INTERNATIONAL
FUEL TAX
AGREEMENT
IFTA – DUAL FUEL VEHICLE TAX
REPORTING
Annual IFTA Business Meeting
August 21, 2013
Reno, NV
Presented by
DUAL FUEL WORKING GROUP
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Overview
• Dual Fuel Vehicles - 101
• Recommended Reporting Process
• Full-Track Ballot #03-2013
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Dual Fuel Vehicles - 101
• A dual fuel vehicle can use two fuels (e.g., diesel
and natural gas at the same time)
• Two types of natural gas
• Liquefied Natural Gas (LNG):
– Natural gas stored as a super-cooled liquid (e.g., -260°F or
-170°C)
– Energy content comparable to gasoline and diesel fuels
– Expect will be used more for long-haul runs
– Almost always sold as a liquid measure (e.g., gallons or
liters)
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Dual Fuel Vehicles - 101
• Two types of natural gas (continued)
•
Compressed Natural Gas (CNG)
– Natural gas stored as a gas in high-pressure tanks (e.g., 3,000
to 3,600 psi
– Lower energy content compared to gasoline and diesel fuels
– Often sold as a gaseous measure (e.g., ft3 or m3)
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Dual Fuel Vehicles - 101
• How they operate:
• Can operate solely on diesel but not natural gas
• At idle and low load conditions the engine burns
mostly diesel
• At full load, the engine burns up to 95% natural
gas (diesel is used solely to trigger combustion)
• Overall the same power and performance of
normal diesel engines
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Dual Fuel Vehicles - 101
• Why is this engine technology being developed
and used:
o Significantly lower cost fuel compared to diesel
o Environmentally friendly (lower truck
emissions)
o Domestic supply – less concern about future
world price and availability compared to other
fuels
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
Dual Fuel Vehicles - 101
INTERNATIONAL
FUEL TAX
AGREEMENT
• Challenges
• Infrastructure:
– Fueling stations with equipment to cool the gas; and
– Distribution / fuel supply availability along
transportation corridors for long haul trucks
• Weight and space considerations (e.g., extra
engine components and different fuel tanks
capable of keeping LNG cool until used which
reduce load-carrying capacity)
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
• Why is this important to IFTA
• Anticipate at least 5% of long haul vehicles will
be dual fuel within the next 5 years
• IFTA tax return was built for reporting one fuel
type per vehicle, and we need to agree on a
new process to ensure a fair and consistent
distribution of taxes
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Questions / Discussion
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Recommended
Reporting Process
• Considerations:
– Accuracy (but not vehicle specific)
– Easy to understand (government and industry);
– Easy to implement (e.g., integrate into existing
systems used by government and industry);
and
– Easy to audit
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
10
INTERNATIONAL
FUEL TAX
AGREEMENT
Recommended
Reporting Process
• Observations:
1. IFTA is not a perfect reporting system (we accept
average fuel consumption for all jurisdictions
travelled).
2. IFTA documents are generally silent on how to
calculate taxable distances and fuel use
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
11
INTERNATIONAL
FUEL TAX
AGREEMENT
Recommended
Reporting Process
3. New technology is impacting on IFTA:
• New fuel types
• New engine types
• Onboard devices to track the amount of each fuel
used in each jurisdiction are available. However:
• Their accuracy needs to be verified
• They should not be used since consumption
rates under IFTA are an average based on
distance and purchase records over a quarter.
