What is IFTA?
The International Fuel Tax Agreement started in 1983. It's an agreement between Canada and the contiguous United States (the lower 48).
The agreement is a tax collection in regards to fuel used in more than one jurisdiction by a qualified motor vehicle.
Who has to adhere to IFTA?
All non-exempt qualified motor vehicles. A qualified motor vehicle is defined as:
- Vehicle designed, used, or maintained for transporting property or persons.
- Vehicle gross weight more than 26,000 pounds.
- Vehicle has three axles
- Used in combination when weight exceeds 26,000 pounds
Who is exempt from IFTA?
Those who are exempt from IFTA vary by province, state, vehicle, fuel and distance. Specific information can be found here.
How do I apply for an IFTA license?
That varies by state and/or province. Contact your local government that issues licenses. Drivers will want to keep this documentation on them at all times in their permit book which is a requirement with the Federal Motor Carriers Safety Administration (FMCSA). The base jurisdiction that issues your IFTA permit will also give you two decals per each truck you register.
When is IFTA due?
Paying your fuel taxes is done on a quarterly basis. Drivers in the United States must keep track of the distance they drive between states.
- QUARTER 1: January-March, DUE DATE: April 30
- QUARTER 2: April-June, DUE DATE: July 31
- QUARTER 3: July-September, DUE DATE: October
- QUARTER 4: October-December, DUE DATE: January 31
Is there an easy way to track IFTA miles?
Yes. At Blue Ink Tech we've made it stress-free. Drivers can see their overall miles traveled in each state, see daily state-by-state miles for all of their vehicles, and use fuel receipts submitted by drivers on the road to track fuel purchases and even calculate the estimated MPG of your fleet.
The Blue Ink Tech ELD captures odometer readings automatically at each state line crossing and also keeps track of current fuel levels of trucks that are in use. When a driver re-fuels they will be prompted to enter a fuel receipt that can also be seen on the back end. Blue Ink Tech makes it easy.
What happens if I don't pay IFTA?
Fees and penalties will vary by state and province and drivers could potentially lose their licenses and permits. If a truck driver is paying late there is typically an itemized line on the tax form where the driver can calculate their applicable late fee.
How do I manually calculate IFTA?
If you choose to do it by hand you need to keep track of the miles each qualified motor vehicle (including off-highway miles, trip permit miles and non-revenue (deadhead, bobtail) miles the truck has traveled from state-to-state. You will need to keep a notebook and be sure to list the dates, times, locations, and all fuel receipts.
Add up the total taxable miles driven in each state. Next, add up the total amount of all fuel purchased in each state. Next, divide the taxable miles by the taxable miles per gallon. This needs to be done for each jurisdiction. You must contact each jurisdiction in which you travel to get a definition of nontaxable miles. Exempt miles are included in your total miles for computing miles per gallon and included in each jurisdiction’s total miles but are excluded from taxable miles.
Truck drivers must report each fuel type for each jurisdiction on separate lines. IFTA recognizes the following fuel types:
Diesel, Liquid Propane, Ethanol, E-85, Gasoline, Liquid Natural Gas, Methanol, M-85, Gasohol, Compressed Natural Gas, A-55, and biodiesel. There are separate lines for each of these on the tax form.
Each of the lower 48 states have different tax forms drivers must fill out. Drivers will want to request forms or go online to get forms in their base jurisdiction. If a driver never leaves their base jurisdiction, they do not have to file quarterly IFTA reports.
Don't forget to keep all of your receipts in case of audit. Also, if you pre-pay your fuel, be sure to go back inside and get a receipt. When you pre-pay the receipt does not list the total gallons purchased. Another pro-tip that could be considered is getting a fuel card as it will provide the truck driver with a periodic statement of how much fuel they bought and what state they were in when they purchased it.
source: iftach.org and irs.gov