What Is IFTA?
Before the IFTA, every state had its own unique fuel tax system to help fund the upkeep of interstate roadways. This created a permitting and paperwork nightmare for both American and Canadian truckers. Long haulers needed tax permits for each state they operated in and were required to show the proper documentation and pay their taxes at each new Port of Entry.
But that all changed with the introduction of the International Fuel Trade Agreement (IFTA), which simplified how fleet owners could pay their fuel taxes and pass between states.
What is IFTA exactly, and how does it impact owner-operators and fleet owners?
Here’s what you need to know.
The IFTA is a fuel tax collection and sharing cooperative agreement between the contiguous United States and the Canadian provinces. It was first established in the early ‘80s to help frustrated truckers better navigate the various fuel tax regulations and reporting requirements in each state.
States envisioned it as a joint revenue distribution program created to streamline the permitting and fuel taxation processes by introducing a universal fuel use license for interstate carriers. Once obtained, a registered inter-jurisdictional motor carrier could then use the permit to legally operate and file taxes in compliance with each state’s unique fuel tax rates.
How Does the IFTA Work?
Under the program, a truck must register with the IFTA to obtain an IFTA fuel tax permit from its home state. Then, as the big rig passes through each state and fills up on fuel, the fuel taxes are credited to that permit holder’s account.
To legally operate a trucking fleet throughout North America, interstate commercial carriers must file a quarterly IFTA report by the following deadlines:
- Q1 – April 30th
- Q2 – July 31st
- Q3 – October 31st
- Q4 – January 31st
Once submitted, their base jurisdiction works with the IFTA to calculate whether they still owe fuel taxes or are due a credit.
Benefits of the IFTA Process
The IFTA system was a much-needed shakeup to the archaic and disjointed permitting and taxation system that preceded it, mutually benefiting all involved:
- For drivers – Professional drivers need to only acquire a single permit that can be used to travel throughout all IFTA jurisdictions. This simplifies paperwork, saving them money and time, especially since the base jurisdiction handles tax calculations on their behalf. It also reduces the number of decals, forms, and other related documents they need to keep track of.
- For fleet owners – The IFTA makes it much easier to ensure that all drivers have their permits, are tracking their miles, and paying their taxes accurately and on time. IFTA also takes much of the guesswork out of the budgeting equation when the system is standardized and not fragmented.
- For states – The IFTA redistributes the tax revenues to every state or province rather than putting the onus on each individual carrier. It ensures that each member jurisdiction receives its fair share of tax revenue.
- For citizens – Taxation pools paid into IFTA go toward the maintenance and upkeep of public roadways. This helps ensure that roads are safe and up-to-date for both commerce and the public.
Who Does the IFTA Apply To?
The IFTA only covers motor vehicles used, designed, or maintained to transport people or property. Said vehicles must also operate in at least two U.S. states and/or Canadian provinces that are IFTA members.
Additionally, per the IFTA Articles of Agreement, a vehicle falls into this category if it satisfies any of the following conditions:
- 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.
Note: Qualified Motor Vehicle does not include larger recreational vehicles like RVs, campers, pickup trucks with attached campers, trailers, and personal-use buses. Nor does it apply to heavy farm equipment.
What Are You Required to Do Under the IFTA
If your fleet operation falls under the auspices of IFTA, you must then apply for an IFTA license in your base jurisdiction. This is defined as your home state—the location where your qualified motor vehicle is registered and where the HQ of operational control is situated.
Once the IFTA requirements are complete, you’ll receive a license and two IFTA decals for every registered vehicle. Each year’s decal expires on January 1st of the following year.
So, for instance, the 2022 decal will expire on January 1st, 2023. That said, owner operators have a grace period through the end of February to renew the decal. Once the grace period has expired, the owner is subject to fines.
After the motor carrier has received the license and two decals for each qualified vehicle, what then?
