What is IFTA?
Aug 20, · IFTA is the International Fuel Tax Agreement. Through IFTA, member jurisdictions act cooperatively to collect and administer taxes related to motor fuel usage. The purpose of IFTA is to establish and maintain the concept of one fuel use license for interstate carriers and one administering base jurisdiction for each license holder. Jan 28, · IFTA pertains to the cooperative agreement between 48 states in the U.S. and 10 provinces in Canada. It allows interjurisdictional carriers to report and pay taxes for the fuel their vehicles consume across states using a single fuel tax license.
Organization is the key to success for a busy trucking company. You need to know everything there is to know about the daily orders that stream into your warehouse. This is especially true when it comes to tax reporting. Financial reporting errors can lead to a long list of headaches, including audits, penalties, and unhappy stakeholders.
Trucking taxes can certainly be difficult. The IFTA has truly been a game-changer for the trucking industry. In the not-so-distant past, carriers with operations in more than one jurisdiction faced a variety wha barriers when it came time to report motor fuel taxes. Motor carriers were dealing with multiple states when filing fuel taxes. Filing periods, record-keeping requirements, and even definitions varied from state to state, making it very difficult for carriers to stay in compliance.
And when crossing international borders, it became even more tricky. It was clear that the trucking industry needed a faster and more efficient way to process taxes for everyone in the process. Many people across the industry saw the RFTA as a success. So, other states eventually did the same thing. The agreement eventually expanded to 16 states and incorporated as an Arizona-based nonprofit— the International Fuel Tax Association —in At this point, the message was loud and clear: The United States needed a single trycking to govern how carriers pay taxes.
So, inCongress passed legislation 49 USC —, requiring all lower 48 states to conform with IFTA before administering and enforcing any tax regulation. However, Hawaii and Alaska are exempt, which makes sense with respect to geographical considerations.
IFTA is designed to simplify tax reporting for fleets by eliminating the trjcking to file with multiple states at the end of each fiscal quarter. Under IFTA, the carrier files a single quarterly fuel tax report. This information helps determine the net tax. And, if applicable, it also helps determine whether a refund is due. Carriers then pay how to make android apps work on symbian to the jurisdiction where the IFTA license applies.
After that, member jurisdictions then receive distributions. IFTA is mandatory for vehicles that transport goods or people. It also applies to these type of vehicles:. However, IFTA doesn't apply to recreational doess vehicles or vehicles wwhat in connection doees a business. In other words, IFTA wouldn't apply to a company-owned car or small truck that transports employees to and from job sites.
It strictly applies to large motor vehicles that people and companies use for commercial purposes. These qualifications apply to vehicles that operate in a qualifying U. IFTA gives fleets the ability to pay taxes at the pump or in a lump sum at the end of the fiscal quarter. Carriers need to keep careful records to prove that they paid taxes in full and on time. Receipts must contain this information:. In its quarterly IFTA report, the carrier then lists the total miles traveled and gallons how to use a chronometer watch fuel purchased in participating areas.
You can calculate tax liability by combining the average fuel mileage with total miles traveled. If a carrier doesn't meet its requirements, that carrier can lose its IFTA license.
What are some examples of failure to meet requirements? What happens if your IFTA license is suspended or revoked? All member jurisdictions receive notice. And the vehicle in question is no longer able to use an IFTA license. Carriers have the right to cancel IFTA at any time. To do this, they can submit a request by checking a cancellation box on the final quarterly return. They can also submit a letter requesting cancellation of the license. Cancellation may result in an audit from any participating IFTA member jurisdiction.
It's possible to get your IFTA license reinstated by paying outstanding taxes that are due and filing late tax returns, however. Carriers that operate in multiple states need to file only one quarterly fuel tax return.
Submit this return to the state where your base jurisdiction is located. For example, carriers that operate primarily out of Florida should file through the state of Florida. In most cases, carriers have the option to submit IFTA reports online or through the mail.
However, each state has its own system. Contact individual registers for guidance. Also, keep strict mileage records to help determine where to pay taxes. When an IFTA audit occurs, the base jurisdiction leads the charge. Companies such as Vector can help you streamline and digitize your paperwork.
