Understanding IFTA Fuel Reporting in Depth
The International Fuel Tax Agreement (IFTA) is an accord among 48 states of the United States and 10 provinces of Canada in a bid to simplify the reporting of fuel usage by motor carriers who operate in more than one jurisdiction. Before this, each state had its system, which made reporting system much more complicated.
Every fleet company wants to ensure compliance with the standards and regulations of the governing authority and ensure that the IFTA taxes are not either overpaid or underpaid.
IFTA helps the drivers by simplifying their duties. The drivers only need to register and pay taxes to one jurisdiction only. It helps in documenting the distance covered and quantity of fuel used during the travel by any commercial driver.
Different Parts of IFTA Fuel Tax Forms:
- Fuel Receipts
- Fuel Tax Reporting Periods
Territories that recognize the IFTA:
It covers 48 jurisdictions in the United States and 10 provinces in Canada.
Jurisdictions including Northwest Territories, Nunavut, Alaska, Hawaii and Columbia District, Yukon, and Federal District of Mexico does not come under the IFTA recognized territory.
IFTA works on certain principles. We have listed them below:
- The fuel tax is calculated based on the location of where the fuel was consumed
- The tax credit is determined based on where the fuel was purchased
- IFTA helps in determining the difference between fuel consumed and fuel purchased for every jurisdiction
Things to Remember: While purchasing fuel, carriers should keep their receipts – hard copy or electronic version.
Does your carrier need to obtain IFTA license?
- Two-axle Commercial Motor Vehicle (CMV) with a Gross Vehicle Weight Rating (GVWR) or Gross Combination Weight Rating (GCWR) of 26,001 pounds or more
- Three-axle CMV irrespective of their weight
Vehicles solely used for personal use are exempted.
How to get an IFTA license:
- Commercial Carriers should submit an application for an IFTA license to its base IFTA jurisdiction
- The application is then reviewed, checked and approved by the base jurisdiction
- The Commercial Carrier collects the license for every eligible vehicle and a copy of the license should be put inside the vehicle
- The carrier will then submit a quarterly IFTA tax return to their base IFTA jurisdiction for fuel usage.
- IFTA tax return review process will be carried out by the base IFTA jurisdiction
- The base IFTA jurisdiction then sends a transmittal report to all the other recognized IFTA jurisdiction where the vehicle is expected to operate
- All payments and transmittal reports from other jurisdictions are handled through the carrier’s IFTA base jurisdiction
- Carrier will pay the amount owed to the base jurisdiction and the base jurisdiction will pay all the other IFTA recognized jurisdiction
Documents you need to file IFTA?
- Reports of every trip with mileage in each state
- Receipts of fuel purchase
- IFTA license number and permit numbers
When do you need to file IFTA?
Quarter Due Date
- January – March April 30
- April – June July 31
- July – September October 31
- October – December January 31
Penalties for non-compliance:
Every jurisdiction has its own specific regulations and guidelines for penalties that apply for non-compliance.
For instance, any driver, who fails to file a tax return after the due date, both California and New York jurisdiction can impose 10% fine or $50-$500 as fine.
TXT Electronic Logging Device (ELD) has a feature that simplifies and automates the Cross-Border Fuel Tax Reporting and eliminates the risk of penalty by removing the burden of manual collection of mileage state-wise or unit-wise. TXT ELD brings you a smart solution for your fleet with 100% FMCSA complied device.
The automated report on Fuel Tax Reporting is generated based on Data obtained from Vehicle Engine Control Module unit and it is 100% reliable. TXT ELD eases the process by increasing the productivity and eliminating the time-consuming burden of paperwork through automated collection of mileage, fuel receipts etc.
Write to us or call us. TXT offers a 24/7 Multi-Language technical support team that is always available to help you.