500-Series Data Reporting Guidebook

3 Motor Fuels and Taxation

3.1 Background

This chapter details the procedures for completing FHWA Form 551M and FHWA Form 556. FHWA Form 551M is for reporting up-to-date, complete, and accurate State data on motor fuel usage to FHWA. FHWA Form 556 is for reporting State motor fuel tax revenue. Reporting on motor fuels covers gasoline and gasoline blends, diesel, and alternative fuels.

3.2 Use and Dissemination of the Data

The FHWA uses data on motor fuel usage and tax revenue to record historical information for developing national datasets. The datasets serve many purposes. They provide inputs to business processes such as analysis of highway investment needs, HTF monitoring, Federal-aid Highway Program funds apportionment, and technical assistance. Each year, highway users pay billions of dollars in excise taxes that are deposited into the HTF . Federal law requires those funds to be apportioned to the States for highway program areas in accordance with certain statutory formulas. State-reported motor fuel data is used in these processes. It is imperative that the States report current and accurate data which requires reporting gallons in the same month the Distributors/Suppliers report on their tax returns. The year-to year and month-to-month variances are suggested to have the following tolerance thresholds: Gasoline (+/- 5%) and Special Fuel (+/- 10%).

Data from FHWA Form 551M and FHWA Form 556 is used in compiling tables that are published in the annual Highway Statistics publication. The tables show motor fuel volume by tax status and by use and motor fuel revenues. They are used extensively for highway planning and projections of highway-user tax revenue. The FHWA also uses data products that the data serves as input to such as other publications, the Monthly Motor Fuel Report by State, State Statistical Summary, and Our Nation’s Highways.  

FHWA analysts and other analysts at the national and State levels use the data in forecasting tax revenue, highway deterioration, and fuel consumption, and in transportation planning for determining conformance with air quality standards, multimodal design analysis, and roadway safety analysis.

3.3 State Responsibilities for Data Collection and Interagency Coordination

State DOTs are ultimately responsible for the accurate reporting and timely submission of FHWA Form 551M and FHWA Form 556 to FHWA. Different States have different organizational structures, typically, the State department of revenue and taxation or a division in the State DOT, such as transportation planning, is tasked with the collection of data on motor fuel usage and tax revenue for FHWA.

The FHWA recognizes that the States’ motor fuel information systems are organized primarily for administering State fuel-tax programs and that the State agency that submits data to FHWA may have to translate, restructure, or transform the data into the format required for FHWA Form 551M and FHWA Form 556.

FHWA Form 556 is usually compiled from the records of the State motor fuel tax-collecting agency and other agencies responsible for collecting and distributing the funds. If the data collection agency simply turns the receipts over to the treasurer, and the treasurer distributes the money to the agencies that spend it, then FHWA Form 556 should be prepared from records of the treasurer, auditor, or comptroller—whichever of these officers maintains the authoritative record of the distribution of the funds concerned.

If the State DOT relies on other offices and agencies for the data required for FHWA Form 551M and FHWA Form 556, it should ensure that their processes for data collection meet FHWA’s reporting requirements. Coordination among agencies to establish processes for translation or transformation of data may be necessary to meet reporting requirements.

The FHWA division office should coordinate with State agencies to identify the agencies, offices, and personnel responsible for data collection, preparation, and quality control. Some division offices form user groups to encourage coordination among agencies for the preparation of data for FHWA.

Absence of coordination among State agencies may affect data quality and timeliness; staff turnover and retirement can disrupt established processes. This information should be entered in Fuels and FASH as well. The FHWA strongly encourages a back-up user be listed with UPACS and LOGIN.GOV access as well. State agencies should document their procedures for data collection, analysis, and reporting to ensure the transfer of this essential knowledge when staff leave an agency. Proper documentation and knowledge transfer flatten the learning curve for new staff and reduce knowledge gaps that could lead to the reporting of erroneous data.

The State DOT should notify FHWA Office of Highway Policy Information of the contact information of the staff responsible for data preparation, including the person’s name, position title, office or agency name, email address, and phone number.

Due Date

FHWA Form 551M is submitted monthly, 90 days after the close of the month for which data is being reported. For example, the June 2024 report is due September 30, 2024. Specifically, if the June 2024, FHWA Form 551M is due September 30, 2024, and has not been submitted by the time the June Monthly Motor Fuel Report (MMFR) is generated, the MMFR will be posted to DOT’s Motor Fuel Consumption and Tax Dashboard and Datahub platform with zero gallons and noted “Not Provided” for the month of June 2024. As communicated previously in this document, the State is ultimately responsible for accurate and timely reporting. Any inquiries will be directed to that State. FHWA Form 556 is submitted annually.

3.4 Special Considerations

States may have to give special consideration to certain uncommon issues in compiling data, or they may have unique circumstances in the collection and reporting of motor fuel data. The following gives States more information about how to handle some of these circumstances.

On-Highway and Non-highway Use of Fuels

Generally, road users pay State motor fuel taxes, and States refund taxes paid or give tax exemptions for non-highway use of motor fuel. But not all States offer refunds or exemptions for all classes of non-highway use, and not all refunds are claimed. Thus, often the net volume of fuel taxed as motor fuel by the States is not the same as the volume consumed on highways. For FHWA to report fuel volumes accurately, there are many such exceptions for motor fuel data. Read the instructions for line-by-line data entry carefully to determine what to include and what to exclude from the data you provide to FHWA.

Types of Fuels Reported on FHWA Form 551M and FHWA Form 556

States are required to report on usage and revenue for various fuel types. With the market for motor fuels changing—increasing use of gasoline blends and alternative fuels such as biodiesel—and the wide variety of ways State legislatures have defined different motor fuels, it is necessary to define the fuel types reported on FHWA Form 551M and FHWA Form 556.

For more instructions on fuel-type data, see FHWA Form 551M Reporting Requirements.

Treatment of Alternative Fuels

Alternative fuels are reported separately from gasoline and special fuels (highway-use diesel and kerosene) on FHWA Form 551M. Alternative fuels are defined as fuels other than gasoline, gasoline blends, E85, M85, diesel or kerosene. The alternative-fuel category includes liquefied petroleum gases (LPG) (propane, butane), compressed natural gas (CNG), liquefied natural gas (LNG), hydrogen, and biodiesel such as soy diesel.

