IFTA is the International Fuel Tax Agreement. Through IFTA, member jurisdictions act cooperatively to collect and administer taxes related to motor fuel usage.
The International Fuel Tax Agreement (IFTA) is an arrangement among U.S. states and Canadian provinces. Taxes are paid on motor fuels, and IFTA allows commercial motor carriers to register in one state and have these tax assessments paid out to all participating areas according to their fair share. IFTA was created for truckers who frequently cross state lines on their routes. It simplifies accounting and payment of fuel taxes and relieves trucking companies of some paperwork. Read more about What is FMCSA? USA DOT
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Cooperative Agreement Between 48 States in the U.S. and 10 provinces in Canada:
IFTA pertains to the cooperative agreement between 48 states in the U.S. and 10 provinces in Canada. It allows inter jurisdictional carriers to report and pay taxes for the fuel their vehicles consume across states using a single fuel tax license.
To fully understand what IFTA is, it’s important to know why the agreement was made in the first place. Prior to IFTA, truckers were required to obtain fuel permits from every single state they entered. Explore What Exactly is CSA Score (FMCSA DOT BASICs)
Here is a List of the States and Provinces that are Members of the IFTA Agreement:
Canada
Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland
Nova Scotia
Ontario
Prince Edward Island
Quebec
Saskatchewan
United States of America
All states except for Alaska, Hawaii, and the District of Columbia
Who needs IFTA?
Carriers need an IFTA license if they’re based in a member state and operate across two or more member jurisdictions. Another consideration is the type of vehicle they use.
IFTA defines a “qualified motor vehicle” as a vehicle built and used to transport property or people. Qualified motor vehicles must also fit any of the following descriptions:
Any vehicle with two axles and a gross vehicle weight of over 11,797 kilograms or 26,000 pounds
A vehicle of any weight but with three or more axles
A vehicle that exceeds 11,797 kilograms or 26,000 pounds
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How does IFTA Works:
Simply stated, IFTA works as a "pay now or pay later" system. As commercial motor vehicles buy fuel, any fuel taxes paid are credited to that licensee's account. At the end of the fiscal quarter, the licensee completes their fuel tax report, listing all miles traveled in all participating jurisdictions and lists all gallons purchased. Then the average fuel mileage is applied to the miles traveled to determine the tax liability to each jurisdiction. Three states—Kentucky, New Mexico, and New York—have "weight-mile" taxes in addition to the standard fuel tax. Explore further:What is Reckless Driving? Is it a Criminal Offense? (Simplified)
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 inter-jurisdictional 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.
The base state is also responsible for enforcing compliance through scheduled IFTA audits. Read more about the Top 7 Essential Road Safety Rules for Drivers
How to Apply 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. 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. Here are the top 5 Useful Tips You Need to Know Before Using Biodiesel for Your Fleet
Some of the basic carrier information required for new IFTA applications are:
Registered business name
Mailing address
Federal business number
USDOT number
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.
Once your application has been processed, the IFTA authority in your state will issue official IFTA decals for the current year.
A temporary IFTA license can be sent to you by fax while you wait for your decals. Must read about the 5 Ways Traxroot-Fleet Can Help you Save Fuel | Fuel Management System
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