International Fuel Tax Agreement

IFTA

Let us handle your IFTA

We take care of everything for you. If you use an electronic service you send us a report monthly from your trucks as well as the report from your fuel purchase tracking system and we will file on your behalf.

What is IFTA?

IFTA pertains to the agreement between the 48 states in the U.S. and 10 provinces in Canada. It allows carriers to report and pay taxes for the fuel their vehicles consume across states using a single fuel tax license. This makes it fair to all of the states that CMV's travel in. Think about it, you might drive across the entire state of New Mexico and never fill up with fuel. How do they maintain those roads without the taxes they usually receive from the fuel purchased.

Prior to IFTA, trucking companies were required to obtain fuel permits from every single state they entered. If you don't have IFTA on your fleet this is still a requirement. If you are caught without either a current IFTA license or a trip permit then you could get fined and still have to purchase the trip permit. 

IFTA has established uniformity and efficiency in fuel tax payments among member states. According to estimates, IFTA saves trucking businesses millions of dollars annually in administrative costs. Simply because of the easy of filing them quarterly instead of having to get a trip permit every time you enter a different state.

Here is a list of the states and provinces that are members of the IFTA agreement:

Canada
Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland
Nova Scotia
Ontario
Prince Edward Island
Quebec
Saskatchewan
United States of America
All states except for Alaska, Hawaii, and the District of Columbia

Who needs IFTA?

Carriers need an IFTA license if they’re based in a member state and operate across two or more member jurisdictions. Another consideration is the type of vehicle they use.

IFTA defines a “qualified motor vehicle” as a vehicle built and used to transport property or people. Qualified motor vehicles must also fit any of the following descriptions:

Any vehicle with two axles and a gross vehicle weight (GVW) of 26,001 LBS or more.
A vehicle of any weight but with three or more axles (a truck and trailer are considered 2 vehicles)
A vehicle that exceeds 26,001 LBS Gross Vehicle Weight Rating (GVWR) 

Applying for an IFTA license and decals

If you need an IFTA license, the first step is to fill out the application used in your base state. (Where you vehicles are registered)

IFTA application forms vary from state to state and sometimes serve multiple purposes. Carriers based in Ohio, for example, can use the IFTA application form to request additional decals or make changes to their account. Most states accept these forms electronically.

Some of the basic carrier information required for new IFTA applications are:

Registered business name
Mailing address
FEIN
USDOT number


Once your application has been processed, the IFTA authority in your state will issue official IFTA decals for the current year. A temporary IFTA license will be sent to you while you wait for your decals to arrive.
 

Quarterly filing of IFTA taxes

The next step is to figure out how much IFTA is going to cost your fleet. Yes someitmes you have to pay states if you did not purchus any fuel but drove in the state.

As far as requirements go, an IFTA licensee’s primary objective is to file a quarterly return with their base state. Then that state will automaticly transfer funds to the diffrent intities across the nation.

Below is a list of the IFTA return due dates for each reporting quarter:

1st quarter (January to March) — April 30
2nd quarter (April to June) — July 31
3rd quarter (July to September) — October 31
4th quarter (October to December) — January 31



IFTA tax calculations can be summarized in five simple steps:

1. Tracking miles you’ve traveled in each state
Fleet managers and drivers must work together to accurately record the amount of fuel consumed in different jurisdictions. This is getting easier with todays technology.  with the use of Telematics in fleets it is extreemly simple to have that system report exactly how many miles were driven in states automticly to your email.  If you dont have a telematics system then it is more difficult.
Drivers record their odometer readings whenever they cross state lines, this is a must without a telematics system. 

2. Adding fuel purchases. 
The next piece of information you need is the total gallons of fuel purchased in each state.
Remember, carriers must retain the original receipts or invoices to prove that fuel tax was paid. If you utilize an electronic way to capture the recipt this is more than sufficent.  These documents must contain the following details:
Fuel purchase date
Fuel seller’s name and location
Type of fuel purchased
Vehicle plate number
Number of gallons purchased
Price per gallon
Driver’s name


3. Calculating fuel consumed per state
Once you have the total miles and fuel purchased tallied, it’s time to calculate the fuel mileage of your vehicles for each jurisdiction. You can use the simple formula below to calculate your fleet’s overall fuel mileage:

Total Miles Driven ÷ Total Gallons = Overall Fuel Mileage

For example, if you purchased a total of 4,000 gallons of fuel and covered 22,000 miles, then your overall fuel mileage would be:

22,000 ÷ 4,000 = 5.5 miles per gallon

Be sure to round off the MPG value to two decimal places.

To calculate how many gallons your fleet consumed in each jurisdiction, input your overall fuel mileage to the formula below:

Total Miles Driven in State X ÷ Overall Fuel Mileage = Fuel Consumed in State X

Keep in mind that you need to use the second equation for each state or province you operated in during the current reporting period.

4. Calculating taxes owed for each state and province
The fuel purchased per jurisdiction is the key needed to calculate your fuel tax your fleet owes each jurisdiction.  

You can view the complete chart of fuel tax rates for each fuel type and jurisdiction on the International Fuel Tax Association website. Take note that these rates are subject to change.

IFTA FAQs

Filing quarterly IFTA taxes can be a challenge despite the availability of tools that expedite reporting. To make it more manageable for your fleet, here is a short roundup of IFTA-related frequently asked questions.

Do I need to file IFTA taxes if I didn’t move any freight?
Yes — filing quarterly IFTA taxes is required even if your fleet was inactive during the reporting period.

What if we never went beyond our base state for the entire quarter?
You are still required to file your quarterly IFTA report even if you didn’t operate outside your jurisdiction for a given quarter.

How can my fleet get new IFTA decals?
New decals will be supplied to your fleet whenever you renew your IFTA license, which is done annually. In case you lost or damaged your IFTA decals, you can send a request to your jurisdiction’s IFTA authority and order new ones.

What if an intrastate fleet is suddenly required to operate out of state?
For one-time trips between two or more jurisdictions, fleets can use temporary trip permits. These are only valid for one vehicle on a specific journey into another jurisdiction.

To acquire a single-trip permit, the carrier must define the time period and total distance to be covered. This information will be used to calculate the fuel tax to be paid along with other applicable fees.

What are the penalties for failing to file or pay an IFTA quarterly return?
If a carrier fails to file a quarterly IFTA return, they have 30 days to complete the requirements before their license gets suspended.

Late payments are subject to a penalty of $50 or 10 percent of the total tax due, whichever is higher. An auditor will assess if failure to pay is due to an intent to commit fraud or evade fuel taxes. If so, this may lead to criminal prosecution and a fine of up to $5,000.

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