How to meet IFTA requirements

How to meet IFTA requirements

  • A thorough understanding of IFTA requirements can help sharpen awareness of total business activity
  • All vehicles used/designed to transport people or property must apply for an IFTA license if they meet certain conditions
  • A fleet management platform can help you create fast, accurate reports

IFTA, or the International Fuel Tax Agreement, was created to streamline the collection and distribution of fuel taxes for carriers who operate in multiple jurisdictions. The transportation industry has been classically funded by motor fuel taxes. IFTA was a natural byproduct of the growing transportation industry. It exists to ensure public works and infrastructure projects continue to happen today.

Under IFTA, licensed carriers can submit one quarterly tax return to their base jurisdiction concerning fuel usage, as opposed to individual returns for each state visited. Complying with IFTA regulations is important for the longevity and sustainability of all commercial carriers.

IFTA fuel tax past and present

As early as just after World War I, jurisdictions levied taxes on the growing number of vehicles on the road. Initiatives like the Multi-State Reciprocal Agreement of 1962 and the International Registration Plan of 1973 helped lay the groundwork for what would become IFTA.

Prior to IFTA’s creation, each truck required a tax permit for each state where it operated. The permit could only be issued at designated Ports of Entry. The permits were issued as stickers that were then arranged on a special license plate called a Bingo Plate.

What we know of as IFTA was born in 1983 when a group of government and industry representatives set out to simplify the payment and documentation of fuel taxes. IFTA became law in 1996 and became a mandated regulation for carriers operating in the lower 48 United States, eventually including 10 Canadian provinces as well.

Why register for IFTA?

Federal law requires that commercial truck companies abide by IFTA regulations. Registration is non-negotiable if your truck meets certain criteria.

Compliance is a more streamlined and consolidated process than ever before. Once a carrier has an IFTA license and decals, reporting can begin. Digital tools like GPS fleet tracking systems and trucking management software can help streamline this process even more.

Who has to register for IFTA?

Qualified motor vehicles used/designed to transport people or property may require IFTA registration if they:

  • Have three or more axles; or
  • Have two axles and a gross vehicle or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms; or
  • Are used in a combination that has a combined or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms.

Keep in mind that there are examples of vehicles that fall under this definition but do not require an IFTA license, for example, an intrastate vehicle.

To be licensed for tax reporting, these vehicles must use diesel, propane, or natural gas. Some jurisdictions require even gas-powered vehicles to be licensed.

IFTA documents and applications

All carriers must keep fuel use records, either digital or hard copy. An annual license is required for every vehicle that qualifies. Each year your base jurisdiction may send you a reminder to file your IFTA, but the onus is on each carrier to remember to apply and to store the license properly once obtained.

Vehicles with active licenses are given two decals to display. Each carrier registers a base state from which their vehicles operate, but the single license and one set of decals allows operation through all member jurisdictions. Only the base jurisdiction performs audits.

The importance of fuel tax reporting

A comprehensive fuel tax report is required four times a year. Quarterly reporting dates are as follows:

Reporting Quarter

  • Jan. – March (Q1): April 30
  • April – June (Q2): July 31
  • July – Sept. (Q3): Oct. 31
  • Oct. – Dec. (Q4): Jan. 31

The IFTA agreement states that commercial carriers must keep precise records of fuel purchases, mileage, and fuel taxes accrued in each state or province traveled in. Payment by check can be made with the quarterly report, and if taxes were over or underpaid, you’ll receive a credit or a bill.

To receive a refund or tax credit, you’ll need to provide receipts for fuel tax purchases along with your quarterly forms. Smooth IFTA reporting requires accuracy and timeliness. There are penalties if IFTA is filed inaccurately or late. Many fleets find that the most efficient way to create accurate, error-free reports is to use a technology solution to track IFTA data points by jurisdiction.

Frequently asked IFTA questions

Here are a few final questions to ask when considering your strategy for fulfilling IFTA requirements:

Are IFTA regulations in effect for my region?

The IFTA requirement is in effect for all lower 48 US states (which excludes Hawaii, Alaska, and the District of Columbia) and the following 10 Canadian provinces: Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan.

What are the IFTA fuel tax exemptions?

There are some exemptions to fuel tax reporting. Driving on certain private roads, on Native American reservations, or on specific toll roads could be considered for exemption. The IFTA Exemptions Table is an important reference for these circumstances.

What if my company gets audited?

Audits are a regular process for all IFTA jurisdictions, who are in fact required to audit 3 percent of their members within any given year. Auditors will generally require immediate preliminary information to grasp the depth of their audit. Having accurate information on-hand is key to ensuring an audit goes smoothly to avoid further fees.

IFTA is sort of like a litmus test for each commercial carrier’s knowledge of their own business operations. It can be tedious to collect and store all the information a business generates within a given time period.

Resources that employ GPS asset tracking can be invaluable tools to help make sure IFTA reports are correct.

IFTA reporting doesn’t have to be tedious

A firm grasp on IFTA regulations is an important responsibility for all commercial vehicle and fleet owners. IFTA was created to relieve stress from the necessity of fuel tax collection, but it is complex and has obstacles.

If you’re wondering how you can streamline IFTA reporting for your fleet, the best thing you can do is start familiarizing yourself with the tools that are available to you. A modern fleet management platform can go a long way towards making data collection and fuel tax reporting a simple, low-stress task.

With a cutting edge technology solution, there is no reason to crunch numbers by hand, fill out paperwork with a pencil, or set your own calendar reminders for reporting.

The use of technology can free up your time as well as reduce the risk for errors (and the likelihood of an audit).

Here are a few more useful articles to improve your knowledge of IFTA.

Disclaimer: All content and information on this website is for informational and educational purposes only, does not constitute financial, business, or legal advice. Although KeepTruckin strives to provide accurate general information, the information presented here is not a substitute for any kind of professional advice, and you should not rely solely on this information. Always consult a professional in the area for your particular needs and circumstances prior to making any professional, legal, business and financial or tax-related decisions.

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Michael Garza

Michael Garza is a transportation industry veteran, with expertise in compliance and insurance risks. He's also an arts & education journalist, and a published poet. He lives, works, and pursues higher education in Chicago.

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