How Mexican Carriers Can Participate in IRP and IFTA

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How Mexican Carriers Can Participate in IRP and IFTA Module 1: Registration under International Registration Plan (IRP) Module 2: Fuel Taxation under International Fuel Tax Agreement (IFTA)

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How Mexican Carriers Can Participate in IRP and IFTA. Module 1: Registration under International Registration Plan (IRP) Module 2: Fuel Taxation under International Fuel Tax Agreement (IFTA). Goal. - PowerPoint PPT Presentation

Transcript of How Mexican Carriers Can Participate in IRP and IFTA

Page 1: How Mexican Carriers Can Participate in IRP and IFTA

How Mexican Carriers Can Participate inIRP and IFTA

Module 1: Registration under International Registration Plan (IRP)

Module 2: Fuel Taxation under International Fuel Tax Agreement (IFTA)

Page 2: How Mexican Carriers Can Participate in IRP and IFTA

Goal

Learn how to comply with registration requirements under IRP and fuel taxation under IFTA for operations throughout the US and Canada

Page 3: How Mexican Carriers Can Participate in IRP and IFTA

What Are IRP and IFTA?

International Registration Plan (IRP)

International Fuel Tax Agreement (IFTA)

Page 4: How Mexican Carriers Can Participate in IRP and IFTA

One-Stop Registration

– One base jurisdiction to file application and pay fees

– One jurisdiction oversees registrant

– One set of credentials

You!

For-hire motor carrier

Private motor carrier

Household goods carrier

Owner-operator

Leasing company

The jurisdiction you select to register your vehicles

California, Arizona, New Mexico or Texas, in whichever you expect to travel the most miles in your first year of operation in the US

The same jurisdiction for both IRP and IFTA

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Fuel Tax Collection Process

– Licensee pays tax on each gallon purchased

– Licensee summarizes purchases and distances traveled each calendar quarter

– Licensee files tax return that calculates tax due to each jurisdiction

– Base jurisdiction provides IFTA license and redistributes tax paid in one state/province to compensate use of highways in each state/province in which you operate

Issued to a licensee upon opening an account, and for each renewal year beginning January 1Original kept in office, copy kept in cab of each IFTA vehicle

You!

For-hire motor carrier

Private motor carrier

Household goods carrier

Owner-operator

Leasing company

The document you file quarterly with your base jurisdiction calculating any tax payment due or refund owed you

Page 6: How Mexican Carriers Can Participate in IRP and IFTA

IRP-IFTA Similarities

– Similar types of vehicles operated

– Similar recordkeeping requirements

– Audit and enforcement practices

But…

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IRP and IFTA Are Separate and Distinct Programs

• IRP– Vehicle

registration

– Pay fees annually in advance of operation

• IFTA– Fuel use

taxation

– Pay tax upon purchase of fuel and then adjust by jurisdiction on quarterly tax return

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IRP Prerequisites

• USDOT OP-1 (MX) operating authority• Heavy duty trucks, passenger buses,

and/or tractor-trailer combinations• Intention to operate in at least 2 IRP

jurisdictions

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Before You License in IFTA

• Have USDOT OP-1(MX) operating authority

• Have vehicle types authorized for IFTA

• Have vehicles registered under IRP

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Cabotage Limitation

• US federal limitations placed on you as a motor carrier, your drivers, and your vehicles as to operations in the US

• US federal rules limit your travel to delivery between a point in Mexico and a point in US– Prohibited: Pick up a load in the US for

delivery to another point in the US

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Quick Quiz

• What types of fees are collected under IRP?

• What types of taxes are collected under IFTA?

• Which state must I use as my base jurisdiction?

• Can I pick up from and deliver to two US locations in the trip?

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Your Responsibilities As an IRP Registrant

• Filing application and renewal forms

• Maintaining records accurately and completely

• Paying fees

• Displaying license plates, cab cards

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Your Responsibilities as an IFTA Licensee

• Filing application and renewal• Maintaining records• Filing tax returns and payment

of taxes due• Displaying IFTA license and

decals

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Creating a Compliant Recordkeeping System

• Driver trip logs

• Fuel receipts

• In-house trip log summaries

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Recordkeeping for compliance

The keys to calculating fees and taxes for payment for travel in IRP/IFTA jurisdictions and staying in compliance

When you operate under IRP and IFTA, you agree to retain records and make them available upon request.