The FHWA does not require the reporting of information on electricity used for vehicles but does require reporting on any liquid fuel used in hybrid vehicles.

Provide data on the types of alternative fuels consumed, measured on a BTU energy-equivalent basis. To achieve consistency in reporting among States, FHWA recognizes generally accepted conversion rates based on energy equivalents.

Treatment of Diesel Fuel Used in Public Vehicles

Most States do not disaggregate figures for the public use of diesel motor fuel and therefore report public-use diesel as part of private and commercial diesel. Many States lack a tax mechanism to identify publicly used fuel. Some States do not have legislation providing for an exemption or a refund of public-use diesel, and some States do not have the mechanisms to track complex reporting from many jurisdictions (such as counties and school districts).

In the past, FHWA tried to exclude the volume of diesel fuel consumed by licensed public vehicles from its dataset. But over time, FHWA has found that only a few States could identify public-use motor diesel usage accurately. To accommodate States that cannot provide data on public-use diesel consumption, FHWA has changed the requirement to disaggregate public-vehicle usage of diesel from private and commercial usage.

The FHWA has modified its procedures relating to public-use gallons for the purpose of the  HTF attribution. States that do disaggregate the data will not be penalized in the HTF attribution formula for breaking out the figures as FHWA has requested in the past. This means that States do not have to modify their reporting procedures to accommodate this change. The FHWA has made the necessary changes in its analytical procedures to treat all States equitably on this issue.

Allowances for Losses and Expenses Related to Tax Collection

About half of States grant gasoline wholesalers and/or retailers a flat-percentage allowance against the tax owed for loss of fuel volume in storage and handling or for both losses and the expense of tax collection. Because retailers sell fuel at a tax-included price, FHWA considers that the “lost” volume exists and the gallons are used on the highways. (Although a State may provide a loss allowance to motor fuel wholesalers and distributors, the gallons represented by this accounting entry are not actually lost; they are just not taxed by the State.)

Analysis of data from States that allow only actual losses to be claimed shows that actual losses seldom exceed one-half of 1percent. When a State’s legislation provides for a flat-percentage loss allowance, FHWA uses a 1% factor loss allowance for gallons consumed on the highway in FHWA publications.

The flat-percentage losses are removed when applying the data related to attribution. The FHWA will continue to direct States to report loss allowances, because some FHWA tables are meant to reflect actual practice. Because FHWA’s intent is to show the actual fuel volume that is used on the Nation’s highways, it makes appropriate adjustments to State data. States should report all gallons subject to a loss allowance, and FHWA, in its analysis, will make the adjustments described.

The FHWA does not recognize allowance for losses in diesel because it assumes that shrinkage and evaporation of diesel fuel are not significant. If your State has a diesel loss allowance, exclude the diesel loss allowance from the data you submit on FHWA Form 556.

State Motor fuel Tax Rate Changes

States periodically change their motor fuel tax rates. A monthly verification of the States motor fuel tax rates should be performed before creating a FHWA Form 551M. Then enter the motor fuel tax rates and their effective dates on the entry screens of FHWA Form 551M.  Fuels and FASH shows the changes in FHWA Form 556 automatically.

State Motor fuel Tax Law Changes

When a change in State tax law introduces a new tax exemption, whether for full refund or taxation at another rate, add a brief note describing the change in the first report on which the new exemption appears. After an exemption type is assigned a category, Fuels and FASH retains the category information for future submissions.

Reporting Data That Is Collected Only Annually

Some States collect data on certain motor fuels, such as LPG, aviation gasoline, mass transit fuel, and gasohol, only on an annual basis. If this is true for your State, after you receive the annual data, divide the annual number by 12 and revise your previous FHWA Form 551M reports to reflect that figure (annual/12).

Reporting Late Tax Assessments

Assessments are taxes that, through audit or review of taxpayer returns, a State determines the taxpayer owes but did not previously report and pay. Assessments typically take place months or even years after the date of sale or transfer of the motor fuel. Reporting these volumes later distorts motor fuel reporting to a certain degree, but reporting these volumes, no matter how late, is important.

To report the fuel volume represented by assessments or late returns, the timing of the assessment determines how you provide the data:

• If the assessment takes place within 12 months of the sale of the volumes to be reported, modify and resubmit the relevant FHWA Form 551M. For example, if an assessment is levied in August 2023 on a sale that occurred in June 2023, modify the data for June to reflect the new assessed volume. This way, volumes are included in the month of their sale and the data reflect a more accurate picture of the flow of gasoline, diesel, and alternative fuels in relation to travel.
• If the assessment takes place more than 12 months after the sale of the volume in question, report the data in the month the assessment is issued. Notate this assessment, fuel type and gallons in the comment section.

Regardless of timing, report the volume of motor fuel represented by the assessment only after all legal procedures have been exhausted and the assessment is sustained.

Whether or not the taxpayer pays the assessment, the volume of fuel represented by the assessment should be reported. If a taxpayer does not pay the assessment, include a note describing the volume as consumed, but without tax revenue being collected by the State.

Reporting International Fuel Tax Agreement Data

International Fuel Tax Agreement (IFTA) is a cooperative agreement between the 48 contiguous States of the United States and the 10 provinces of Canada to simplify the reporting and payment of taxes on motor fuels used by motor carriers operated in more than one jurisdiction. The intent is to tax interstate fuel users (typically motor carriers), based on the quantity of fuel used in each jurisdiction rather than on the basis of fuel purchased in each jurisdiction.

All fuel volume taxed on a use basis should be reported as IFTA usage. Most motor fuel used by interstate motor carriers is diesel, although gasoline and alternative fuels are also reported. All fuel types reported for IFTA usage, regardless of the fuel type used, should be reported as diesel on FHWA Form 551M.

In some jurisdictions, motor carriers report fuel usage to an agency other than the fuel-tax agency; in such a case, the agency responsible for completing FHWA Form 551M may have to obtain this information from another source.

All jurisdictions except Alaska, the District of Columbia, Hawaii, Oregon, the Yukon and Northwest Territories and Nunavut territory use IFTA provisions for taxing motor fuel used by interstate motor carriers.

