Paying tax anytime can be a pain, but IFTA doesn’t have to be. In fact, today, you will see when you get your IFTA reporting set up appropriately, you won’t have to worry about discrepancies when filing fuel tax returns.
And this article will be your GPS down the IFTA tax road.
In this post you will learn:
- What is IFTA?
- How IFTA makes your life easier
- How to File IFTA taxes
- Tips to make the IFTA compliance process easier
Let’s get rollin’!
What is IFTA and what are the benefits of filing for it?
IFTA, or the International Fuel Tax Agreement, is a fuel tax collection agreement between the contiguous states in the United States and most provinces in Canada. This fuel tax agreement applies to both gas-powered vehicles as well as diesel, and it is fundamentally a road, bridges, and fuel use tax that goes to the jurisdictions you turned fuel into exhaust by traveling in.
IFTA simplifies the calculation of taxes for trucking companies with qualified motor vehicles operating in multiple jurisdictions (Crossing state lines!).
IFTA fuel tax is calculated based on a combination of fuel usage (total gallons) and taxable miles. The more gallons of fuel used and the more total miles driven, the higher the tax. So, increasing your average fuel mileage (reducing speed!) will lower your fuel usage and your fuel tax.
The way it works is: each motor carrier registers an IFTA license with their home state (a base jurisdiction) and must report information regarding their operations on a quarterly basis to their base jurisdiction. This base jurisdiction is then responsible for sending the tax payments to the other jurisdictions where the motor carriers operated.
This means you only need to file one IFTA tax report, and your base jurisdiction will take care of appropriating the money to other IFTA jurisdictions for you.
Who needs to comply?
If any or all of the trucks that you own or oversee have a registered gross vehicle weight over 26,000 lbs or have three or more axles, and travel in more than one state, you have one or more qualified vehicles and need to adhere to the quarterly reporting and IFTA filing process.
Quarterly IFTA Due Dates
All IFTA fuel tax-qualifying vehicles need to file reports once a quarter. The IFTA filing and payment due dates are:
- Jan 31st (4th quarter, October – December’s filings)
- April 30th (1st quarter, January – March’s filing)
- July 31st (2nd quarter, April – June’s filing)
- October 31st (3rd quarter, July – September’s filing)
If you don’t submit fuel tax reporting requirements by the due date or file your quarterly IFTA report incorrectly, you may be subject to penalties, fees, or even have your license suspended.
IFTA Reporting Requirements
IFTA requires businesses to register their motor vehicles with their home base jurisdiction. This is typically the home state that holds the licensing of your truck(s) or the “corporate” office where your trucking records are kept.
Once trucking companies complete their IFTA member jurisdictions forms, they receive two IFTA stickers to display on the side of their cab, as well as an IFTA license that certifies they are IFTA compliant for that calendar year. After one year, IFTA stickers expire.
In addition to these registrations, the ongoing reporting requirements that are needed are details of the miles traveled per jurisdiction and fuel use records to base the necessary tax owed on fuel use by your truck or an entire fleet. (more on these reporting details in the IFTA filing section below)
Note:
Fuel tax reporting for qualified motor vehicles documentation elements needs to be kept on hand for four years. That is the amount of time an IFTA audit can go back, and records need to be able to be shown if an audit occurs.
What triggers an IFTA Audit?
IFTA audits are triggered at random by each state. The states are required to audit 3% of all IFTA filings. 25% of that 3% must be high-distance accounts, and 50% of the 3% must be low-distance accounts.
So, file your IFTA’s accurately, and rest easy knowing if you are chosen by this random lottery of IFTA audits, you will be able to breeze through.
How to File Quarterly IFTA Taxes
In order to file quarterly IFTA taxes, a trucker must register for an account with their base jurisdiction. This will require submitting an application form, along with providing documents such as qualified motor vehicle registration certificates, business names, etc.
After registering and being accepted by IFTA, a trucker will be issued an annual license and credentials to log in to their account. Once logged in, you can begin the process of reporting travel details and filing quarterly taxes.
This begins by filling out an electronic return form (ERF) which will require information such as miles traveled within each jurisdiction, fuel gallons purchased, and other fuel mileage information related to the previous quarter.
The ERF will then calculate the amount of taxes to pay with your quarterly tax return. No manual calculations are needed!
The easiest way to find your base jurisdiction’s website for filing is checking the jurisdiction selection box on IFTA’s site here.
Or, see below for an even easier way to file.
How to file IFTA for Multiple Trucks
There is no difference in fuel tax reporting for multiple trucks or one truck. Operators that own more than one truck simply add the totals of each truck’s fuel use and distance traveled in each state together and make one filing with their home state.
The Easy Way to File
Want to have a 3rd party review your records and take the IFTA documentation and filing requirements off of your plate?
The Permit Shop has been filing IFTA taxes for hundreds of trucking businesses for over 20 years. In one quick phone call with us and your IFTA filings can be done.
Simply call, (417) 833-3355, or send us a message here, and we’ll do the IFTA setup and filings for you!
How can you make the process of filing for and managing your IFTA taxes easier?
Because IFTA decals expire each year, every truck that needs to file IFTA taxes requires a new IFTA sticker. These applications are due by December 31st and need to be filed by the end of each year.
However, you can make it easier on yourself if you file your third quarter IFTA taxes on time. You will receive the needed IFTA decals for the following year, without doing any additional paperwork!
Note: If a qualifying vehicle was registered with IFTA in the prior year, IFTA typically gives these prior IFTA registrations a 2-month grace period so their IFTA registrations are not due until the end of February.
But easy and done is to file your 3rd quarter IFTA taxes on time and get next year’s decals far in advance of these deadlines.
And besides contacting the Permit Shop, a way to make managing your IFTA taxes easier on yourself and your business is to use an electronic logging device (ELD) system. ELDs are innovative devices that enable truckers to track their routes more accurately and efficiently than ever before.
In addition, many ELD systems with accompanying trucking management software also offer automated reports that can be used for IFTA filing purposes. This can save time and energy, as well as reduce paperwork associated with manual record keeping.
Fuel cards are another straightforward way to simplify the process of filing for and managing your IFTA taxes. When your purchase fuel, fuel cards provide access to special discounts at participating fueling stations throughout all states serviced by your fleet – making it easier to accurately document fuel purchases and the number of gallons without having to keep manual records or wait until you’re ready to file your taxes before unearthing receipts from months ago.
To Your Trucking Success
So while fuel taxes suck, creating a system for a fuel tax report makes it WAY easier for ya’ll in the transportation industry.
Remember, if your trucks have a gross vehicle weight of over 26,000 pounds or have three or more axles, and cross into two jurisdictions, you have a “qualified motor vehicle” and are required to file an IFTA report (no matter what your fuel type!). And the best way to reduce your net tax liability is to reduce your fuel consumed!
If you interstate motor carriers need help, contact the Permit Shop now, and we’ll take the IFTA reporting and filing off of your plate.
Happy trucking!
