Key Takeways
- IFTA simplifies fuel tax reporting for fleets operating across multiple jurisdictions.
- Carriers must file quarterly reports to their base jurisdiction, ensuring proper tax distribution.
- Accurate mileage and fuel tracking are essential for compliance and avoiding penalties.
- IFTA records must be kept for at least four years for audit purposes.
- Automation and software streamline reporting, reducing errors and administrative workload.
- Late filings result in penalties and interest charges, making timely submissions critical.
- Using GPS and Electronic Logging Devices (ELDs) improves accuracy in mileage tracking.
What is IFTA and Why is It Important?
The International Fuel Tax Agreement (IFTA) is a tax agreement among 48 U.S. states and 10 Canadian provinces that simplifies the reporting and payment of fuel taxes for interstate commercial carriers.
Benefits of IFTA
- Simplifies tax reporting – Instead of multiple reports, fleet operators file one quarterly return.
- Ensures accurate tax distribution – The home jurisdiction collects the tax and redistributes it accordingly.
- Reduces administrative burden – Fleet managers save time by avoiding separate filings for each jurisdiction.
Who Must File IFTA Reports?
A carrier is required to file IFTA reports if it operates a qualified motor vehicle in two or more IFTA jurisdictions. A qualified vehicle meets any of these criteria:
- Has two axles and a gross weight of 26,000 lbs or more.
- Has three or more axles, regardless of weight.
- Operates in combination with a trailer, exceeding 26,000 lbs total.
Exemptions from IFTA
- Recreational vehicles (used for personal travel).
- Government-owned vehicles.
- Intrastate-only carriers (operating in a single state or province).
How to Register for IFTA
Step-by-Step Registration Process
- Determine Your Base Jurisdiction
- Your home state or province is the base jurisdiction.
- You must have an established place of business and maintain operational records there.
- Apply for an IFTA License
- Visit the Department of Revenue or Motor Vehicle Office of your base jurisdiction.
- Submit an application that includes:
- Business name and address.
- USDOT number.
- Number of qualified vehicles in your fleet.
- Estimated mileage in IFTA jurisdictions.
- Pay the required registration fee.
- Receive IFTA Credentials
- Upon approval, you’ll receive:
- An IFTA license (must be carried in each vehicle).
- Two IFTA decals per vehicle (one for each side of the cab).
- Upon approval, you’ll receive:
- Renew Annually
- IFTA licenses expire on December 31 each year.
- Renewal must be completed before expiration to avoid penalties.
How to Calculate IFTA Taxes
Data Required for IFTA Calculation
- To calculate IFTA taxes accurately, you must track:
- Total miles driven in all IFTA jurisdictions.
- Miles per jurisdiction (breakdown by state/province).
- Total gallons of fuel purchased (verified with receipts).
- Miles per gallon (MPG) for each vehicle.
- Jurisdiction-specific tax rates (updated quarterly).
Formula to Calculate IFTA Fuel Tax
Fuel Tax Owed=(Miles Driven in Each JurisdictionFleet MPG)
Example Calculation
- Total miles traveled: 10,000
- Miles in State A: 4,000
- Miles in State B: 6,000
- Total fuel purchased: 1,000 gallons
- MPG: 10 (10,000 miles ÷ 1,000 gallons)
- Tax rate in State A: $0.30 per gallon
- Tax rate in State B: $0.25 per gallon
Step 1: Calculate Fuel Used in Each Jurisdiction
- State A Fuel Used: 4,000 miles ÷ 10 MPG = 400 gallons
- State B Fuel Used: 6,000 miles ÷ 10 MPG = 600 gallons
Step 2: Determine Tax Owed
- State A Tax Owed: 400 gallons × $0.30 = $120
- State B Tax Owed: 600 gallons × $0.25 = $150
- Total Tax Owed: $270
Step 3: Adjust for Fuel Taxes Paid
- If you paid $250 in fuel taxes at the pump, the additional $20 is due.
- If you paid $280, you qualify for a $10 credit.
What Documentation Do You Need to File IFTA?
To file an accurate IFTA report, maintain the following records:
- Trip logs with date, odometer readings, route details, and jurisdictional mileage.
- Fuel purchase receipts with date, seller details, fuel type, and gallons purchased.
- Vehicle reports showing fleet-wide mileage and fuel consumption.
- Tax rate reference sheets for each jurisdiction.
Also Read – Trucking business
Step-by-Step Guide to Filing IFTA
1. Gather Data
- Collect mileage logs and fuel receipts.
- Verify total miles traveled in each jurisdiction.
2. Calculate Fuel Tax
- Use the IFTA formula to compute tax owed per jurisdiction.
- Adjust based on fuel taxes already paid.
3. Complete the IFTA Tax Report
- Enter mileage, fuel purchases, and jurisdictional tax rates.
- Double-check for accuracy to avoid penalties.
4. Submit the Report
- File the report online or by mail.
- Make any required tax payments electronically.
5. Retain Records
- Maintain all IFTA-related documentation for at least four years for audit purposes.
Key Tips for Staying IFTA Compliant
- Use GPS and Electronic Logging Devices (ELDs) for accurate mileage tracking.
- Verify fuel receipts for completeness and correctness.
- Submit reports before deadlines to avoid penalties.
- Automate fuel tax calculations with IFTA software.
- Conduct internal audits to prevent errors.
Frequently Asked Questions (FAQs)
What happens if I file my IFTA report late?
Late filings result in penalties and interest charges, which vary by jurisdiction.
Can IFTA reports be filed online?
Yes, most states allow electronic filing and payment.
What if I overpaid fuel taxes?
Overpayments result in credits or refunds applied to future tax filings.
How long should I keep IFTA records?
You must retain IFTA-related records for at least four years.
How do I correct an error on a submitted report?
Submit an amended IFTA report to correct discrepancies.
James Johnson is a former truck driver who now works as a writer, specializing in the trucking industry. With over 15 years of experience on the road, James has a unique perspective on the challenges and opportunities faced by truck drivers and the trucking industry as a whole. His writing focuses on issues such as safety, regulation, and the latest industry trends. His work has been featured in several trucking publications and he has received recognition for his contributions to the industry. In his free time, James still enjoys being around trucks and often attends truck shows and other industry events.