Carriers that travel outside of their base jurisdiction with vehicles that weigh more than 26000 pounds, or have 3 or more axles, are required to adhere to IFTA compliance.
IFTA, or the International Fuel Tax Agreement, helps carriers to fairly distribute the fuel taxes they’ve paid among the various states they have operated/driven in. This distribution of fuel tax revenue is crucial for the maintenance and support of state-owned highways.
Similar to DOT compliance, adherence to IFTA regulations is a legal requirement for operating on the road. To achieve IFTA compliance, obtaining an IFTA license and placing two decals to a visible part of your vehicle is necessary. These licenses musted be renewed annually. Additionally, accurate and timely filing of IFTA reports is also essential for IFTA compliance. Failure to meet IFTA requirements can lead to fines, audits, and even the revocation of the IFTA license.
Every carrier is required to file for IFTA on a quarterly basis – January, April, July, October – to the state that your company is registered in. The state will then distribute the fuel tax revenue to the necessary states that you’ve operated in in the last quarter.
Once you file for IFTA and your report is reviewed by the state, you may receive a refund or have to pay an additional fee to ensure each state is receiving the right amount of fuel tax revenue.
When you file for IFTA, there are two main types of information needed – mile logs and fuel receipts. In order for this information to be eligible for IFTA reporting, your mile logs and fuel receipts must contain specific pieces of data to be considered IFTA compliant.
For a detailed breakdown on the type of information needed to ensure your mile logs and fuel receipts are IFTA compliant, check out our blogs - Are Prepared To Pass An IFTA/IRP Audit? and How To Ensure Your Fuel Receipts Meet IFTA Standards.
Once your mile logs and fuel receipts have the proper information to be IFTA compliant, the next step to filing your reports is to calculate the fuel tax revenue for the miles that you’ve driven in in each state. To do so, you will first need to calculate the total miles traveled in each state, determine the total gallons of fuel purchased in each state, and calculate the miles per gallon for each state. From there, you will calculate the tax for each state by matching the total miles traveled in each state with the tax rate for each state, which can be found on each state website or the official IFTA website here.
Every carrier should keep their reports up to 7 years in the event of an IFTA audit. During the audit, the state will examine all your mile logs, fuel receipts, and past IFTA reports to identify any noncompliance.
As you start to add new trucks to your fleet, you will also need to ensure that you are obtaining IFTA licenses for each truck you add on. In addition, you will be required to file IFTA quarterly reports for those vehicles.
We understand how complex and frustrating it can be to navigate IFTA requirements as a new owner-operator and fleet owner. But with the support and guidance of industry experts, you can ensure IFTA compliance for your fleet as you continue to grow!