To learn more about how Vector can help your company streamline tax documentation to boost profitability and ensure compliance, contact the Vector team today. This post was written by Dos Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can what to put on burns at home workers be more productive.
In his spare time, he likes seeing or playing live music, hiking, and traveling. Suffice it to say that truckiny is one area where it pays to remain in compliance. This piece of legislation also provided specific rules governing fuel taxes among member states. Now that you understand where IFTA came how many new zealand dollars to the pound, let's discuss what it means for you.
It also applies to these type of vehicles: ones that have two axles and a gross vehicle weight or registered gross vehicle weight trufking 26, pounds ones where the power unit has three or more axles in a situation where there's a combined registered gross vehicle weight exceeding 26, pounds However, IFTA doesn't apply to recreational motor vehicles or vehicles used in youtube canasta how to play with a business.
What happens if you don't comply with IFTA standards? Failing to file an IFTA quarterly tax return Neglecting to pay or protest an audit assessment during the acceptable time period Avoiding tax obligations There iffta other reasons, too, but the ones listed above are some of the most common. Subscribe Now. Additional Reading.
Jun 10, · IFTA is designed to simplify tax reporting for fleets by eliminating the need to file with multiple states at the end of each fiscal quarter. Under IFTA, the carrier files a single quarterly fuel tax report. This information helps determine the net tax. And, if applicable, it also helps determine whether a refund is . Basically, IFTA allows motor vehicles that travel across numerous states and provinces to report and pay for their fuel taxes using a single fuel tax license. Although complicated, IFTA was originally implemented to help trucking companies.
To stay in business and on the right side of the law, a fleet must adhere to a number of rules and regulations that govern the roads. Compliance is a responsibility most carriers pass on to their fleet managers.
While fleet managers ensure the company follows compliance rules, awareness of the regulations can help drivers and carriers make better-informed decisions to benefit their fleet. IFTA pertains to the cooperative agreement between 48 states in the U. It allows interjurisdictional carriers to report and pay taxes for the fuel their vehicles consume across states using a single fuel tax license. Prior to IFTA, truckers were required to obtain fuel permits from every single state they entered.
Not only was the process inefficient, but it also meant additional costs in the form of lost time, fuel burned en route to permit purchasing centers, and the applicable fees. Fleets also had to comply with inconsistent filing periods, rules, definitions, and reporting requirements that involved hours of clerical work. 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. Apart from the benefits of IFTA to trucking businesses, the agreement also makes sure jurisdictions are properly compensated for the use of their roads by heavy commercial vehicles.
Under IFTA, carriers only need to report interjurisdictional fuel use to their base state. The state, in turn, will collect the taxes on net fuel use, process fuel tax returns, and distribute the funds to all the other states. Another consideration is the type of vehicle they use.
Qualified motor vehicles must also fit any of the following descriptions:. If you need an IFTA license, the first step is to fill out the application form used in your base state. IFTA application forms may vary and can sometimes serve other purposes. Carriers based in Ohio, for example, can use the IFTA application form to request additional decals or make changes to their account. If downloaded online, completed IFTA forms can be sent by mail.
Other jurisdictions also allow IFTA forms to be sent by fax or through taxpayer service offices. A temporary IFTA license can be sent to you by fax while you wait for your decals. Fleet managers and drivers must work together to accurately record the amount of fuel consumed in different jurisdictions. Drivers must also do their part and diligently record their odometer readings whenever they cross state lines. To avoid human error, you can leverage route planning or fleet management software to digitally log the miles your drivers cover for each jurisdiction.
The next piece of information you need for IFTA fuel tax reports is the total gallons of fuel purchased in each jurisdiction. Remember, carriers must retain the original receipts or invoices to prove that fuel tax was paid. These documents must contain the following details:. For example, if you purchased a total of 4, gallons of fuel and covered 22, miles, then your overall fuel mileage would be:.
To calculate how many gallons your fleet consumed in each jurisdiction, input your overall fuel mileage to the formula below:. Keep in mind that you need to use the second equation for each state or province you operated in during the current reporting period. The fuel purchased per jurisdiction is the key metric needed to calculate the fuel tax amount your fleet owes each jurisdiction. This is dependent on the applicable rates during the current IFTA quarter.