To uphold continued IFTA compliance, the owner must take the following actions:
- Place the decals on the truck – One IFTA sticker must be placed on the exterior portion of the cab’s passenger side. The other must be placed in the same spot on the driver’s side.
- File quarterly reports – Owners must complete an IFTA report and submit it every 90 days. As mentioned above, the report deadlines are April 30th, July 31st, October 31st, and January 31st.
- Pay taxes – Owners must pay all IFTA taxes owed by the deadline.
- Maintain records – In addition to submitting taxes, license holders are also expected to maintain a thorough record of fleet activity for a period covering at least four years. Physical copies of the documentation must be available in-office at all times, and include the following data:
- ~Distances traveled in all participating jurisdictions
- ~Gallons of motor fuel purchased
- ~Gallons of motor fuel used
- ~Trip permits
- ~Monthly or quarterly summaries
- ~Individual Vehicle Distance Records
- ~Tax-paid retail fuel purchase receipts
- Provide access to records – Fleet owners are expected to maintain their records in case of a DOT audit. Should that occur, the auditor will need ready access to all of the relevant forms and receipts to verify that the business is compliant.
- Renew the license – The IFTA license expires on the first of each year. This means owners must re-apply annually.
What Are the Penalties for IFTA Noncompliance
When it comes to the assessment and collection of taxes and reports, the IFTA lists four primary violations:
- Failure, neglect, or refusal to file an IFTA tax return when due
- Underpaying IFTA taxes
- Failure to make records available upon written request by the base jurisdiction
- Failure to maintain records
If determined that a truck was noncompliant, the base jurisdiction will issue a penalty of $50 or 10% of the delinquent taxes (whichever is greater). They’ll also revoke or suspend the license of any licensee who fails to file a tax report with the full payment.
What Are the IFTA Jurisdictions?
As of 2022, IFTA credentials are valid in the following member jurisdictions:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
- New Brunswick
- Nova Scotia
- Prince Edward Island
Non-IFTA jurisdictions include Mexico, Alaska, Hawaii, District of Columbia, Yukon Territory, Northwest Territory, and Nunavut. Miles driven in these jurisdictions are considered non-IFTA miles. For more on what are non-IFTA miles, check out our blog.
If you have any questions regarding the IFTA, your best answer will come from your state’s Motor Carrier Services department.
How Can Fleet Operators Gain Visibility and Control Over Fleet Fuel Consumption?
Keeping track of fuel transactions is a time-consuming task—even for just a single truck. When you must manage an entire fleet of trucks, the difficulty scales.
Fortunately, AtoB’s fuel card simplifies the IFTA documentation and reporting process.
What’s a fuel card?
The AtoB card is a Visa card meant expressly for OTR trucking companies, owner-operators, and private fleet owners to use on fuel and fleet-related purchases. If you manage a fleet of multiple drivers, you can give each one a fuel card with its own set weekly, daily, or per-transaction limit.
In regard to the IFTA, the AtoB fuel card dashboard gives you visibility over all of your relevant expenditures, making it easy to keep track of important data and gain actionable insights.
Simplify Your IFTA Reporting by Partnering with AtoB
The IFTA is here to stay. Owner-operators and fleet owners must abide by its rules and regulations or else face the consequences.
But with AtoB’s fuel card, you needn’t worry. Filling up and keeping track of your gallons purchased is automated. Plus, the application process is easy with no added fees, personal guarantees, or social security number requirements.
Our card is also universally accepted by more than 99% of merchants; unlike traditional fuel cards, there’s no need to visit in-network fuel stations and stops.
So, no matter where you go in IFTA jurisdiction—whether you visit a mom-and-pop fuel stop or a major depot—you can use the AtoB card to reduce your expenses and simplify your IFTA tracking process.
IFTA. International Fuel Tax Association. https://www.iftach.org/
IFTA. IFTA Articles of Agreement (January 2017).
CDTFA. International Fuel Tax Agreement (IFTA) FAQ.