10 Stats 'n' Facts about Motor Fuel Tax Compliance

Understanding and keeping up with the complexity of excise tax rules and rates can keep any tax manager in the fuel industry up late at night. The real stress, however, is when auditors come knocking on the door unexpectedly.

If you’re a tax manager, you know your job is on the line if the company is hit with a hefty penalty for non-compliance. The IRS, for example, can penalize a business as much as $10,000 for each erroneous report filed for each terminal or storage location.

Don’t get caught off guard in an audit! Review the list of motor fuel tax facts below to see if your business may be at risk. If so, it’s time to make a change ASAP to avoid any headaches in the future.

1. Mistakenly reporting a product code for an entire year could lead to a penalty of over $1 million.
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2. In 2013 there were 483 fuel tax changes in the US, an increase of 216% in just the past two years.
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3. Tax departments in the fuel industry can have as little as 30 days notice to comply with new requirements.
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4. States typically require a minimum record retention period of 3 years, and in some cases, 10 years.
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5. Some jurisdictions allow flat percentage exemption on final tax liability.
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6. The state of Illinois charges 10% of the total tax due or $50, whichever is greater, for tax underpayments.
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7. The Florida Department of Revenue will assess a penalty of up to $200 for incomplete reports.
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8. As many as 55% of all fuel invoices have some error. Tax-related errors were 20% of these in 2012.
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9. On average, 60 hours are spent researching tax rules and rates per jurisdiction, per year.
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10. Many states require excise tax withholding and/or filing when selling or using natural gas as a motor fuel.
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