Motor carriers file IFTA returns quarterly with their base jurisdiction. Jurisdictions process the IFTA returns to capture the data on mileage, fuel purchased, fuel consumed, net taxable fuel, and the tax due to or credit due from each jurisdiction. In the month after the processing of the returns, each IFTA jurisdiction receives a report (transmittal) from every other IFTA jurisdiction that includes the net taxable gallons (positive or negative) accumulated from all the base jurisdictions’ motor carriers. The monthly IFTA transmittals also contain IFTA audit information. Use the transmittals to calculate the IFTA adjustment to the fuel purchased in your State.

All jurisdictions store transmittals electronically in the IFTA Clearinghouse; the transmittals are accessible to members of the clearinghouse.

To capture this data for your State, create a spreadsheet listing all 58 IFTA jurisdictions (including your own State and the Canadian provinces) with a net fuel adjustment column that can be summed each month. Each month, enter the net fuel adjustment for all jurisdictions, including net fuel adjustments from audits, and take the sum of the column.

Reporting Fuel Sold on Native American Reservations

Include the volume of fuel sold for highway (non-Tribal government) use on Native American reservations on FHWA Form 551M. These are highway-use gallons taxed by the Federal Government and should be included so HTF revenue can be attributed to States in which reservations are located.

Include gasoline and diesel-fuel volume sold on Native American reservations in gross gallons. For all fuel types, report tax-exempt gallons and tax-refunded gallons for Tribal member use under the relevant category. List tax-exempt and tax-refunded gallons separately as “Native American use” to distinguish these gallons from other volumes in exempt or refunded categories such as Federal Government use. Identify payments to Native American Tribes under fuel-tax collection or revenue-sharing agreements in lieu of motor fuel tax refunds separately on FHWA Form 556, under Item 8.

If some sales on Native American reservations are not reported to the State, add a note similar to the following in FHWA Form 551M: “Motor fuel sales on certain Native American reservations are not included.”

Treating Motor Fuel Volume if Registration Fee Rather than Per Gallon Tax Is Collected

Several States do not tax alternative fuels on a per-gallon basis. This is most common for fuels for electric vehicles and may apply for LPG, LNG, and CNG. These States typically charge annual alternative-fuel vehicle registration fees and issue a special decal. The registration fee often depends on the vehicle weight or distance traveled. This fee is a highway-related tax, and the gallons represented by this tax are treated as on-highway motor fuel use. The receipts associated with these decals are reported on FHWA Form 556, and the on-highway gallons are reported on FHWA Form 551M. (The fees associated with an alternative fuel registration fee should be carried over to FHWA Form 531 in the State Motor Fuel Tax section, not the Motor Vehicle, Driver License, and Fees section.)

3.5 FHWA Form 551M Reporting Requirements

Due Date

Submit FHWA Form 551M not later than 90 days after the close of the month for which data is being reported.

Data that is not available on a monthly schedule should be included in the next monthly report after the data becomes available. This data, and the period covered by the data, should be noted (for example, “Gasoline and gasohol refunds in items 4(a) to 4(h) cover July 1 to September 30.”). Similarly, if data is missing for a monthly report, make a note of that fact (for example, “Gasoline and gasohol refunds are available quarterly and will next be reported on the September report.”).

States are encouraged to resubmit FHWA Form 551M when data becomes available for a given month (usually within 12 months). For example, if a State's fiscal year is July to June, some May data is included in the August form, and some June data is included in the September form. Therefore, some data from the reporting year is not included in the correct fiscal year reporting. This could cause the following reporting year's comparisons to the receipts to be off because of overlapping reporting periods.

Customizing FHWA Form 551M

States may have unique motor fuel tax exemptions, refunds, or rates other than the normal highway motor fuel tax rate. Fuels and FASH allows States to customize FHWA Form 551M to display their own tax category labels.

States may use their State categories as defined by their State law instead of standard national categories. For example, several States provide refunds for firefighting and ambulance services. For the purposes of reporting motor fuel use, FHWA has determined that these services are typically a government function, and therefore the States should categorize such use as State, County, and Municipal Use of Fuel.

Customizing the form in Fuels and FASH saves on work required for data entry later. After you define a setting, the data aligns for consistency over multiple data cycles. If your State changes its motor fuel tax structure again, you can record the new definitions. This feature is discussed more below.

Entering Fuel-Type Data in FHWA Form 551M

Use FHWA definitions of fuel types unless your State's definition of a fuel differs from the definition given here. In that case, record your State's definition, once a year, in the January report. If your State changes the definition of a fuel during the year, enter the new definition in the month that the change takes effect.

The four columns are for reporting volume by fuel type.

Gasoline

Enter usage volumes for motor gasoline, aviation gasoline, and neat alcohol in the Gasoline column. The Department of Energy’s Energy Information Administration website has aviation gasoline-usage data if your State does not report it separately.

Gasoline Blends

Highway Diesel Fuel

Enter diesel fuel volume—for private and commercial highway use and public highway use only—in the Highway Diesel Fuel column. Do not include dyed diesel fuel, because dyed diesel fuel is normally sold for non-highway use. But if a State allows public vehicles to use dyed diesel fuel—and in this limited case only—report the dyed diesel as highway-use diesel.

Include kerosene in the Highway Diesel Fuel column only if it is sold or blended for highway use in public transit vehicles, on-highway public vehicles, or private, commercial vehicles.

Alternative Fuels

Add a note providing definitions for ALL alternative fuels sold in your State. (In addition, identify alternative fuels on the Tax Rates and IFTA tab and show the fuel tax rate and the effective date of the tax rate.)

Total Column

The Total column sums the amounts reported in the Gasoline, Gasoline Blends, Highway Diesel Fuel, and Alternative Fuels columns. Fuels and FASH makes the calculation automatically.

See the instructions for each item below.

Section 1, Gross Volume

Each item is described below.

Item 1, Gross Volume Reported

This item is for reporting total consumption of motor fuel. Calculate, as accurately as possible, the total consumption of motor fuel in the State during the month reported.

Enter the volume of fuel for gasoline, gasoline blends, diesel, and alternative fuels in the appropriate column, as per Entering Fuel-Type Data in FHWA Form 551M.