(Unless we want to change the entire IFTA
reporting process)
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
Recommended Reporting Process
• At a high level:
– Dual fuel vehicles must be treated and reported separately (e.g.,
gasoline fleet, diesel fuel fleet, LNG fleet, dual fuel fleet)
– Duel fuel vehicles must be treated and reported as two vehicles:
• Separately reporting the distances travelled and fuel purchased
• Pro-rating the distances to avoid double counting
Fleet Type
Pure Diesel
Dual Fuel
Fuel Type
IFTA Return
or
Return Line
Actual
Distance
Travelled
Distances
Reported
Diesel “D”
Return #1
100
100
Diesel “dD”
Return #2
100
(pro-rated) 25
LNG “dL”
Return #3
(pro-rated) 75
INTERNATIONAL
FUEL TAX
AGREEMENT
Recommended
Reporting Process
• Dual vehicle distances are pro-rated based on
their fuel purchases:
dD Distance = Total Distance Travelled * Diesel purchase
Total (Diesel + LNG) purchases
dL Distance = Total Distance Travelled * LNG purchases
Total (Diesel + LNG) purchases
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
Recommended Reporting Process
Assumptions
Total Distance
dD (gallons)
dL (gallons)
Total Fuel
J1
8,000
500
J2
2,000
-
1,000
1,000
10,000
500
1,000
1,500
Total
-
500
No exempt distances were traveled in either jurisdiction.
Calculate MPG Total Distance
Total Fuel
10,000
MPG
1,500
Prorate Distances by Jurisdiction Between
Fuel Types
6.67
Total
Fuel
Fuel by Type
dD
Ratio
500
0.3333
1,000
0.6667
1,500
dL
Total Distance
Total
J1
8,000
J2
2,000
10,000
Ratio
0.3333
0.6667
0.3333
0.6667
(dD)
(dL)
(dD)
(dL)
Prorated Distance
2,667
5,333
667
1,333
10,000
15
Recommended Reporting Process
•
•
Pro-rating more complicated if a carrier has exempt distances
Developed and tested worksheet which can be used to accurately prorate
the “Total Distance” and “Taxable Distance” between fuel types.
Pro-Rating Worksheet
These fields auto-populate and then transferred to the appropriate
dD and dL form/return for each jurisdiction
TOTAL
DISTANCE
TRAVELLED
EXEMPT
DISTANCE
TRAVELLED
Total
Distance
dD Portion
J1
8,000
0
2,667
0
2,667
5,333
0
5,333
J2
2,000
0
667
0
667
1,333
0
1,333
Total
Miles
10,000
0
3,333
0
3,333
6,667
0
6,667
Exempt
Distance
Txbl Distance
dD Portion
Total
Distance
dL Portion
Txbl
Distance
dL Portion
Exempt
Distance
Recommended Reporting Process
Dual Fuel Vehicles – Diesel
Fuel Type Jurisdiction
Average MPG
Total
Distance
Txbl
Distance
Txbl
Volume
Tax Paid
Volume
Net Txbl
Volume
6.67
Tax Rate
Tax Due
dD
J1
2,667
2,667
400
500
-100
0.2000
-$
20.00
dD
J2
667
667
100
0
100
0.1000
$
10.00
3,333
3,333
500
500
0
-$
10.00
Sub-total
Dual Fuel Vehicles – LPG
Fuel Type Jurisdiction
Average MPG
Total
Distance
Txbl
Distance
Txbl
Volume
Tax Paid
Volume
Net Txbl
Volume
6.67
Tax Rate
Tax Due
dL
J1
5,333
5,333
800
0
800
0.0500
$
40.00
dL
J2
1,333
1,333
200
1,000
-800
0.1000
-$
80.00
6,667
6,667
1,000
1,000
0
-$
40.00
10,000
10,000
1,500
1,500
-$
50.00
Sub-total
TOTAL DUAL-FUEL VEHICLES
INTERNATIONAL
FUEL TAX
AGREEMENT
Questions / Discussion
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
Ballot #03-2013
INTERNATIONAL
FUEL TAX
AGREEMENT
• Purpose:
– Introduce a standard for converting CNG sold in a
gaseous measure to a liquid measure (e.g., ft3 to gallons,
and m3 to liters)
– Ensure a fair and consistent process for reporting
and disbursement of taxes between jurisdictions
Notes:
– This ballot is specific to CNG (i.e., LNG always sold as a liquid measure)
– Jurisdictions conversion rates for CNG vary considerably
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
19
CNG Conversion Rates
Wikipedia
100,000
Conversion
(Divide by)
126.67
Alternative Fuels
website
IRS
100,000
126.67
789
100,000
126.67
789
Oklahoma
100,000
126.67
789
Kansas
100,000
120
833
Montana
100,000
120
833
Minnesota
100,000
114.1
876
Oregon
100,000
(Multiply by) 0.01
1,000
California
100,000
100
1,000
Connecticut
100,000
(Multiply by) 0.012
1,200
Pennsylvania
100,000
(Multiply by) 0.0314
3,140
State/Source
Cubic Feet
Gallon
(Gasoline Equivalent)
789
Source – FTA
Ballot #03-2013
INTERNATIONAL
FUEL TAX
AGREEMENT
• Observations:
– There is no impact to sovereignty:
• A method for restating volumes of CNG and
jurisdiction’s tax rate into a different but
common unit or measure for use by other
IFTA jurisdictions..
