period, there is no need to make a payment on the return.

We will issue your refund after we determine that you have paid all tax liabilities owed to member jurisdictions, including any outstanding audit assessments. Your request for refund may be denied if you are delinquent in filing any quarterly tax return.

Diesel Fuel Exempt User Refunds

To obtain a refund of the diesel fuel tax you paid on diesel fuel purchased in California, and used in a nontaxable manner in California, you must file a claim for refund. You must submit your claim within three years of the date you purchased the fuel.

The law generally allows you to file a claim for refund once a year. However, if your claim will total at least $750 for a quarter, you may file a claim for refund on a quarterly basis.

This information applies only to claims for refund for California nontaxable diesel fuel uses. For more information on exempt user refunds, please see our Motor Vehicle and Diesel Fuel Tax Guide, Getting Started page.

IFTA Refunds of Tax Paid on Diesel Fuel Used in a Nontaxable Manner

In addition to allowing you to claim a deduction on your IFTA tax return for certain miles traveled, some jurisdictions, including California, allow you to file a claim for refund for the diesel fuel tax you have paid on diesel fuel used in certain nontaxable ways.

The fact that you may file a claim for refund for these nontaxable fuel uses does not change your IFTA reporting. Your IFTA quarterly return must include all gallons used by your qualified motor vehicles during the reporting period.

You must file a diesel fuel tax claim for refund directly with the jurisdiction where you paid the diesel fuel tax and used the fuel in a nontaxable manner, based on the jurisdiction's own definitions of nontaxable fuel use and its refund requirements. Be sure to maintain adequate records to support any refund you claim.

If you wish to file a request for refund from another jurisdiction, please contact that jurisdiction for information.

California Nontaxable Diesel Fuel Uses

California allows refunds of diesel fuel tax you have paid on fuel used for purposes other than operating motor vehicles on the state's public highways.

The most common nontaxable uses of tax-paid diesel fuel include the use of fuel:

  • To power a vehicle on roads other than the state's public highways (off-highway use).
  • To operate auxiliary equipment (Regulation 1432 provides Safe-Harbor Percentages as presumed amounts of diesel fuel used to operate auxiliary equipment).
  • To power a refrigeration unit with a separate fuel tank or generator, or any similar equipment where fuel is not used to power the tractor.
  • In construction equipment exempt from registration and operated off-highway.
  • In a vessel.
  • On a highway under the U.S. Department of Agriculture's (USDA) jurisdiction, provided you pay or contribute to the construction or maintenance of that highway under an agreement with, or with the permission of the USDA.
  • In a motor vehicle owned and operated by a public agency or other political subdivision of California (city, county, or special district), on highways constructed and maintained by the United States within a military base in California.

While you may file a claim for refund for these nontaxable fuel uses, you must include the gallons used in the total gallons figure on your IFTA schedule and include them in your miles-per-gallon calculation, except for gallons used in refrigeration units with separate tanks (reefer).

Records Review Program

We offer a free Records Review Program for International Fuel Tax Agreement (IFTA) licensees that began operating within the last 12 months as part of an overall plan to educate licensees on IFTA recordkeeping requirements. Also, any licensee regardless of the months of operation may voluntarily request to have their records reviewed.

The purpose of performing a records review is to identify and reduce potential recordkeeping compliance issues and ensure licensees are paying the correct amount of tax. If you are selected to participate in the Records Review Program, we will mail you a notification letter in advance detailing the records review process. Participants will only be selected once. The records review should generally take no more than 4 hours of your time, provided the requested records are ready for review on the day of the appointment.

The records review will entail a discussion and review of your distance and fuel accounting system, internal controls, actual fuel and trip source document, and summaries used to prepare the IFTA quarterly returns. Upon completion of the review, you will be provided with a two-part letter. The first part of the letter will summarize the areas where your records were deemed adequate, and areas where improvement is needed. The second part of the letter is a report that will include the detail supporting or summary, including what we reviewed, what we found, and our recommendations, if any.

A records review is limited in scope and covers less than one full reporting period (one quarter), whereas an audit generally covers multiple reporting periods. The records review does not compare your records to your quarterly tax return to determine adjustments and cannot result in a tax assessment, we may recommend that you file an amended return, if warranted. A period that was included in a records review may be included in a future audit. However, licensees will not be scheduled for an audit for at least six months following their records review.

Additional information on Records Review Program is available in the IFTA Audit Manual, Sections A500 to A510 on the IFTA, Inc. website.