Exhibit 3-1. Include in or Exclude from Gross Gasoline Volume

Include or Exclude
Repair and maintenance of Gasoline volume subject to exemption due to actual loss or subject to loss or shrinkage allowance Aviation gasoline Preventive maintenance	Export sales Dealer-to-dealer sales exempted to prevent double-counting of tax payments Jet fuel

The major source of data on gross volume is the tax returns of sellers. Depending on the point of taxation, sellers are position holders at fuel terminals, wholesalers, or retailers. Include the gross motor fuel sales reported by these taxpayers, including fully taxed sales, exempt sales, volume subject to full or partial refund, and sales taxed at a reduced rate.

Include gasoline volume subject to exemption due to actual loss or subject to loss or shrinkage allowance. Include aviation gasoline, but not jet fuel, in gross gasoline volume.

Exclude export sales and dealer-to-dealer sales exempted to prevent double-counting of tax payments. Also exclude non-highway use of diesel and alternative fuels (including actual losses of these fuels).

The gross volume reported is the sum of the volumes in Fully Tax Exempt, Fully Refunded, and Net Volume Taxed. Do not report volume that does not represent actual consumption. For example, do not include a refund of an overpayment. A refund is not a fuel volume transaction but a monetary transaction that is reported on FHWA Form 556.

Item 1.b, IFTA Calculation (Consumption in State)

This item covers the gallons of fuels consumed by interstate motor carriers as reported to the IFTA clearinghouse. The software calculates this value when the IFTA Gross Volume Reported is entered in the Notes and Technical information section. This item is not open for data entry.

Enter the tax returns of motor fuel users (generally IFTA returns). Adjust gross volume reported by sellers to reflect net use. See 3, Computation of IFTA Component of Gross Volume Reported.

Item 2, Fully Tax Exempt

This section is customizable. States can define the specific categories applicable under State law to fit into standard national categories. Enter the gallons of fuel that are fully tax exempt in each category recognized by your State. Exemptions are automatically system calculated to reduce from Gross Volume. Any negative numbers showing in this category require an explanation in the comment section.

Item 2.a, Losses—Allowed (% Losses)

If your State allows flat percentage losses, enter the volume of fuel on which shrinkage or loss allowances were calculated or claimed during the month.

Gasoline flat percentage loss allowances are not considered in FHWA’s analysis for HTF attribution, although several States provide such allowances in accordance with State legislation.

If your State allows gasoline flat-percentage losses, include the losses in gross gallons reported and show in the Loss, Flat Percent cell. Add a note describing the percentage allowance and number of gallons excluded.

Some States provide allowances (discounts) for prompt payment of taxes or for the expense incurred by the taxpayer in keeping records and collecting the tax. Such allowances are merely deductions from the gross amount of tax due to the State. They do not affect motor fuel consumption. For this reason, these deductions are not entered as loss allowances. Consider them deductions from the tax revenue only, and therefore record any allowance amounts for expenses, prompt tax payments, and so forth, as deductions from gross tax collections on FHWA Form 556, item 1.a(2).

Some States make a percentage allowance for losses in handling and for the expense of tax collection. Losses in handling affect the distribution of motor fuel, but allowances for expenses do not. To provide accurate data, divide the total allowance into two parts: (1) the estimated loss in handling, plus the actual loss (such as through evaporation, destruction by fire, or explosion), and (2) the estimated allowance for expenses.

Losses—Actual

Description

Many States make a distinction between losses described in Item 2.a Losses—Allowed (% Losses) and losses through destruction by fire, explosion, and so forth. Generally, any provable loss is tax exempt or eligible for refund if the tax has already been paid.

When the actual volume lost from destruction, explosion, or shrinkage is known, enter it here. These are gallons not consumed on the highway.

Record net gains or losses resulting from temperature adjustments—that is, the volume of expansion or shrinkage. Record a negative or a positive figure (+ or -).

For diesel fuel, deduct actual losses from the gross on item 1. This line is not shown on FHWA Form 551M.

Other Fully Tax Exempt

Enter the motor fuel volume amounts that are completely exempt from State taxation.

Report the gallons of fuels pertaining to actual losses in a specific category. Exclude from Gross Volume and from Fully Tax Exempt the amounts not representing motor fuel consumed in the State. Exclusions cover export sales, fuel moving in interstate commerce, and amounts exempted to avoid duplication of tax payments.

To the extent possible, when reporting government exemption or refund categories, separate the Federal from the State and county and municipal.

Do not combine amounts for Native American Tribal government with those for Federal, State, or county and municipal governments. Enter the exemption for gallons consumed by Native American Tribal governments on a separate line (or item) from the exemption for Federal, State, and county and municipal exemptions.

Customize FHWA Form 551M to show your State’s exemptions.

To the extent your State’s data allows, identify refund and exemption categories as highway-use fuel or non-highway-use fuel, and do not mix highway and non-highway uses in a miscellaneous category.

Fuels and FASH calculates the total of the tax exempt and refund items automatically.

Total (Fully Tax Exempt)

This item is the sum of motor fuel volumes that are fully tax exempt reported under all the selected categories for your State.

The software calculates this total automatically.

Item 3, Gross Volume Taxed (system-calculated field)

Gross Volume Taxed is the gross volume subject to motor fuel taxes, which equals Gross Volume minus Exempt Volume.

Fuels and FASH calculates this amount automatically.

Item 4, Fully Refunded

Fully Refunded is for the volume of motor fuel sold or distributed on which refunds of the motor fuel tax were subsequently granted. This should correlate with Gross Volume Reported, or Gross Volume Taxed, which are based on distributors’ reports of sales for the month.

Report the gallons of fuels for Fully Refunded for each category. Refunds are automatically system calculated to reduce from Gross Volume Taxed. Any negative numbers showing in this category require an explanation in the comment section.

States make refunds to the motor fuel purchaser, but very few States reconcile motor fuel refunds by month of fuel purchase. Some States report refunds and corresponding fuel volumes (obtained by dividing the amount of refunded money by the refund tax rate) in the month in which refunds were paid. Most States maintain and report a record of refunds certified in each month, as well as refunds paid. Either approach is acceptable for FHWA Form 551M.

Categories of exemption are also used to distinguish refund categories. The FHWA expects that States can place State-specific items into one of the above categories. Help screens in Fuels and FASH provide guidelines, and you can call the FHWA motor fuel staff for additional guidance. As States begin to enter data, FHWA staff will review the results closely to ensure that States define these characteristics correctly.

When changes in State tax law introduce a new refund category, add a note with a description of the change in the first report on which it appears.

For more information about the categories that can be used see Exhibit 3-2, Typical Categories of Exemption.

