International Fuel Tax Agreement (IFTA) Adopts CNG Conversion Factor
posted in Alerts, Blog by Brian Gray
The International Fuel Tax Agreement (IFTA) is an agreement by the 48 contiguous states and the 10 Canadian provinces bordering the states that administers a uniform system for fuels use taxation laws with respect to trucks over 26,000 lbs operated in multiple member jurisdictions. The basis for IFTA tax calculations are in gallons and miles per gallon or liters and kilometers per liter. The advent of trucks fueling with CNG products has presented a tax calculation problem as CNG is measured in cubic feet or cubic meters.
In a ballot sponsored by the IFTA, Inc. Board of Trustees, members passed a resolution to establish a standard conversion factor so compressed natural gas (CNG), when sold in gaseous volumes (e.g., cubic feet or cubic meters), can be converted to liquid volumes (e.g., gallons and liters) and accurately reported on the IFTA Tax Return. The standard conversion factor adopted mirrors the IRS conversion factor of 126.67 cubic feet of natural gas to equal a gallon of gasoline.
The adoption of this ballot means that either CNG vendors make the conversion at the pump and provide carriers receipts using gallon conversion or carriers using CNG fuel would need to first convert their fuel receipts from cubic feet to gallons and then complete the IFTA tax calculation process using the current methods. The implementation date of this ballot is January 1, 2015.