• Almost identical to Procedures Manual
Section P1300 to convert tax rates and
volume measurements between U.S. and
Canadian jurisdictions.
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
Ballot #03-2013
INTERNATIONAL
FUEL TAX
AGREEMENT
– By way of an example:
• BC's tax rate is converted through a two-part process
for IFTA reporting purposes (i.e., litres to gallons, and
Canadian currency to US currency)
• The result is BC’s tax of 0.2267 cents per litre for diesel
set by our legislature is restated to 0.8398 cents per
gallon
• IFTA has not forced BC to change its tax rate, BC/IFTA
are simply restating BC’s tax rate for others to ensure
the correct reporting and distribution of taxes
between IFTA jurisdictions
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
Ballot #03-2013
• What happens if we use different conversion
rates?
Assumptions
Miles
dD (gallons)
Jurisdiction 1
8,000
500
Jurisdiction 2
Total
2,000
10,000
500
CNG Purchased (ft3)
Conversion Factors
dC (gallons)
1,000
1,000
dC (gallons)
126,760
126.76
1,000.00
126,760
100.00
1,267.60
Total Fuel
500
1,000
1,500
Ballot #03-2013
• What happens if we use different conversion
rates?
Total Miles
dD Purchased
dC Purchased
Total Fuel
MPG
10,000
500
1,000
1,500
6.67
10,000
500
1,276
1,768
5.66
Miles
Jurisdiction 1
8,000
Jurisdiction 1 (at 100 ft3)
8,000
Jurisdiction 2
2,000
Jurisdiction 2 (at 100 ft3)
2,000
Ratio
Prorated Distances
0.3333
0.6667
0.2829
0.7171
(dD)
(dC)
(dD)
(dC)
2,667
5,333
2,663
5,737
0.3333
0.6667
0.2829
0.7171
(dD)
(dC)
(dD)
(dC)
667
1,333
566
1,434
Ballot #03-2013
dC @ 126.75 ft3
Total
Distance
Taxable
Distance
Taxable Fuel
Volume
Tax Paid
Volume
Net Taxable
Volume
Fuel Type
Jurisdiction
dC
J1
5,333
5,333
800
0
800
0.0500
40.00
dC
J2
1,333
1,333
200
1000
(800)
0.1000
-80.00
6,667
6,667
1,000
1000
0
10,000
10,000
1,500
1500
Subtotal
TOTAL FOR BOTH FUELS
Tax Rate
Tax Due
-40.00
(50.00)
dC @ 100ft3)
Taxable Fuel
Volume
Tax Paid
Volume
Net Taxable
Volume
Jurisdiction
dC
J1
5,737
5,737
1,014
0
1,014
0.0500
50.70
dC
J2
1,434
1,434
254
1,268
(1,014)
0.1000
-101.41
7,171
7,171
1,268
1000
0
10,000
10,000
1,768
1500
Subtotal
TOTAL FOR BOTH FUELS
Total Distance
Taxable
Distance
Fuel Type
Tax Rate
Tax Due
-50.70
(60.70)
$ Difference
-$10.70
% Difference
21.4%
25
Ballot #03-2013
INTERNATIONAL
FUEL TAX
AGREEMENT
• Next Steps: (Assuming the ballot passes)
– Jurisdictions with different conversion rates instruct
their carriers, solely for IFTA reporting purposes, to
either restate:
1. CNG tax rates/volumes purchased at 100 ft3 (or
something else) to rates/volumes at 126 ft3; or
2. CNG tax rates/volumes purchased at 126 ft3 (or
something else) to CNG tax rates/volumes at 100 ft3
and then the jurisdiction convert to 126 ft3 for its
transmittal purposes.
