May 27, 2020
What Is IFTA?
IFTA stands for International Fuel Tax Agreement. It’s an agreement among 48 states of the United States and some provinces in Canada to evenly distribute fuel taxes. Where you buy your fuel doesn’t necessarily mean you pay for that in taxes.
Here’s an example to help you understand what IFTA is:
You may purchase fuel in Omaha, but you’re doing a bulk of your hauling in Atlanta. The fuel taxes in Omaha are different from what you pay in Atlanta. In order to balance those costs, IFTA fuel taxes take into account what you actually paid for in taxes as compared to where you do the bulk of your driving.
These taxes are then appropriately distributed to each state to be used where needed.
How Does IFTA Work?
IFTA requires you to file quarterly reports to show how much you paid in taxes and how much you should have paid in taxes. As part of your reports, you need to be able to show:
- The number of miles driven in each state
- Fuel purchases by state
Because each state collects different amounts in taxes, which you can view by state, the cost of your taxes is adjusted by how many miles you travel in each state as compared to just paying the tax where you purchased the fuel.
Getting these two numbers is easy, as your electronic logging device (ELD) tracks the number of miles driven and all the other information required as an IFTA report. Your fuel card can show you where and when you purchased your fuel, too. You can expect to fill out the appropriate paperwork, which can vary per state.
Once you’ve submitted your report, you may be required to pay more money in taxes, or you could get a tax return.
We’ve talked on our podcast Haulin Assets about how you can actually save money on fuel by understanding how IFTA works. You can listen to episode 29 to learn more.
Get IFTA Reports Done for You
At Motor Carrier HQ, we strive to take care of everything to keep your company compliant, from getting your operating authority to being compliant with your new entrant safety audit. If you’re ready to take the next step and need your IFTA reports done, we can take care of that for you, too!
Who Has To Pay IFTA Taxes?
You are required to file IFTA reports if:
- You are based in an area that is a member of IFTA
- You operate a qualified motor vehicle in two or more areas that are part of IFTA’s jurisdiction
If you have any questions about whether or not you are required to register under IFTA, our coaches can help you out!
What Counts as a Qualified Motor Vehicle?
A qualified motor vehicle is a vehicle that meets one of these criteria:
- Has two axles and a gross vehicle weight or registered gross vehicle weight over 26,000 pounds
- Has three or more axles
- Is used in a combination that exceeds 26,000 pounds of a gross vehicle weight or registered gross vehicle weight
Recreational vehicles are not included as a qualified motor vehicle under IFTA.
When Are IFTA Reports Due?
IFTA reports are generally due the month after a quarter ends, but the actual date may vary based on the state or the year. For example, if the due date is a Saturday, Sunday, or legal holiday, these reports are due the next business day.
|January – March||April 30|
|April – June||July 31|
|July – September||October 31|
|October – December||January 31|
Where Do You Submit IFTA Reports?
The IFTA jurisdiction you’re operating under determines where you submit your IFTA reports. So, if you’re in Utah, you submit your reports under the Utah State Tax Commission.
It’s important to work with your base state to determine who to submit your IFTA reports to. That’s something we can help out with, too.
What’s the Difference Between IRP and IFTA?
IFTA focuses only on the fuel taxes of hauling loads while the International Registration Plan (IRP) requires fees based on the percentage of miles traveled per state. Depending on the state, it is possible to register for both IFTA and IRP at the same time, but the required fees are different and the money is used differently, as well.