Total (Fully Refunded)

This item is the sum of motor fuel volumes fully refunded under all the selected categories.

Fuels and FASH calculates this total automatically.

Item 5, Net Volume Taxed

Enter in this section the motor fuel volumes taxed in your State, either at the maximum rate or another rate.

For Taxed at Different Rates, enter the volume of fuels taxed at a rate other than the maximum rate for the categories identified at the beginning of the calendar year. Fuels and FASH computes the gallons of fuel taxed at the full rate by subtracting the sum of fuels taxed at other rates.

For more details on the categories that can be used, see Exhibit 3-2, Typical Categories of Exemption.

At Full Rate (system-calculated field)

The volume taxed at the full prevailing highway-user tax rate is computed by subtracting full exemptions, full refunds, and the volume taxed at less than the full rate from the gross volume reported for the fuel.

Fuels and FASH calculates this amount automatically.

Taxed at Other Rates

This is for the volume of the particular fuel type on which the State ultimately retains some tax payments, but at less than the highway rate. This includes categories taxed at an initially lower rate (aviation is common), the categories granted a partial exemption or refund (such as transit in some States), and categories for which only part of the initial tax payment is refundable.

Enter each category of use, or user-based special tax treatment, on a separate line. For more details on the categories that can be used, see Exhibit 3-2, Typical Categories of Exemption.

Total (Net Volume Taxed) (system-calculated field)

This item is the total of motor fuel volumes taxed in the State, either at the full rate or another rate. Fuels and FASH calculates this total automatically.

Notes and Technical Info Tab

1, Rate of tax at end of month, in cents per gallon

The tax rates at the end of each reporting month are reported for each fuel type with a different tax rate.

Update the tax rate (in cents per gallon) every January or whenever the fuel tax rate changes. By default, the tax rate in the table uses the previous month’s data. Check the prefilled values and make any necessary change.

Enter the basic rate of motor fuel tax by fuel type as of the last day in the month. If a tax rate has changed, provide the effective date of the change. Effective date means the last time the State changed the tax rate. In some States, the tax is indexed and changes annually or more often. In other States, the tax may not change for a decade or more.

If your State has a fuel tax levied as a percentage of price rather than on a cents-per-volume basis, add a note reporting the percentage and explaining the application basis (such as, “5% of wholesale gasoline price excluding Federal tax”).

2, Rate of Optional tax, in cents per gallon

Several optional taxes, such as environmental clean-up taxes, local option taxes that are applied uniformly across the State, and motor fuel inspection fees, can be entered in these fields. Enter the name of the optional tax or fee, the tax rate (in cents per gallon), and the effective date (last time the State changed the tax rate).

If the optional tax or fee is applicable to only certain fuels, add a note specifying the fuel types applicable. If the optional tax varies by geography (such as by county or city), provide that information.

3, Computation of IFTA Component of Gross Volume Reported

Fuels and FASH automatically computes the IFTA share of gross volume (entered in Item 1), using the information from the IFTA clearinghouse.

Source the IFTA data from the IFTA Clearinghouse. Every month, enter the data from the IFTA Clearinghouse on

• Gross sales from sellers returns.
• Fuel purchased by interstate motor carriers outside the State but used within the State.
• Fuel purchased by interstate motor carriers within the State but used outside the State.

If the data is entered monthly, Fuels and FASH computes net consumption automatically by summing the data for the components, considering whether the component is to be added or subtracted.

Exhibit 3-3 gives an example of how to calculate the data.

Report IFTA adjustments every month. For example, the IFTA adjustment on FHWA Form 551M for January should be based on the IFTA transmittal for January. If obtaining IFTA figures prevents timely data submission, provide the figures on the next month’s report.

5, Stratification of Alternative Fuels by Type

Enter here the percentage share or volume of alternative fuels by fuel type for the volumes reported in the Alternative Fuels column for the month.

Enter the volume or percentage share per alternative fuel type in the appropriate table cell.

Provide the stratification of alternative fuels for the following fuel types. The FHWA definitions of the fuel types can be found in the glossary of terms.

• LPG
• CNG
• E85
• M85
• LNG
• Biodiesel
• Other.

Fuels and FASH automatically computes the total volume and percentage of alternative fuels when the volume of the gasohol per blend ratio is entered in the table.

3.6 FHWA Form 556 Reporting Requirements

FHWA Form 556 records the actual collections of State motor fuel tax during a calendar or State fiscal year and other receipts incidental to the administration of this tax. It also shows the distribution of tax receipts by major item. FHWA Form 556 serves as a measurement of the flow of funds from collecting agency to expending agency.

The Filer Information tab is for State agency contact information. Data Entry tab is for data entry. The IFTA tab (IFTA Receipts for Gasoline and Special Fuels) is automatically populated when data is entered into the Notes & Technical Information tab of FHWA Form 551M.

The Form Comments tab is for comments, reconciliation with FHWA Form 551M if needed, and source notes for records.

Receipts should be segregated to show revenues derived from gasoline (including gasoline blends (Gasoline column) and from other motor fuels (Special Fuels column) separately. Total receipts and refunds should reconcile closely to the fuel volume reported on FHWA Form 551M, with an allowance for lag between amounts due and paid. If they do not, reconciliation should accompany FHWA Form 556.

Entering Fuel-Type Data in FHWA Form 556

There are three columns: Gasoline (includes gasoline blends); Special Fuels (diesel and other special fuels); and Other Receipts. The total column sums the three columns. Fuels and FASH makes these calculations automatically,

Exhibit 3 4. Fuel Type Data for FHWA Form 556 Reporting

Gasoline Gasoline, gasoline blends, aviation gasoline (avgas)	Special Fuels Diesel, propane, butane, and other

All entries should be in whole dollars. Round amounts to the nearest dollar.

Item-by-item instructions for filling out FHWA Form 556 are provided next.

Item 1, Receipts for Year

Enter the total collections from motor fuel taxes and other fees and taxes incidental to motor fuel tax administration as described below.

Item 1.a, Volume Tax Collections

Report the collections from fuel-volume taxes—that is, taxes imposed per gallon of fuel.

There is usually a lag of 1 to 2 months between the use of the gasoline, as reported on FHWA Form 551M, and the payment of the tax to the State. However, because the lag in any given year is similar to the preceding year's pattern, collections should be reported in the year received.