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
26
Ballot #03-2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Notes:
• Option #2 will completely address the sovereignty issue.
• Either option requires carriers to know what conversion rate
is being used by fuel sellers in each jurisdiction they
purchase CNG in, and carriers will be required at some point
to convert of their purchases:
– To a common standard; or
– From a common standard to their base jurisdiction’s
standard (if different).
• Next Steps:
– There were several constructive suggestions which the
Working Group will be adding
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
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Ballot #03-2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Article R200: Add definitions of Gallon and of Liter, as applied to CNG:
• R222 Gallon, as applied to compressed natural gas, means a quantity of
compressed natural gas equal to 126.67 cubic feet of natural gas at 60
degrees Fahrenheit and one atmosphere of pressure. In the alternative,
Gallon, as applied to compressed natural gas, means a quantity of
compressed natural gas that weighs 5.66 pounds.
• R237 Liter, as applied to compressed natural gas, means a quantity of
compressed natural gas equal to 1.0 cubic meters of natural gas at 15
degrees Celsius and one atmosphere of pressure. In the alternative, Liter, as
applied to compressed natural gas, means a quantity of compressed natural
gas that weighs 0.7316 kilograms.
(No Changes)
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
Ballot #03-2013
Article P700: Add to P730 CONVERSION RATES AND
MEASUREMENTS: A note referring to the new definition of a
gallon and a liter of CNG:
• P730 CONVERSION RATES AND MEASUREMENTS When the
membership includes a member jurisdiction other than a U.S.
jurisdiction, conversion rates and measurements must be printed on
all standard tax returns or instructions provided with tax returns. If
the conversion rates and measurements are not printed on the tax
returns, or if specific instructions including those conversion rates and
measurements are not included with tax returns, either the IFTA, Inc.
web-site or the base jurisdiction’s web-site shall be referenced on the
tax return instructions, provided those sites contain the current
conversion rates and measurements. (See IFTA Articles of Agreement
Section R222 regarding the definition of a gallon of compressed
natural gas, and R237 regarding the definition of a liter of compressed
natural gas. Also see Procedures Manual Section P1300 regarding
conversion rates and measurements between U.S. and Canadian
jurisdictions.)
(Green signifies no longer a strike through)
Ballot #03-2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Article P1300: Delete section: P1320 FUELS NOT MEASURED IN LITERS OR
GALLONS:
• P1320 FUELS NOT MEASURED IN LITERS OR GALLONS
• For reporting fuels that cannot be measured in liters or gallons (e.g.,
compressed natural gas), the licensee shall report the fuel in the units of
measurement employed by the jurisdiction in which the fuel was used.
(No Changes)
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Questions / Discussion
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Dual Fuel
Working Group
IFTA:
Hugh Hughson (BC)
Paul Bernander (WI)
Tim Ford (CA)
Dawn Lietz (NV )
Garry Hinkley (MI)
Chuck Ulm (MD)
Industry:
Robert Pitcher (ATA)
Gary Bennion (Con-Way)
FTA:
Cindy Anders-Robb
IFTA, Inc. Advisors:
Lonette Turner
Amanda Koeller
Celebrating 30 Years of Cooperation and Trust 1983 - 2013
INTERNATIONAL
FUEL TAX
AGREEMENT
Thanks!
Celebrating 30 Years of Cooperation and Trust 1983 - 2013