IFTA - An Overview
Updated on October 11, 2022 - 4:00 PM by Admin, TruckLogics
To run your trucking business successfully, you must know about IFTA.
IFTA stands for International Fuel Tax Agreement and was adopted in 1996. The IFTA agreement allows the collecting and redistributing of fuel taxes paid by interstate commercial carriers.
IFTA simplified state and province fuel tax reporting for interstate commercial carriers. When carriers cross into two or more states or provincial lines, the vehicle must display current IFTA decals.
Table of Contents:
What is IFTA?
The International Fuel Tax Agreement (IFTA) is an agreement between the 48 contiguous U.S. states and the 10 Canadian provinces that makes it easier for motor carriers that operate in various jurisdictions.
A carrier that operates a vehicle that meets the following criteria must obtain an IFTA license and decals for their vehicles.
- A gross vehicle weight of at least 26,000 pounds is required.
- Three or more axles are required.
- Trucks transporting commercial goods over state lines or the U.S./Canada border are also applicable for IFTA.
Once a qualifying vehicle obtains an IFTA License, the vehicle is allowed to travel through all IFTA jurisdictions and is only required to submit one fuel tax return per quarter to their base jurisdiction.
Below are the list of U.S. States and Canadian Provinces that fall under IFTA jurisdiction.
How does IFTA work?
Obtaining an IFTA license and decals is one of the most important processes for running your trucking business.
If your trucking business requires an IFTA license and decals for running your Qualified motor vehicle on the highways, you must submit an IFTA application in the state where your company is located.
Click here to find the IFTA registration process for your state.
Note: IFTA licenses and decals will expire on December 31st of each year. You have until March 1st of the following year to renew your IFTA license and display current decals on your vehicles.
Under IFTA, the qualified vehicle owners must report the inter-jurisdictional fuel usage & mileage details to their base state. The state will collect the fuel taxes and distribute the funds to all the required states.
In this article, we will further explain how to apply for a IFTA licence, IFTA reporting requirements, and more.
What Information is required to apply for an IFTA License?
The following information is required to apply for an lFTA license:
- USDOT number
- Registered business name
- Mailing address
- Federal business number
Once your IFTA license application is processed, your state or provincial IFTA authority will issue two IFTA decals for each licensed vehicle for the current year. You will need to stick one on each side of your truck cab.
You can receive a temporary license by fax while your decals are being sent to you.
What happens if I don’t have IFTA decals?
If you don't have IFTA decals on your vehicle, you could face penalties depending on the jurisdiction. Failure to display your IFTA decals on the other hand, can result in fines ranging from a few hundred dollars to several thousand dollars.
Quarterly IFTA Fuel Tax Reporting
An IFTA licensee’s primary goal is to file a quarterly return with their base jurisdiction/state.
After receiving your license, you are required to submit a quarterly IFTA fuel tax return to your base jurisdiction/state.
You must have the following information to prepare your IFTA Report:
The total miles driven by the IFTA licensee's qualifying motor vehicle(s) in all jurisdictions/states.
Fuel Miles can be calculated using this formula:
Total Fuel Mileage = Total Miles Driven / Total Gallons
The total gallons or liters of fuel consumed by a qualified motor vehicle in all jurisdictions/states.
Gallons of Fuel Consumption
Use the following formula to calculate gallons of fuel consumed in each jurisdiction.
Fuel Consumed in a specific state or province =
Total Miles Driven in a specific state or province / Overall Fuel Mileage
The fuel purchases per state or province are the metrics you need to calculate the fuel tax your company owes each jurisdiction. This calculation is made based on the rates in effect for the IFTA quarter.
Click here to find the IFTA tax rate.
IFTA Tax Rate Calculation
Use the formula to find out the actual amount you owe to each state or province.
Fuel Tax Owed to a specific state or province =
Fuel Tax Required in a specific state or province – Fuel Tax Paid in a particular state or provinces
You will also need to enter the following basic details about your vehicle:
- The truck/unit number, gross vehicle weight, fuel type, fleet name, fleet number, manufacturer, and model are all required details for the vehicle.
- Business information such as the EIN, company name, type of business, and address.
To learn more about the IFTA reporting requirements, click here.
IFTA Reporting deadlines
The following is a list of the IFTA return due dates for each reporting quarter:
|First Quarter||January to March||April 30|
|Second Quarter||April to June||July 31|
|Third Quarter||July to September||October 31|
|Fourth Quarter||October to December||January 31|
How to Report IFTA
Depending on your base state/province, there are two ways to file an IFTA Quarterly Fuel Tax Return. It varies based on the jurisdiction.
Click here to learn more about how to report IFTA to your state.
Why Choose TruckLogics for IFTA Reporting?
TruckLogics offers a viable solution for generating IFTA reports based on State-specific formats. Manually enter the distance and fuel data or bulk import the data using our excel template. It is also possible to import data from Motive into TruckLogics for IFTA reporting.
Based on distance and fuel data, our IFTA Reporting Software will accurately calculate the tax and make automatic tax rate adjustments for all jurisdictions every quarter. Miles to kilometers and gallons to liters conversions are also available.
If the current state is not adjacent to the previous state, a State Adjacency check will be conducted, and an error message will be provided. Generate an accurate IFTA report after auditing and addressing any errors.
Ready to generate your IFTA Report with TruckLogics?Generate your IFTA Report Now
Only pay for the report you generate
Frequently Asked Questions
What are the benefits of IFTA?
The International Fuel Tax Agreement (IFTA) was created to make transferring fuel taxes between states and provinces easier.
Operators only have to report their fuel usage to their home jurisdictions, which collect and distribute taxes on net fuel consumption to other states. The base state is also responsible for enforcing compliance through frequent IFTA audits.
Another benefit is that IFTA guarantees that highways and roads are maintained in each state or province, ensuring that routes are safe and reliable. For motor haulers, this decreases the risk of vehicle damage.
What states/provinces are not included in IFTA?
Below are the following Non-IFTA jurisdictions/provinces:
|District of Columbia||Nunavut|
How long must records be kept?
IFTA records must be kept for four years after the filing or due date of the tax return, whichever comes first. In addition, monthly, quarterly, and annual summaries of IRP vehicle mileage records by fleet and state or Canadian province are required.
What is the difference between IFTA miles and Non-IFTA Miles?
International Fuel Tax Agreement miles, or IFTA miles, are all miles or kilometers your vehicle traveled in each IFTA-only territory during the quarter, including empty or deadhead miles.
Miles driven in non-IFTA jurisdictions are known as Non-IFTA State Miles. These jurisdictions include Alaska, Hawaii, the District of Columbia, the Yukon Territory, the Northwest Territories, Nunavut, and Mexico. Therefore, as mentioned earlier, the miles you traveled through these jurisdictions are indicated as Non-IFTA State Miles on your IFTA report.
What does IFTA flagged mean?
Failure to file returns, pay taxes on time, or both can result in a "flagged" account. You will be unable to renew your license or order more decals as a result of this. If your account has been flagged, a red alert will appear on your “User Home Page” next to your account name and number, informing you that your account has been flagged.