IFTA Fuel Taxes for Carriers

One of the biggest concerns for trucking companies operating in the United States is fuel taxes. Depending on the state, these taxes can be very high, and they can vary widely from state to state. This can make it very difficult for trucking companies to budget fuel costs. Fortunately, there is a program called the International Fuel Tax Agreement (IFTA) that can help trucking companies save money on fuel taxes.

What is IFTA?

The International Fuel Tax Agreement is an agreement between the 48 contiguous states and 10 Canadian provinces to simplify the collection of fuel taxes. Under IFTA, a trucking company only needs to file one tax return per quarter, regardless of the number of states it operates in.

IFTA is only available to carriers who operate in more than one IFTA jurisdiction and only applies to fuel used for interstate travel.

How Does IFTA Work?

Each trucking company participating in IFTA is assigned an IFTA license and decal. The license is valid for four years, and the decal must be renewed yearly. When a trucking company purchases fuel, the receipts must be kept in the truck and be available for inspection by IFTA auditors. 

At the end of each quarter, the trucking company must file an IFTA tax return. This return must include the total number of miles driven in each state, as well as the total amount of fuel purchased. 

IFTA can save trucking companies a lot of money on fuel taxes, and it is relatively simple to participate in. If you are a trucking company that operates in more than one state, you should definitely consider enrolling in IFTA.

What Are The Benefits Of IFTA?

There are many benefits of IFTA for trucking companies, including:

• • Simplified record keeping for fuel purchases

• • Reduced paperwork for fuel receipts

• • One license for all member jurisdictions

• • A streamlined process for buying fuel – IFTA licenses and decals are honored at all IFTA-licensed fueling locations.

• • Access to online filing and payment options. The ability to receive refunds for overpayments.

• • Elimination of multiple fuel tax filings

What Are The Drawbacks Of IFTA?

There are a few drawbacks to be aware of with IFTA:

• • You must keep records of all fuel purchases – This can be difficult if you purchase fuel from many different locations.

• • You must file a quarterly return – This can be time-consuming, and if you miss a deadline, you may be subject to penalties.

• • IFTA only applies to fuel used for interstate travel – If you do fuel up for local trips, you will still need to pay state fuel taxes.

Enrolling In IFTA

Enrolling in IFTA is a good idea if your trucking company operates in more than one state. The application process is relatively simple, and the benefits can be significant. You can find more information about enrolling in IFTA on the website of your state’s Department of Motor Vehicles.

To qualify for IFTA, you must:

• • Operate in more than one IFTA jurisdiction

• • Use fuel for interstate travel

• • Be licensed by the IFTA clearinghouse

• • Keep track of your miles traveled and fuel purchases in each jurisdiction

• • Have a valid IFTA license sticker affixed to your vehicle

How To Get An IFTA License

To get an IFTA license, you need to file an application with your state’s Department of Motor Vehicles. The application will ask for information about your trucking business, such as your business name, address, and contact information. 

You will also need to provide proof of insurance, registration, and filing of your business entity with the state. Once you have gathered all the required information, you will need to submit it to the DMV, along with the application fee. The DMV will then issue you an IFTA license, which is valid for four years.

Frequently Asked Questions

 

Q: How do I file my IFTA taxes?

A: At the end of each quarter, you will report your miles traveled and fuel purchases to the IFTA clearinghouse. The clearinghouse will then distribute the taxes owed to each jurisdiction.

Q: What Records do I need to keep?

A: You will need to keep records of your fuel purchases and miles traveled in each jurisdiction. These records can be in the form of receipts, trip sheets, or GPS logs.

Q: What is the IFTA Fuel Tax Rate?

A: The fuel tax rate varies by jurisdiction, but is typically between 20 and 50 cents per gallon. 

Q: What if I don’t file my IFTA taxes?

A: If you don’t file your IFTA taxes, you may be subject to penalties. These can include late fees, interest, and audits.

Q: How can I pay my IFTA taxes?

You can pay your IFTA taxes online, by check, or by money order.

IFTA is a great way for trucking companies to save money on fuel taxes. It is simple to enroll, and the benefits can be significant. Just be sure to keep good records of your fuel purchases and miles traveled, and file your quarterly reports on time to avoid penalties. Many states offer online filing and payment options, making the process even easier. 

It’s definitely worth considering IFTA for your trucking business if you operate in more than one state.