South Dakota Has New Law for Alternative Fuels Taxes, Credits
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Truckers driving through South Dakota using biodiesel and other alternative fuels will no longer be incorrectly taxed due to a new law enacted recently by Gov. Kristi Noem.
She signed Senate Bill 71 on Feb. 22 that authorizes the state to impose and collect alternative fuel taxes within its agreement with the Arizona nonprofit International Fuel Tax Association Inc.
“The IFTA system is how South Dakota gets its fair share of fuel taxes from interstate and international carriers. Regardless of where the fuel was purchased and the tax paid, the fuel taxes are split by the system among the states where the fuel was used based on the miles traveled in each state,” said Sen. Joshua Klumb (R), who sponsored the legislation in January.
The IFTA tax collection agreement is among the 48 contiguous states and the 10 Canadian jurisdictions bordering the United States. Commercial vehicles subject to the tax are those meeting the following criteria: having three axles or a gross vehicle/registered gross vehicle weight or combination of weight over 26,000 pounds.
A motor carrier registers and pays with one jurisdiction taxes and IFTA distributes the fees to states and other relevant jurisdictions if roads are traveled there, with tax credits issued back to the state/jurisdiction where fuel was purchased but not used.
South Dakota annually receives from $1.2 million to $1.3 million from fuel tax payments through the IFTA clearinghouse.
Rosa Yaeger, motor vehicle director at the state department of revenue, testified earlier in legislative transportation division hearing that South Dakota needed to act.
She said the bill was “to make sure those trucks that do have those alternative fuel types are getting the proper [tax] credits back and forth so they’re not double paying this tax.”
“The other thing we’re trying to make sure happens, is if you buy the fuel in Minnesota and you pay all the tax there and then you come back through to us, we get our fair share for miles traveled across our state,” Yaeger explained.
A carrier that filled up with liquid natural gas in Minnesota and paid the Minnesota fuel tax and then used that fuel to drive in South Dakota was not paying South Dakota for the use of our roads, she added.
Before the law’s passage, South Dakota only included diesel fuel or diesel blends in its IFTA laws. South Dakota was “missing out on fuel taxes from carriers that use other fuels like liquid natural gas or biodiesel blends to power their trucks,” she said.
The new law now expands South Dakota’s ability to collect fuel taxes on heavy trucks using alternative fuels (biodiesel, biodiesel blend, liquid natural gas, liquid petroleum gas, compressed natural gas, ethyl alcohol and methyl alcohol).
IFTA is federally mandated for all the states. According to IFTA, most states collect biodiesel fuel taxes though its clearinghouse except for Indiana, New Mexico, New York, Oregon, South Carolina and Vermont. Canadian jurisdictions also lacking biodiesel tax agreements with IFTA are Alberta, Prince Edward Island and Newfoundland.
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