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Records Kept for IRP

• Record ALL distance traveled• Record loaded and empty

distance• Record whether on company

or personal travel in apportionable vehicle

• Record travel in Mexico, each US state, each Canadian province

2-axle trucks/buses greater than 26,000 lbs. GVW

Trucks/buses with 3 or more axles, regardless of weight

Tractor-trailer combinations greater than 26,000 lbs. GVW

Used or intended for use in 2 or more IRP jurisdictions

Maintenance of distance

records begins at the time

license plates and cab cards

are provided by the jurisdiction

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Must Log All Trips

Date of trip (starting / ending)Trip origin and destination (with city & jurisdiction) Route of travelBeginning and ending odometer or hub odometer

reading of the tripTotal trip distance traveledDistance traveled by jurisdictionUnit Number or VIN At the discretion of the base jurisdiction, may also

require vehicle fleet number, registrant’s name, trailer number, and drivers name/signature

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Summaries/Recaps to Generate

Monthly, quarterly, and annual summary documents of distance generated by vehicle and jurisdiction

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Records Kept for IFTA

• Distance records same as IRP

– Document:• All distance traveled• All distance loaded and empty• All distance whether on company or

personal travel• All distance in Mexico, Canada, US• All distance from the time IFTA license

and decals are put in the vehicle

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Must Log All Trips

• Document:– Start/end dates of each trip– Trip origin/destination (city/jurisdiction)– Route of travel (highways traveled on)– Beginning/ending

odometer/hubometer reading– Total trip distance– Distance traveled by jurisdiction– Units/VINs– Fuel purchases

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Fuel Records Kept

• Document:

– All fuel purchased, received, and used by IFTA qualified vehicles

– All fuel purchased and distance traveled by IFTA jurisdiction and in Mexico

– Each fuel type separately for each IFTA vehicle

Same as IRP apportionable vehicles

2-axle trucks/buses greater than 26,000 lbs. GVW

Trucks/buses with 3 or more axles, regardless of weight

Tractor-trailer combinations greater than 26,000 lbs. GVW

Used in 2 or more IFTA jurisdictions

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Fuel Purchase Evidence

• Retail fuel purchases supported by a receipt, invoice, credit card receipt, or automated vendor generated invoice or transaction listing. Only purchases in US and Canada are eligible for tax computation purposes; purchases in Mexico are not to be included in tax computation

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Acceptable Records – Retail Purchase

• Acceptable receipt or invoice must contain:

• Date of purchase• Name and address of the seller• Number of gallons or liters• Type of fuel purchased• Price paid per gallon or liter or total

amount of sale• Vehicle plate, unit, or identification

number into which the fuel was delivered

• Absence of info = invalid receipt / invoice for tax computation

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Fuel Records Kept – Bulk Storage

• Document:– Record of bulk fuel receipts or

purchases, withdrawals, and inventories for each bulk fuel storage location

– Details of purchase and inventory records that show tax paid to an IFTA member jurisdiction receive credit on tax return

• Absence of info = invalid withdrawal/purchase for IFTA calculation

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Acceptable Records – Bulk Storage

• Acceptable receipt or invoice must contain:

• Date of purchase• Name and address of seller• Number of gallons purchased• Type of fuel purchased• Purchase price with tax included• IFTA member jurisdiction in US/CN

• Absence of info = invalid receipt / invoice for tax computation

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Acceptable Records - Bulk Storage

• Distribution record must document all withdrawals from each bulk storage tank location.

• Acceptable distribution record must contain:

• Date of withdrawal• Number of gallons or liters withdrawn• Type of fuel • Vehicle plate, unit, or other identification

number into which the fuel is delivered• Withdrawals for other purposes than use in

IFTA qualified vehicles

• Inventory records

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IFTA Summaries/Recaps To Generate

Quarterly summaries For distance records (like IRP requirement)– By individual IFTA vehicle– By jurisdiction

For fuel records– For each fuel type– For each IFTA vehicle– For each jurisdiction

Internal records may be kept in kilometers and liters

Forms submitted for US operation MUST BE in US measurements of miles and gallons

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Quick Quiz

• Name 3 items required on a trip log• If I paid fuel tax on the purchase,

what evidence do I need on the receipt to prove that?

