March 9, 2026
Being Prepared for a Fuel Tax Audit
By Amanda Thacker, Fuel Tax Coordinator
Think that your company is safe from a fuel tax audit? You may want to think again! Fuel tax audits can be triggered for many reasons, sometimes for specific discrepancies, and other times simply through random selection. Each year, jurisdictions are required to audit at least three (3) percent of their registered accounts.
During a fuel tax audit, reviewers will be looking in depth at your fuel tax filings, mileage records, and tax payments to ensure everything is being reported correctly. If for any reason an auditor finds any errors within your records, your location could face fines, penalties, or even a blocked or canceled account profile.
Some common triggers for a fuel tax audit include: late or amended tax returns, missing or illegible fuel receipts, large refunds, discrepancies in fuel and mileage, missing or inaccurate trip records, fluctuating fuel records, incorrectly reported miles, and problems with data collection or entry. The most common causes of fuel tax assessments are miscalculated fuel tax payments and inaccurate or missing trip reports.
During the process, fuel tax auditors often look for: mileage tracking inconsistencies, fuel receipt verification, gaps in trip reports, failing to file quarterly reports, fuel records not matching miles traveled, and suspiciously high or low MPGs.
Common driver mistakes include: not tracking non-IFTA miles (off-road use or exempt miles), forgetting to record all fuel purchases, and manually guessing fuel tax amounts instead of keeping receipts.
If your location is selected for an audit, the process generally includes:
- A Fuel Tax Audit Notice: Written notification of the audit with a specific period to be reviewed.
- Preliminary Review: Fuel tax auditors will check for obvious discrepancies before requesting full documentation.
- Official Examination: This will include detailed mileage reports, fuel logs, and tax payments against the regulation’s requirements.
- A Fuel Tax Audit Report: A report of the audit will be provided to you both in verbal and written form. The report will identify any non-compliant records, outline additional assessments, and include an invoice of the fees owed.
- Response Period: If you choose to contest any audit findings, you must respond through the proper representatives from your jurisdiction.
Your company can reduce the risk of a fuel tax audit by partnering with a trusted truck tax compliance professional like PacTax. Our services help ensure automated fuel tax calculations, GPS-based mileage tracking for maximum accuracy, auto-generated tax reports, and continuous compliance monitoring, which helps identify missing fuel, missing miles, gaps in trips, and last trips processed.
Learn how PacLease helps commercial fleets manage fuel tax compliance, with PacTax fuel tax reporting.
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