Report collections from the taxation of motor fuel used by interstate motor carriers, often referred to as motor-carrier road taxes or fuel-use taxes, on FHWA Form 556 and not on FHWA Form 571. FHWA Form 571 records other taxes and fees on motor carriers that do not fall under the motor fuel tax laws (see chapter 7).

Because motor fuel tax receipts, including IFTA revenues received from other States, are volume-tax receipts, include them with other volume-tax receipts in item 1.a.(1) or 1.a.(3) of columns (A) and (B) for gasoline, special fuels, and alternative fuels respectively. The amounts refunded or credited to interstate motor carriers, or IFTA receipts sent to other States, are reported in item 1.a.(4) of the Gasoline and Other Fuels columns with other volume-tax refunds. Consequently, the net collections of motor-carrier road taxes, whether positive or negative, are reflected in item 1.a.(5), net receipts.

Add a note in the IFTA section if IFTA revenues are included in the items discussed in this paragraph.

For FHWA to reconcile the receipts reported on FHWA Form 556 and the fuel volume reported on FHWA Form 551M, the following information should be footnoted by fuel type on the IFTA section of FHWA Form 556:

• Reported IFTA fuel tax receipts—the funds remitted with the fuel tax returns under IFTA.
• Refunds or credits of fuel tax under IFTA.
• Net IFTA fuel tax receipts (may be either positive or negative).

Item 1.a (1), Gross collections by distributors

Record the gross amount collected under the volume tax on motor fuel before subtracting allowances granted to distributors for collection expenses.

Enter tax receipts for gasoline and gasoline blends in the IFTA tab, and enter tax receipts for special motor fuels, including diesel, propane, butane, and other alternative fuels, in the Special Fuels column.

Do not include loss allowances here or in item 1.a (2).

Item 1.a (2), Less: Distributor allowance for collection expense

Record the total amount of cash allowances made during the year to distributors (or deducted by them) in consideration of prompt payment, the costs of collecting the tax, preparing reports, and so forth.

Enter the cash allowances by fuel type into the corresponding column (see item 1.a (1), Gross collections by distributors).

Do not include loss allowances here or in item 1.a (1).

Item 1.a (3), Gross receipts by State

This item is for reporting the gross amount received by the State from the volume tax during the year. Enter gross receipts by fuel type (see item 1.a (1), Gross collections by distributors).

In States that make no allowance for distributors' collection expenses, items 1.a (1) and 1.a (3) should be identical.

Item 1.a (4), Less: refunds and credits

Enter actual refunds and credits of the motor fuel tax issued during the year here. Enter actual refunds by fuel type in the corresponding column. Enter the values for refunds with a positive number, not a negative number.

Item 1.b, All other receipts under motor fuel tax laws

Record the receipts from sources other than the volume tax. Enter the receipts by fuel type into the corresponding column. These receipts are collected as incidental to the administration of the motor fuel tax laws or the inspection of motor fuel.

Item 1.b (1), Distributor and dealer licenses

Enter the amount collected from motor fuel distributor licenses and from special dealer licenses, pump inspection fees, and other direct taxes or fees imposed on sellers of motor fuel.

Receipts for distributor and dealer licenses go in the corresponding column by fuel type (see item 1.a (1), Gross collections by distributors).

Sales tax revenue from general retail licenses or chain store taxes, which are levied on all types of products sold by this type of business, are not regarded as taxes on motor fuel and should not be included in this item.

Item 1.b (2), Motor fuel inspection fee

Enter the amount of fees collected for the inspection of motor fuels by fuel type in the corresponding column (see item 1.a (1), Gross collections by distributors).

In some States, motor fuel inspection fees are imposed just to defray the cost of inspection; in others, they are a source of considerable revenue. Exclude (to the extent possible) fees charged for the inspection of petroleum products other than motor fuel. Also exclude inspection fees paid on motor fuel used for non-highway purposes, such as agriculture and aviation.

If receipts from inspection fees on petroleum products are not segregated by product inspected or by product use, estimate the amount of fees received from the inspection of motor fuel based on data reported on FHWA Form 551M or FHWA Form 556. Enter the estimated amount in item 1.b.(2). If you enter estimates, add a note specifying (1) total actual receipts from inspection fees and (2) the computation you use to arrive at the figure entered in item 1.b(2).

Item 1.b (3), Fines, penalties, and interest

Report the amount of fines and penalties collected in connection with the administration of the motor fuel tax and inspection laws. Fines, penalties, and interest should be entered into the corresponding column by fuel type (see item 1.a (1), Gross collections by distributors).

Also include interest on delinquent collections.

Item 1.b (4), Motor-carrier fuel tax registration (decals)

Report the income from the fuel tax registration decal fees required of motor carriers. The registration fees for decals should be entered into the corresponding column by fuel type (see item 1.a (1), Gross collections by distributors).

States generally require motor carriers to display proof of fuel-tax registration in the form of a decal. Include the fees for decals issued under IFTA and any other base-State fuel tax agreement.

Item 1.b (5), Alternative fuel tax decals (in lieu of volume tax)

This is for registration fees for alternative fuel tax decals. Enter the amount into the corresponding column by fuel type (item 1.a (1), Gross collections by distributors).

Many States issue decals or other markers to vehicles that burn alternative fuels, such as LPG, LNG, and CNG. The decal fees are in lieu of a fuel tax on the fuel the vehicle consumes. Enter the income from such decals.

Items 1.b (6) to Item 1.b (9), Other Receipts

Space is provided here for other receipts that do not fall under the first five classifications of item 1.b. Describe the nature of any entry.

Report State sales tax applied to motor fuel purchases in item B1 on FHWA Form 531.

Assessments are an example of receipts that may be reported in these lines. Assessments are taxes that the State determines, through audit or review of taxpayer returns, that the taxpayer owes and did not previously report and pay. States should report assessments for the year that payment was received, regardless of when the assessments were made. If assessments are reduced or canceled later, report the adjustments for the year in which the adjustments are made.

Report the revenue represented by assessments on FHWA Form 556 and make a note on FHWA Form 551M. Some States cannot separate assessments from other motor fuel receipts and therefore should report assessments in item 1.a.(3), Gross Receipts by State.