You can view the complete chart of fuel tax rates for each fuel type and jurisdiction on the International Fuel Tax Association website. You can determine the amount of fuel tax paid upon purchase from fuel receipts or fuel withdrawal slips. The formulas above skip certain aspects of IFTA tax reporting. Use them with discretion and be prepared to make adjustments, especially once fuel tax rates are finalized by the end of every IFTA quarter.
However, certain jurisdictions allow mileage exceptions that do not count as taxable, such as fuel trip permit miles. You can then subtract your total tax for paid gallons purchased to get your net taxable gallons. Surcharges allow a state where fuel is purchased to keep a portion of the money regardless of where the fuel is used. Fleets should only purchase the amount of fuel they expect to use within jurisdictions where surcharges apply.
Traditionally, drivers and fleet managers had to manually track their vehicle miles and fuel purchases when filing quarterly IFTA taxes. Everything, from fuel purchase receipts to a list of miles driven in each jurisdiction, must be accounted for. Drivers can use the tax reporting worksheet from the Owner-Operator Independent Drivers Association OOIDA to keep track of their fuel purchases, miles driven, jurisdictions, and routes traveled. Alternatively, they can turn to cloud-based reporting tools and fleet management software with IFTA reporting features.
Secondly, drivers can manually submit their fuel purchases as well as upload photos of fuel receipts from the KeepTruckin App. We recently updated our IFTA feature which now makes it easier for drivers to upload fuel purchases at the point of purchase directly to the KeepTruckin dashboard.
This allows you to make bulk imports from major fuel cards. In other words, you can import all of your receipts at once. 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.
Yes — filing quarterly IFTA taxes is required even if your fleet was inactive during the reporting period. New decals will be supplied to your fleet whenever you renew your IFTA license, which is done annually. 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. If a carrier fails to file a quarterly IFTA return, they have 30 days to complete the requirements before their license gets suspended.
Fuel tax preparation can be tedious, but once you understand what IFTA is and how everything is done, it will be easier to tackle. IFTA eliminates the messy fuel tax reporting practices of old. It also enables jurisdictions to fund road repairs and improvements, which will directly impact the safety of commercial fleets on the road.
Although IFTA fuel tax calculation and reporting can be overwhelming, you can use the KeepTruckin fleet management solution to simplify the process. If you have any questions, call or email at support keeptruckin. Jimmy Rodela writes about transportation industry challenges, insights, and compliance news. He specializes in digital media and blogging. One such regulation that can often be confusing is IFTA. What is IFTA? The base state is also responsible for enforcing compliance through scheduled IFTA audits.
Who needs IFTA? Qualified motor vehicles must also fit any of the following descriptions: Any vehicle with two axles and a gross vehicle weight of over 11, kilograms or 26, pounds A vehicle of any weight but with three or more axles A vehicle that exceeds 11, kilograms or 26, pounds Applying for an IFTA license and decals If you need an IFTA license, the first step is to fill out the application form used in your base state. How to calculate IFTA fuel tax reports?
Now, to the main question: how to do IFTA? IFTA tax calculations can be summarized in five simple steps: 1. Adding fuel purchases The next piece of information you need for IFTA fuel tax reports is the total gallons of fuel purchased in each jurisdiction.
Calculating taxes owed for each state and province The fuel purchased per jurisdiction is the key metric needed to calculate the fuel tax amount your fleet owes each jurisdiction. Putting it all together Finally, you can use the formula below to calculate the actual tax amount you owe each state. Surcharges Surcharges allow a state where fuel is purchased to keep a portion of the money regardless of where the fuel is used.
There are two ways to import fuel purchase data. What if we never went beyond our base state for the entire quarter?
How can my fleet get new IFTA decals? What if an intrastate fleet is suddenly required to operate out of state? What are the penalties for failing to file or pay an IFTA quarterly return? Simplify IFTA reporting with modern technology Fuel tax preparation can be tedious, but once you understand what IFTA is and how everything is done, it will be easier to tackle.
Jimmy Jimmy Rodela writes about transportation industry challenges, insights, and compliance news. Ready to get started? Get Pricing. Request Demo.