What is IFTA?
The International Fuel Tax Agreement is a cooperative tax collection agreement that makes it easier for commercial carriers to report and pay fuel taxes. There are 58 jurisdictions signed on to the agreement – 48 American states, and 10 Canadian provinces. The IFTA redistributes fuel taxes paid by interstate and transnational commercial carriers, ensuring that each member jurisdiction has their fair share of revenue to put towards roads and transportation.
How Does The IFTA Work?
The IFTA requires commercial carriers to pay their fuel taxes proportionally according to the miles driven in each member state or province. Under the IFTA, carriers can obtain an IFTA license, allowing their vehicles to travel through IFTA member jurisdictions, submitting one quarterly fuel tax return to their base jurisdiction. Vehicles registered under the IFTA report the amount of fuel consumed and distance traveled in each jurisdiction to their base jurisdiction, who decides whether they owe taxes or will receive a credit. If not registered with the IFTA, carriers must comply with fuel tax reporting guidelines of the individual states an/or provinces they travel through.
Should You Have an IFTA License?
Carriers with qualified motor vehicles that travel in more than one IFTA jurisdiction must obtain an IFTA license. A qualified motor vehicle is one used, designed, or maintained for the transportation of persons or property, and:
Having two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26 000 pounds or 11 797 kilograms; or
Having three or more axles regardless of weight; or
Is used in combination, when the weight of such combination exceeds 26 000 pounds or 11 797 kilograms gross vehicle or registered gross vehicle weight
Does not include recreational vehicles
*according to the IFTA Articles of Agreement
The IFTA Process
Carriers can submit an IFTA license application in their base jurisdiction, who will assess their eligibility and process the application. If a license is obtained, two decals for each vehicle will be received, and a copy of the license will be kept in the vehicle at all times of operation. At the end of each quarter, an IFTA tax return will be submitted to the carrier’s base jurisdiction. The base jurisdiction will then prepare a transmittal report, which will be sent to all other jurisdictions in which the vehicle operated in. The licensed carrier will pay the base jurisdiction what is owed, and the base jurisdiction will collect and pay taxes to/from other jurisdictions according to the proportional amount owed.
Exalt Can Simplify This Process For You!
IFTA management can be simplified with the use of a telematics solution. Relying on paperwork can lead to a variety of issues when it comes to reporting time. Exalt offers a variety of GPS solutions that will eliminate manual processes, saving you tons of time. With the use of exact GPS times and locations of fleet vehicles, reporting accuracy can be assured.