IFTA Compliance Guide for Fleets | IFTA Reporting Overview
If you operate a trucking company in the United States or Canada, you're probably familiar with the International Fuel Tax Agreement (IFTA). The IFTA is a cooperative arrangement between the 48 contiguous American states and 10 Canadian provinces that enables inter-jurisdictional carriers to pay fuel consumption taxes under a single license.
Rand McNally Fleet has developed this informative IFTA compliance guide to explain more about what the agreement is, how it works, and the application process. We'll also cover the various IFTA vehicle exceptions.
IFTA compliance overview
IFTA's purpose is to make it easier for trucking companies to report and pay their fuel taxes. Before IFTA, drivers had to stop and obtain a fuel tax permit whenever they entered a new state or province. This cumbersome process wasted a lot of valuable driving time. It also resulted in compliance nightmares, as each jurisdiction had different requirements. The United States and Canada joined forces to create IFTA to streamline and simplify the compliance procedure.
How does IFTA work?
All impacted U.S. and Canadian transportation entities must register with IFTA. The companies then receive a license and two decals for each vehicle in their fleet. The truck must display a sticker on either side of the cab. With these credentials, trucks can travel into any IFTA jurisdiction without having to obtain an individual fuel tax permit. The registration cost depends on the jurisdiction and the vehicle's weight.
How to apply for an IFTA license and decals
Companies that need an IFTA license should fill out the application form in their home state. Examples of the required information include the registered business name, mailing address, federal business number, and USDOT number. In states that provide downloadable IFTA applications, companies can return the completed forms via postal mail. Some jurisdictions also allow submissions by fax or through local taxpayer services offices.
IFTA reporting process
The specific IFTA tax calculation is a five-step process based on these factors:
- Number of miles driven in each state
- Amount of fuel purchases
- Calculation of fuel purchased per state
- Determining taxes owed for each state or province
- Combining all of the above
Trucking companies must follow the IFTA reporting guidelines to maintain compliance and avoid costly fines and penalties. The reporting process entails submitting quarterly records to the company's home state or jurisdiction. Carriers should also pay all required taxes based on the calculation steps above, and companies that overpay will receive a refund. The home state will process the report and payments from other jurisdictions.
What vehicle types does IFTA cover?
In general, IFTA applies to any "qualified" motor vehicle that operates in two or more member states. These vehicles must be designed and built to carry people or goods for commercial purposes. A qualified vehicle fits one or more of the following descriptions:
- Has two axles and a gross vehicle weight of more than 26,000 pounds
- Any vehicle with three or more axles
- Any vehicle weighing over 26,000 pounds
- A vehicle and attached trailer with a combined weight of more than 26,000 pounds
Are there any IFTA vehicle exceptions?
Some vehicles are exempt from IFTA and are not required to register and pay the fuel tax. These include recreational vehicles or RVs pulling trailers, regardless of weight. IFTA also does not apply to buses used for personal activities. In some states, farm vehicles and government trucks are exempt from the tax.
How fleet management solutions help with IFTA compliance
Electronic logging devices (ELDs) and fleet management software can assist carriers in maintaining IFTA compliance. Rather than attempting to record and track all the information manually, these tools can automate the process, saving time and improving accuracy.
Drivers can upload their fuel purchase information as soon as they complete the transaction and create an easy-to-access file of all fuel receipts. Fleet managers can also avoid mistakes during the complex fuel tax calculation process for IFTA reporting.
Rand McNally Fleet can help you meet IFTA compliance requirements
Rand McNally Fleet offers a full suite of ELD devices and fleet software solutions that eliminate the IFTA compliance hassles for your business. Our ELDs are easy to install and portable, enabling drivers to attach them from the dashboard and show compliance during road stops. We also provide 24/7 service and support. We're always available when you need us.
Feel free to contact us for a more detailed Federal Motor Carrier Safety Administration (FMCSA) and IFTA compliance explanation. We can also provide pricing information for our IFTA tracking solutions or schedule a convenient product demo.