• I crossed through three states to make my delivery into the fourth and didn’t need to buy fuel until my return. Do I owe tax to the three states I simply traveled through?

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Before Beginning Operations (New IRP Account)

• Identify base jurisdiction for registration

• Apply for apportioned fleet registration on Schedules A/B

• Estimate operations– Use self-constructed business plan

OR estimated distance chart available from base jurisdiction

• Receive and pay invoice for apportioned fleet registration fees

One or more apportioned or apportionable vehicles

The initial process of establishing an account and the subsequent annual process of renewing registration of a fleet of apportioned/ apportionable vehicles under IRP

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Before Beginning Operations (New IRP Account)

• Receive and display license plate and cab card

• Create and implement recordkeeping system– Track trips including

• Dates of trip• Miles traveled by vehicle• Cumulative miles traveled in each

jurisdiction, including Mexico

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After the Close of Each Month

• Regardless of extent of operations (little or even none in that month)– Receive driver trip logs– Consolidate miles by vehicle– Summarize activity of miles by

jurisdiction (called a “monthly recap”)

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After the Close of Each Calendar Quarter

• Consolidate monthly recaps into quarterly summary (called a “quarterly recap”)

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Month 11-12 Of Your IRP Apportioned Fleet Registration Year

• Receive renewal application forms from base jurisdiction

• Apply for renewal apportioned fleet registration

• Document actual miles on application

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Each Year Of IRP Apportioned Fleet Registration

• Repeat monthly and quarterly recordkeeping processes

• Repeat renewal application process

• Repeat payment process• Repeat exchange of license

plates, cab cards for new

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The IRP Main Application Forms

• Schedule A– Annual original application and weight

schedule

• Schedule B– Annual declaration of intent to travel into

IRP jurisdictions and expected distance in each jurisdiction (IRP and non-IRP) in miles

• Schedule C – For changes during the year– For vehicle information and weights

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Proofs Required With IRP Application Forms

• IRS Form 2290 – Federal Heavy Vehicle Use Tax (required for gross weight of 55,000 lbs. or more)

• Minimum jurisdiction liability insurance• Other documents as required by the base

jurisdiction

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Application Content

• Company name and address• USDOT number• Vehicle owner• Gross vehicle weight, unladen weight, make,

model of each vehicle in fleet• Unit number of each vehicle in IRP fleet• Age of each vehicle in IRP fleet• Purchase price, factory price, and date of

purchase of each vehicle in IRP fleet• Number of axles/seats of each vehicle in IRP

fleet• Vehicle fuel type for each vehicle in IRP fleet• VINs

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Calculating Your IRP Fees

• Base jurisdiction will send you a statement of fees owed

• Base jurisdiction calculates fees based on Schedule A/B entries you provide

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Calculating Your IRP Fees

• Distance in each jurisdiction traveled

– Divided by total distance in US/Canadian jurisdictions (excluding distance generated in Mexico)

– Percentage derived above applied to fee required by each jurisdiction for the weight of the vehicle being registered

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Jurisdiction

Distance

% of Total

12-month Fee per Jurisdiction

IRP Fee for EACH Vehicle

Texas 6,670 $817.00 New Mexico 1,330 $172.00 Oklahoma 2,000 $948.00

Total 10,000

Scenario: - Tractor-semitrailer combination operated in Texas, New Mexico, and Oklahoma for 12 months.

- Total distance for all three jurisdictions is 750 miles.

- The registered gross weight for all three jurisdictions is 80,000 pounds.

Exercise – Fee Calculation

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Jurisdiction

Distance

% of Total

12-month Fee per Jurisdiction

IRP Fee for EACH Vehicle

Texas 6,670 66.7% $817.00 $544.94 New Mexico 1,330 13.3% $172.00 $22.88 Oklahoma 2,000 20.0% $948.00 $189.60

Total 10,000 100% $757.42

The total fee for each vehicle’s IRP registration is determined by the percentage of distance traveled in each IRP jurisdiction and each jurisdiction’s fee schedule.

