Learn how we conduct fuel tax audits and what to do if we audit you.
Who is subject to fuel tax audits?
Our Prorate and Fuels Tax Audit Unit conducts audits on:
- IFTA and IRP motor carriers
- Fuel tax licensees and
- Fuel tax refund account holders
Audits may result in refunds, taxes due, or no changes to amounts paid.
Information covered in an audit
An audit will cover one or more of the following areas:
- Fuel: Amounts and classifications of taxes and fees you reported on your tax return or refund claim
- Deductions and Exemptions: Amounts, classifications, and documentation you included with your tax return or refund claim
- Mileage: Total and jurisdictional miles you submitted on your returns 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 |
What to expect during an audit
We'll review the completeness and accuracy of these types of records:
- International Registration Plan (IRP) applications
- International Fuel Tax Agreement (IFTA) returns
- Fuel tax returns
- Refund claims
- Records supporting your filings
You'll also receive helpful instructions and information to help you fill out returns in the future.
How we select accounts for audits
Most businesses and individuals we audit are chosen at random. The rest are selected based on the nature of their tax liability or business operations.
Time needed for an audit
The time the audit will take depends on the type of audit and the condition of your records.
Recordkeeping 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.
IFTA and IRP records
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, pickup locations, fueling locations, and delivery destinations
- Routes of travel
- Distance by jurisdiction
- Total trip distance
- Original fuel invoices that include date, customer and seller names, gallons, fuel type, fuel taxes, location, and unit number
Fuel tax and refund records
All documents used to file returns or claims including but not limited to:
- All fuel receipts
- Documentation of all refundable and nonrefundable gallons of fuel
- Documentation of the type of equipment used for refundable fuel (Examples include: boats, tractors, power saws, etc.)
- Fuel inventory readings in bulk storage
- Detailed fuel records for all withdrawals from bulk storage
- On-highway and off-highway mileage records for each licensed vehicle
- Bills of lading
- Terminal report
- Off-road mileage log
- Export and import certificates
- Fuel contracts
- Dispatch reports
- Accounts payable and receivable
How long you must keep records
| 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 end of the application registration year |
| Fuel tax and refunds | 5 years from the date you filed the return or claim |
Bulk fuel storage records
You must maintain these bulk fuel storage 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 you paid taxes on your bulk fuel purchases
- For highway-licensed vehicles: The number of miles the vehicle drove (highway and non-highway miles)
- For highway-licensed vehicles: The unit number of the vehicle that was fueled
- For non-highway equipment: A description of the equipment that was fueled
- Bulk storage vessel reconciliation records
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
When and where audits happen
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:
- Remotely
- At your place of business
- At any prorate and fuel tax office
- At your service provider or accountant's office
- In any public area, such as a restaurant, coffee shop, or library
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.
We'll process your audit according to the table below.
Post-audit procedure
| If you… | Your file will be… | You'll receive… |
|---|---|---|
| Overpaid your taxes | Referred to our headquarters in Olympia to authorize your refund | A refund 2 to 3 weeks after the 30-day appeal period ends |
| 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:
Department of Licensing
Prorate and Fuel Tax
ATTN: Appeals
PO Box 9228
Olympia WA 98507-9228
You can also email us your appeal at PRFTaudit@dol.wa.gov.
If you file an appeal before the payment due date, you won't have to pay until after your appeal 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?
We protect all information you provide in accordance with the Public Records Act. We have information-sharing agreements with the Internal Revenue Service and other agencies and jurisdictions.
Where can I get help with recordkeeping?
We know state and international rules governing prorate and fuel taxes are very complex, and we're happy to help you with reporting and recordkeeping. Contact a prorate and fuel tax office or email us PRFTaudit@dol.wa.gov for more information.
Related information
- IRP (Prorate)
- Fuel tax
- Fuel tax lists (active and canceled fuel tax licenses)
- Fuel tax refunds