Some States impose special environmental taxes for leaking underground storage tanks or for fuel-spill cleanup. Do not report such taxes on FHWA Form 556 unless the tax is exclusively on motor fuels.

Item 1.b(10), Total (system-calculated field)

This is the total of items 1.b(1) through 1.b(9). Fuels and FASH calculates the total automatically.

Item 1.c, Net total receipts

This is the net total of receipts for the year for each column. Fuels and FASH calculates the total automatically.

Item 2, Nonhighway dedications of volume tax from nonhighway gasoline

Enter the proceeds from taxes on non-highway uses of gasoline (including blends, avgas, and neat alcohol) that were dedicated for the improvement and/or operation of non-highway facilities or for related activities.

A typical example is the dedication of the receipts (known or estimated) from motorboat use of gasoline to construction and maintenance of boating facilities such as ramps and docks. Some States dedicate the revenue from aviation gasoline to an airport improvement fund. To be included in item 2, the funds must be both (1) from the taxation of gasoline used for non-highway purposes and (2) dedicated for non-highway purposes.

Item 3, Adjusted Total Receipts

Subtract total non-highway dedications (item 2.z) from net total receipts (1.c.) and enter the amount here.

Item 4, Deductions by State collecting agency

Enter the amounts retained or deducted by the collecting agency before depositing the net collections in the State treasury or otherwise disposing of them. These may represent either actual amounts expended or a flat percentage of collections.

Enter deductions by State collecting agency in the column for the fuel type (see item 1.a (1), Gross collections by distributors).

In some States, total collections are deposited to the credit of the State DOT fund, and expenses of the collecting agency are paid or appropriated from the fund. If your State follows this method, do not make any entry in item 4, but instead show the entire distribution in item 1.a (1), Gross collections by distributors. Subtract collection expenses paid by State highway agencies on FHWA Form 531, item B.1.b., rather than on this form.

If collecting agency expenses are funded by another revenue source not reported in item 1, add a note identifying that revenue source and specifying the actual expenditures of the collecting agency.

Item 4.a, Expense of collecting and administering volume taxes

This is for reporting the expense of collecting and administering volume-based taxes. Enter the expense in the corresponding column by fuel type (see item 1.a (1), Gross collections by distributors).

Item 4.b, Expense of inspecting motor fuel

This is for reporting the expense of inspecting motor fuel here. Enter the expense in the corresponding column by fuel type (see item 1.a (1), Gross collections by distributors).

Some States include in the cost of inspection the cost of administering fuel-inspection laws as well as the cost of the actual inspection and testing.

If your State does not track the cost of motor fuel inspection and the cost of inspecting kerosene and other petroleum products separately, prorate the costs on the same basis as the receipts from inspection fees, and report only the motor fuel portion.

If your State grants refunds for non-highway uses, compute the cost of inspecting motor fuel used for highway purposes on a pro rata basis. Enter this reduced amount in item 4.b. If you make this computation, add a note explaining the computation.

Items 4.C to 4.Y, Record other costs or deductions by the collecting agency

Enter other costs or deductions by the collecting agency by fuel type (see item 1.a (1) Gross collections by distributors).

Item 4.Z, Total (system-calculated field)

Fuels and FASH calculates the total automatically.

Item 5, Net proceeds available for distribution

The net proceeds equal the total receipts (total of item 1) minus the total of deductions by State collection agency (total of item 4). Fuels and FASH calculates the total automatically.

Item 6, Balance undistributed at end of previous year

This item is for the balances in the hands of the State collecting agency or balances owed to the agency at the beginning of the year.

If the amount differs from the amount reported as undistributed at the end of the previous year, provide a note explaining the adjustment. If FHWA Form 556 is prepared from the records of the State treasurer, auditor, or comptroller, the balance may be the amount on hand in a revolving fund; in some cases, this fund balance may have to be combined with any amount in the hands of the collecting agency to account for the total amount of undistributed funds.

Item 7, Total funds available for distribution (system-calculated field)

This is the sum of net proceeds available for distribution (item 5) and the balance undistributed at end of the previous year (item 6). Fuels and FASH calculates the total automatically.

Item 8, Amount Distributed

Show here the allocation of motor fuel revenues to expending agencies or funds. If motor fuel revenues are placed in an intermediate clearing fund with other road-user taxes (such as a highway-users tax distribution fund), submit a balanced statement of the clearing fund.

In some States, net income from inspection fees is credited to the State general fund. If receipts from inspection fees are prorated to exclude receipts from petroleum products other than motor fuel and receipts from motor fuel used for non-highway purposes, these calculations should be carried through to the data on the distribution of these revenues.

Items 8a to 8i

Use these nine items, as necessary, to record the distribution of motor fuel tax revenues as provided for by State law. Record distributions such as funds allocated to counties or cities for roads, county general funds, schools, State general funds, and the State highway agency or department of transportation.

Amounts reported should be consistent with comparable amounts reported on forms FHWA Form 531 and FHWA Form 536.

Item 8.k, Total (system-calculated field)   = FHWA Form 531, Item B.1.a, Total Distributed    

Item 8.k shows the total of lines 8.a to 8.i. Fuels and FASH calculates the total automatically.

Item 9, Balance undistributed at the end of the year

This is the amount remaining after the total amount distributed (item 8k) is subtracted from total funds available for distribution (item 7). Fuels and FASH calculates the total automatically.

3.7 Summary of Relationships Between FHWA Form 556 and Other Forms

FHWA Form 556, item 8.k

The total amount of distribution of motor fuel tax revenues as provided under State law in item 8.k should agree with the amount reported in FHWA Form 531, item B.1.a, which is the total distributed of State motor fuel taxes. If not, explain any difference on FHWA Form 531, in items B.1.b through B.1.e. Common explanations are timing differences, funds in transit, and exclusion of certain funds from FHWA Form 531.

3.8 Quality Control

Automatic Validation in Fuels and FASH

Fuels and FASH validates certain data before it accepts the form submission. It generates a report showing the total percentage change over the past 3-year period and a line graph for the 3-year period. The report highlights data that shows questionable trends from one year to the next. Fuels and FASH prompts the State to view the graphs and reports and to return to the form for editing if data variances are outside of normal trends.

Using the 3-year data reports generated by Fuels and FASH, compare data with the previous year’s data, and if there is a significant increase, decrease, or other anomaly, investigate to identify the reason. If you find a legitimate reason for a large difference from the previous year’s data, add a note providing the reason. Otherwise, return to the data sources to rectify the data.