Fee Calculation Results

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Distance Totals to Use for First and Subsequent Years

• First year = Estimates of distance • Construct your own business

plan and create estimates or• Use distance chart developed by

base jurisdiction• Second year = Distance based on

your records of actual distance traveled

• All registrants use July 1 – June 30 period preceding their registration year

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Need to Make a Change During the Registration Year?

• Can be done, but must notify base jurisdiction– Schedule C

• Provide base with information on change – added vehicles, removed vehicles, added states or provinces you expect to travel

Page 44: How Mexican Carriers Can Participate in IRP and IFTA

Need to Make a Change During the Registration Year?

• Estimate added operations for new vehicles added, new states/provinces added

• Receive and pay invoice• Receive and install license

plates, cab cards• Begin changed operation

Page 45: How Mexican Carriers Can Participate in IRP and IFTA

Licensee Responsibility – IFTA Application Filing

• Name of sole owner, all partners, or corporate officers

• “Doing Business As” name

• Mailing and physical location address

• US DOT number

• IRP account number

• FMCSA OP-1 MX number

• Bulk fuel storage locations (if any)

• Jurisdictions in which you will travel

• Number of qualified vehicles traveling in US/Canada

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In Addition to Application

• Power of Attorney (optional at base jurisdiction discretion)

• Surety bond (amount to be determined)

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IFTA Reporting And Tax Payment Process

• File only the tax return mailed to you by your base jurisdiction

• File with your base jurisdiction at the address on the printed return

• File for each calendar quarter one month after close of quarter

• Attach check for outstanding liability or follow base jurisdiction instructions for refund

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Reporting Liability

• Fuel and travel must be reported using United States measurements – gallons & miles – when filing tax return

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Calculating MPG Ratio

• CONVERT FROM KILOMETERS AND LITERS TO MILES AND GALLONS

Conversion standards to be used for IFTA:

1 gallon = 3.785 liters 1 liter = 0.2642 gallons1 mile = 1.6093 km 1 km = 0.62137 miles

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Calculating Liability

Calculate overall mileage-per-gallon (mpg) ratio

Divide: Total distance traveled (25,000)

By : Total amount of fuel used (6,000)

on the same miles Get = Average miles per gallon ratio (4.17) [round to 2 decimal places]

Total distance = distance operated in US/CN/MX, distance operated under trip permits and temporary IFTA credential for all qualified motor vehicles (QMV)

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Calculating Liability

• Required on the quarterly tax return and schedule for each IFTA jurisdiction

– Total Distance (all distance traveled in the jurisdiction by every qualified motor vehicle)

– Total Taxable Distance (total distance less any jurisdiction-specific exempt miles)

– Taxable Fuel (taxable distance in the jurisdiction divided by the fleet mpg)

– Tax-Paid Fuel (all fuel purchased in the jurisdiction upon which

tax has been paid) – Net Taxable Fuel (taxable fuel minus tax-paid fuel – this will

be a negative number [credit] if taxable fuel is less than tax-paid fuel)

– Tax Rate (the jurisdiction tax rate on the type of fuel being reported)

– Tax Due (net taxable fuel multiplied by the tax rate – if net taxable

fuel is a negative number [credit], tax due will also be a negative number. ) – Interest Due (interest is due if the tax return is filed after the due

date)

– Total Due (tax due plus interest due)

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Calculating Liability - Exercise

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Calculating Liability - Results

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IRP/IFTA Base Jurisdiction to Audit Its Registrants

• Ensure proper collection of registration fees and fuel use taxes owed to all jurisdictions

• Ensure registrant’s recordkeeping requirements are met

– You may not be audited for many years but each year you MUST retain at least the current year plus 3 preceding years – check statute of limitations

– Be prepared for follow-up shortly after new account established

• Jurisdictions may ask you to provide appropriate source documents to verify proper recordkeeping procedures

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IRP Records Reviewed at Audit

• IRP Schedules A, B, C• Individual vehicle distance records• Additional records supporting distance,

including monthly, quarterly, annual summaries

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IFTA Records Reviewed at Audit

