IFTA Tracking: What Is IFTA?
International Fuel Tax Agreement FAQs

What is the best way to track IFTA?

The International Fuel Tax Agreement (IFTA) is an agreement between the lower 48 United States and the Canadian provinces to simplify the reporting of fuel use by motor carriers that operate in more than one jurisdiction. The IFTA agreement permits licensed carriers to submit a single quarterly tax return regarding their fuel usage to their base jurisdiction. This provision streamlines paperwork for carriers, eliminating the need to file separate returns for each state they travel through.

The best way to easily stay on top of your IFTA reporting is via a GPS tracking system. GPS IFTA Tracking automatically monitors the movement of your vehicles across jurisdictions, and typically offers an IFTA reporting module, allowing you to accurately allocate fuel usage and generate an IFTA report at a push of a button.

Advantages of a GPS IFTA Tracking System:

Streamlining complex tabulations: GPS IFTA tracking solutions handle intricate calculations on your behalf, determining jurisdiction-specific distances traveled and fuel acquisitions across all your vehicles.

Mitigating audit risks and eradicating human errors: GPS Tracking automatically records vehicle mileage in each IFTA jurisdiction, so carriers can eliminate the administrative burden of gathering state mileage and fuel receipts, thereby minimizing audit risks and errors.

Do local trucks need IFTA?

Local trucks operating exclusively within a single jurisdiction typically do not need to file IFTA.

IFTA is primarily for commercial vehicles that travel across multiple jurisdictions, such as interstate or international carriers. 

There are a number of vehicle, fuel, and distance exemptions allowed for IFTA, but they vary by jurisdiction. For example, recreational vehicles, farm plated vehicles, school buses, tow trucks, and government-owned vehicles are exempt in some states and provinces but not all. Biodiesel is also exempt from IFTA according to the 2017 list. The full list of IFTA exemptions is posted on the International Fuel Tax Association website.

Why was IFTA created?

Historically, motor fuel taxes have funded transportation. Prior to the IFTA program, drivers had to obtain a permit for every state or province they crossed, available at a designated port of entry. Acquiring a number of permits and maintaining the quarterly filings added a significant amount of work to interstate truck trips.
In the 1980s, some states entered into agreements to set up a joint revenue distribution program and eliminate the requirement for individual fuel tax permits. Over the years this program evolved into IFTA today. 

Under the IFTA agreement, qualified motor carriers can obtain an IFTA license for their motor vehicles allowing them to travel through other IFTA jurisdictions and submit only one quarterly fuel tax return in their base jurisdiction for fuel usage.
If motor carriers aren’t registered with IFTA, they must comply with the fuel tax reporting guidelines of each individual jurisdiction in which they travel, which may include purchasing fuel trip permits. IFTA is an important part of fleet compliance, in addition to the ELD mandate and Hours of Service management.

What Are The Advantages Of IFTA?

IFTA’s main purpose is to simplify the process and reduce the paperwork involved for fuel tax reporting. After registering, you will receive a license with two decals for each commercial motor vehicle (CMV) you operate.

IFTA advantages for transport companies:

  • One annual fuel tax licence authorizing the vehicle to travel across all IFTA jurisdictions.
  • File a single quarterly tax return with your base jurisdiction. This tax return will cover your operations/travel to jurisdictions.
  • Base jurisdiction conducts comprehensive audits on behalf of other jurisdictions.

IFTA Filing Rules To File

Under IFTA, commercial carriers must keep detailed records on miles driven, fuel purchased, and fuel tax paid in each state or province that their vehicles travel in.
Rules to follow:

  • Display the IFTA decals on both sides of your truck cab.
  • Renew your IFTA license and decals on time.
  • IFTA license and decals are valid for one year from January 1st to December 31st.
  • All registered trucks require a photocopy of your IFTA license at all times. (in cab)
  • File your IFTA tax return and pay any fuel taxes due on time.

Carriers submit these records to their base jurisdiction on a quarterly basis for review. The base jurisdiction determines whether they owe taxes or will receive a credit. Since the allocation of taxes is such a huge and complex undertaking, IFTA, along with the International Registration Plan (IRP), oversee the process and provide assistance and guidance to states and provinces on running their individual programs.

How Long Must IFTA Records Be Kept?

Records upon which the quarterly tax return is based must be preserved for four (4) years from the tax return due date or filing date, whichever is later, plus any time period included as a result of waivers or jeopardy assessments.

What Are the Penalties for Failing to Comply with IFTA?

Penalties apply for failing to comply or filing late. Each IFTA jurisdiction has their own specific rules, but most follow a framework. For example, both California and New York assess a $50.00 or 10% penalty if you fail to file your return, file after the due date, or fail to be the amount due. However, Texas expands the rule to say, “If your failure to pay the taxes is due to fraud, you will be subject to a penalty of two times the amount of tax due.”

If you travel to an IFTA jurisdiction without a permit, you may be assessed a penalty, fine, or citation — depending on the jurisdiction’s laws. In California, you could be given a $100 to $500 penalty.

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