State Quality Control

Ensure that the data is consistent with the guidance provided in this guidebook.

Check that the data in each form represents the correct fuel type.

• FHWA Form 551M. Enter gasoline volumes in the Gasoline column and gasoline blend volumes in the Gasoline Blends column.
• FHWA Form 556. Combine revenues from gasoline and gasoline blends in the Gasoline column—because they are taxed at the same rate.

FHWA Quality Control

After a State submits a form, an FHWA analyst reviews it, examining the data quality report and reading all notes, justifications, and submission comments. The analyst may ask for more information. After this review, the analyst may accept or reject a form. The following reasons could lead FHWA Form 551M or FHWA Form 556 to be rejected:

• Total values are questionable.
• Numbers of gallons or revenue reported out of line with previous submissions—that is, increases or decreases that are many times what was reported in the prior year’s report or prior month’s report.
• A change in the tax rate—because tax rates tend to remain constant month to month. Some States change tax rates in June, July, October, or January, but most tax rates stay the same for years.
• Obvious data entry errors—such as transposition of gasoline and diesel totals (gasoline is almost always much higher).
• Negative numbers where they would not be expected.
• Numbers that appear to be rounded too much, such as exactly 10,000,000 gallons in a reported field.
• Inconsistency in reporting; for example, if a State reports all fuel as gasoline for one month, only as gasohol the next month, and then in the third month reverts to gasoline.
• Questionable descriptions for fully or partially non-taxed fuel.
• Missing amounts in fields where there are usually amounts reported.

After accepting the form, the FHWA analyst performs an in-depth review of the forms from all States for quality control. The FHWA staff may request additional information or corrections if the review finds erroneous data. States can go back to edit the form to explain the figures.

FHWA Adjustments to State Data

State-submitted data is used to develop tables showing motor fuel use and motor fuel revenue that are used to attribute Federal HTF receipts to States, which in turn are used in the Federal-aid Highway Program fund apportionment process. To make these attributions as equitable as possible, FHWA may make the adjustments to State-submitted data described below.

Federal Government Highway Gasoline Use

Highway Statistics publication tables (ex.: MF-21) report on Federal government’s civilian use of gasoline and categorically excludes any military use of the fuels. Many States exempt from taxation gasoline used by the Federal Government, including both civilian and military uses. Because the only Federal use of gasoline included in FHWA tables is civilian highway use, FHWA estimates this category for all States based on information obtained from Federal agencies. State-reported Federal use more than the FHWA estimate is presumed to be either civilian non-highway or military use and is eliminated from the Federal figure reported by the State as well as from the gross volume.

State and Local Government Gasoline Use

Many States cannot provide disaggregation of highway and non-highway uses of State, county, and municipal gasoline. The FHWA therefore estimates the highway-use figure for each State. When a State-provided number substantially agrees with the FHWA estimate, FHWA uses State data. Otherwise, it uses the FHWA estimate.

Non-highway use of Gasoline

Generally, in most States non-highway use of gasoline is not taxed, but taxpayers pay the fuel tax on all fuel at the point of sale, regardless of how the taxpayer ultimately uses the fuel. After gasoline is used for non-highway use, the taxpayer may claim a refund for the tax already paid. States report non-highway use of gasoline on FHWA Form 551M under item 4.

Not all States allow exemptions on all categories of refunds for non-highway use; moreover, not all refunds are claimed. Thus, typically, there is a difference between the volume of fuel consumed and the volume of fuel taxed. Therefore, for publications, FHWA staff adjusts the tax information provided by States to show fuel volume on a use basis. The FHWA uses a model to estimate attribution of non-highway use of gasoline to each State.

Non-highway Use of Diesel and Alternative Fuels

In most States, non-highway use of diesel and alternative fuels is not subject to fuel taxes, and most States find estimating non-highway use of diesel and alternative fuels challenging. To include comparable data for all States in the national summary consumption table MF-21, FHWA shows private and commercial uses of diesel and alternative fuels (shown as special fuels). Transit use, regardless of the ownership of the transit system, is treated as private and commercial use.

The FHWA expects all States to identify and subtract any identifiable non-highway use of diesel and alternative fuels in their FHWA Form 551M. Similarly, FHWA expects States to report only revenue related to on-highway uses of diesel or alternative fuel taxes on FHWA Form 556. Non-highway use of diesel should not be reported in gross revenue. The FHWA estimates this category using a model.

3.9 FAQs

In our State, we have some late reporters; therefore, the data is not always available when the 551Ms are due to FHWA. What should I do?

We understand there can be delays in retrieving the data necessary to report to FHWA. That is why States have up to 90 days after the close of the month of activity to report. But if data comes in after the 551M is submitted for that month, modify your 551M and resubmit it instead of including that data in the following month—to ensure that we capture accurate data for each reporting period.

Why can’t I report diesel fuel under the Fully Refunded section of Fuels and FASH?

During the development of Fuels and FASH, the thought was that only taxable diesel would be reported, and non-taxed and fully refunded would not be reported. Therefore, the fields are unavailable for data entry. Until we migrate to the new reporting system, we advise States to create a new category under the Fully Refunded section of the 551M form to input their diesel fuel volume.

Are we supposed to report the activity in the month the original transactions occurred, or in the months that we receive the information, and payment, from the suppliers and distributors?

You should report the activity in the month in which the distributor or supplier distributed the product to the customer.

Is there a limit to how far we should go back and resubmit a corrected report?

Although each situation may require specific guidance, the general rule is that you would not need to amend reports earlier than January of the prior calendar year.

Are jet fuel and aviation gasoline different fuels?

Yes, jet fuel is chemically like kerosene.  Avgas (aviation gasoline) is a higher-octane gasoline product and should be reported with gasolines.  Jet fuel is not included on the FHWA Form 551M.

Is IFTA data only to be reported once each quarter?

No. Although IFTA reporting is done on a quarterly basis, States have transactions every month—transactions resulting from internal and external audits, return adjustments, and late reporting.

Does it matter if IFTA is reported under gasoline instead of diesel?

To assist in our review process, we ask that States avoid reporting IFTA data under multiple fuel categories. Note all IFTA fuel usage under diesel regardless of the fuel usage type.