• IRP forms and documents• Fuel tax receipts, statements• Bulk storage withdrawal

activity• Additional records supporting

travel, fuel consumption

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Record Retention

• For audit purposes, maintain records for at least four full years, including the current year

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Before and During Audit

• Notice – You are notified in writing of time period to be audited and the start date for the audit

• Preparation – You should prepare records in proper order

• Pre-audit Conference – You should outline your operations and auditor will outline the audit procedures

• Examination of your records and reporting system

• Completion – Auditor completes using best information available

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After the Audit

• Post-audit conference• Review of the audit by you and

other jurisdictions• Notification to all parties

concerned• Payment of any amounts owed• Audit follow-ups

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Audit Results

• You and IRP/IFTA jurisdictions examine and challenge audit results

• If audit results are not challenged, the results are final

• Once finalized, base jurisdiction notifies you of the amount owed plus interest and penalties, collects the fees/taxes, and distributes to other jurisdictions that are due the fees/taxes

• Refund due? Contact base jurisdiction for procedures

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Problems That Result In Assessments

• FAILURE to maintain complete and accurate records

• FAILURE to maintain fuel receipts/invoices

• FAILURE to pay taxes owed

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Problems That Result in Assessments

• Audits findings that adjust percentages on the original IRP application with the result being additional fees/taxes owed

• Distance reported does not agree with source documents

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Enforcement Tools For Non-compliance

• Highway enforcement– Credentials checked at roadside, violations costly

• Other means subject to base jurisdiction practices– Administrative suspension– Revocation– Reinstatement

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IRP and IFTA DO NOT WAIVE…

Requirements for proof of liability coverage in each member jurisdiction where required.

Payment of IRS Federal Heavy Vehicle Use Tax on Form 2290

Weight-Distance Tax payments to those jurisdictions that impose a Weight-Distance Tax: Oregon, New Mexico, Kentucky and New York.

Requirements for Single State Registration System (SSRS)

Maximum length, width, height, or axle limitations

Operating authority from any jurisdiction in which the vehicle travels

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The International Registration PlanContact Information In Southern US Border States

Arizona Department of Transportation

Motor Vehicle DivisionPO Box 2100Phoenix, AZ 85001-2100Telephone (602) 712-6775

California Department of Motor Vehicles International Reg. Plan Unit PO Box 932320 MS H160 Sacramento, CA 94232-3200 Telephone (916) 657-7971

New Mexico Department of Taxation and RevenueJoseph Montoya BuildingPO Box 1028Santa Fe, NM 87504-1028Telephone (505) 476-1566

Texas Department of TransportationVehicle Titles and RegistrationIRP Unit4000 Jackson AvenueAustin, TX 78731Telephone (512) 465-7570

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The International Fuel Tax AgreementContact Information In Southern US Border States

California State Board of Equalization

450 N StreetPO Box 942879 MIC: 65Sacramento, CA 94279-0065(916) 322-9669

Arizona Department of Transportation

Mail Drop 527MMotor Vehicle DivisionPO Box 2100Phoenix, AZ 85001-2100(602) 712-6775

New Mexico Commercial Vehicle Bureau

PO Box 5188Santa Fe, NM 87504-5188(505) 827-0392

Texas Comptroller of Public Accounts

111 E. 17th StreetAustin, TX 78774-0100(512) 463-4600

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Other Resources For Help

Manuals with sample forms and instructions on state agency websites:

www.mvd.azdot.gov/mvd/formsandpubmvd.asp www.dmv.ca.gov/vehindustry/irp/irpinfo.htm www.boe.ca.gov/sptaxprog/mciftamain.htm www.boe.ca.gov/sptaxprog/spftdiesel.htm (MX-CA operations)www.state.nm.us/tax/forms/comveh/comveh.htm www.state.nm.us.tax/trd_pubs/IFTAMANUALSPANISH.pdf www.dot.state.tx.us/services/vehicle_titles_and_registration/apportioned_reg.htmwww.dot.state.tx.us/services/vehicle_titles_and_registration/nafta.htm (MX-TX operations)www.window.state.tx.us/taxinfo/taxpubs/tx96_336.html

Thank You!