Understanding IFTA (International Fuel Tax Association) Fuel Tax Requirements
Freight Brokers who are interested in being professionals with services they can offer must understand that each trucking company operating within the lower 48 States over the road must file quarterly IFTA fuel Tax Reports. Understanding what IFTA is and how to assist the trucking company will ensure your services and skills are highly desired.
IFTA is International Fuel Tax Agreement and is an agreement among the lower 48 U.S. states and Canadian provinces to simplify reporting of fuel use by carriers who drive in multiple states. Carriers file a quarterly fuel tax report that determines their tax and distributes it to the states. Your truck must have an IFTA decal on it, and you have to apply for a new one at the beginning of every year.
Filing Your IFTA Report
IFTA is International Fuel Tax Agreement and is an agreement among the lower 48 U.S. States and Canadian provinces to simplify reporting of fuel use by carriers who drive in multiple states. Owner Operators must file quarterly their IFTA reporting so that fuel taxes are distributed to each state within the IFTA agreement.
IFTA was enacted to replace the old fuel tax system. Before each truck was required to have a sticker of each state they passed and operated within.
IFTA was put in place to help trucking companies simplify their fuel tax payments. It allows the trucking company to pass thru each State while moving freight and to quarterly make one payment within IFTA to be disbursed. To qualify for IFTA, a trucking company must meet the requirements below:
A. Those with two axles and a gross vehicle weight rating or registered gross vehicle weight above 26,000 pounds
B. Those of any weight which have three or more axles
C. Any combination of vehicles with a total gross vehicle weight or weight rating above 26,000 pounds
Receiving Your IFTA
The trucking company will receive an IFTA license and IFTA decal for each vehicle they have in their company. The trucking company is then required to file reports on fuel purchase on what’s called a fuel tax report and this is done every three months. These reports will allow IFTA to figure the amounts owed or if there is an amount to be refunded on quarterly fuel taxes.
Who Qualifies for IFTA?
IFTA applies to commercial vehicles only that are operating for moving freight within Canada and North America. Buses, campers, and trucks used for personal recreation are not required to obtain an IFTA license or decal.
Every owner of a qualified commercial motor vehicle must submit an IFTA application and file quarterly IFTA fuel tax reports. Each trucking company may submit this report on their own or they may have a qualified company such as Logistical Forwarding Solutions do on the trucking company behalf.
Due dates for IFTA Quarterly Fuel Taxes Are Listed Below:
· For January through March, the due date is April 30th
· For April through June, the due date is July 31st
· For July through September, the due date is October 31st
· For October through December, the due date is January 31st
IFTA decals expire every year on the 31st of December. Carriers have until the end of February of the next year to re-register.
The importance of having a qualified company file the reporting on your behalf is because in some cases your trucking company might be due a refund. This is stated from an agreement called “fuel tax equalization.” Having proper fuel logs and receipts and also knowing the States you passed thru is crucial to make sure your trucking company is not over taxed on fuel.
Registering For An IFTA Permit
If you operate a qualifying commercial motor vehicle in States that require IFTA or within the IFTA jurisdiction, then you must file for an IFTA License. This permit can be filed by yourself within your State or you may choose to work with a trusted company with experience in IFTA permits such as Logistical Forwarding Solutions. You can find more information about IFTA questions by visiting the International Fuel Tax Association at https://www.iftach.org/Carriers/
Registering for Decals and Cab Cards
To obtain your IFTA decal and cab card, you must prove that your company is registered within the jurisdiction and is open for business during business hours. You must also have a physical structure with a telephone and address.
When your application is approved, you’ll receive an IFTA sticker and one cab card for each vehicle in your fleet.
Penalty For Late Filing IFTA Fuel Tax Reports
A penalty of $50.00 or 10% of the net tax liability, whichever is greater, will be assessed on late-filed reports, failure to file, or for underpayment of tax due. If the net tax liability is zero or a credit, the late filing penalty will still be $50.00. Interest rate at 1 % per month is assessed on all delinquent taxes due each jurisdiction.
What Documentation is Required for Filing IFTA Reports?
Each trucking company is required to keep copies on possession of digital or hard original copies of their fuel receipts. Also the trucking company must have in each truck receipt of payment for their last quarter IFTA Fuel Tax. A copy of their IFTA license with their IFTA number and account information. Drivers must also keep there trip reports for miles they had driven within each State.
IFTA Rules That Must be Followed
IFTA has strict guidelines and here is a list of the IFTA rules to be followed:
License and decals expire on December 31st. Be sure to renew on time.
An extension for IFTA license renewal can be obtained if you apply on time and your account is in good standing. The extension gives you until March 1 to display the current year’s decal on your vehicle.
Stickers should be displayed on both sides of your vehicle cab.
Pay IFTA taxes on time to avoid penalties or loss of IFTA license.
Keep a copy of your IFTA license in the cab at all times.
Keep a copy of your last quarter IFTA Fuel Tax Payment.
Replace lost IFTA stickers and IFTA permits immediately.
Information On IFTA By State
You can find more information by State located at https://www.iftach.org/linksnew.php You may want to also contact the Jurisdiction head quarters in the State you do business within for accurate and complete information. You can also view the Tax Rate By State Here https://www.iftach.org/taxmatrix4/