Fleet owners need to have an understanding of the International Fuel Tax Agreement (IFTA) regulations. Although it was designed to make carriers’ and collectors’ lives easier, IFTA is still an arduous tax filing process depending on your state.
What is IFTA Tax Filing?
IFTA began in the late 1980s and was required by law in 1996. It allows member jurisdictions to collect and dispense taxes based on the use of motor fuel. This makes it easier for inter-jurisdictional carriers to pay taxes and report on fuel purchased.
Before IFTA, truck drivers were required to obtain fuel permits from every state that they entered. The process was inefficient and added additional costs, loss of time and extra fuel consumed to and from permit purchasing centers.
IFTA establishes efficiency and consistency for fuel tax payments. It requires inter-jurisdictional carriers to report the distance traveled and the volume of fuel consumed in each member jurisdiction. All member jurisdictions cooperate in collecting, tracking and sharing the taxes payable on motor fuels. The IFTA agreement benefits carriers by only requiring a single jurisdiction for all of their reporting and payment of fuel taxes.
States and Provinces Participation
Forty-eight states and 10 provinces in Canada are members of the IFTA and only six jurisdictions are not IFTA members. These include the northern Canadian territories of Nunavut, the Northwest Territories and the Yukon, as well as Alaska, Hawaii and the District of Columbia.
Owners of qualified motor vehicles are required to apply for an IFTA license and file fuel tax reports. According to the IFTA Articles of Agreements, commercial vehicles must meet the following criteria:
- A motor vehicle used, designed or maintained for transportation of persons or property;
- Having two axles and a gross vehicle weight or registered gross vehicle weight;
- Is used in combination when the weight of such combination exceeds 26,000 pounds gross vehicle or registered gross vehicle weight.
How Do I File My IFTA Taxes?
Correctly filing IFTA is integral to maintaining compliance. The process is as follows:
- The carrier seeks to obtain an IFTA license in his or her base jurisdiction by submitting an application that includes their primary mailing address, registered business name, federal business number and United States Department of Transportation (USDOT) number.
- The base jurisdiction processes the IFTA application.
- If approved, the carrier receives his or her IFTA license in addition to two decals per vehicle that must be displayed. The license — or a copy — must be inside the vehicle at all times while in operation.
- The carrier must record all distance traveled, fuel purchased and fuel taxes paid in each jurisdiction driven. Also, he or she must record the odometer reading at each state line crossing, save original fuel receipts or invoices and record individual trip reports.
- The carrier submits IFTA records every quarter to the base jurisdiction.
- The base jurisdiction reviews and processes the IFTA tax filing, in addition to all transmittal reports and payments from other states and provinces.
- The base jurisdiction calculates if the carrier has a net tax that is owed or if one should receive a refund for the quarter.
IFTA Fuel Tax Filing Online for the Top Four States
The online reporting portal Webfile makes filing IFTA “fast, easy and more convenient” for Texans. Whether you’re filing or paying taxes or paying to use the portal, carriers must use their Personal Identification Code or Webfile number provided in the Welcome Letter. Another viable option is filing your IFTA using the Electronic Data Interchange (EDI) software.
Pay your IFTA taxes online on Pennsylvania’s web portal myPATH. Introduced in 2019, it facilitates filing and payment obligations to the Pennsylvania Department of Revenue’s Bureau of Motor and Alternative Fuel Taxes.
There are two online services available for IFTA transactions: filing and paying quarterly fuel taxes and ordering and paying for IFTA decals. To complete these processes through the online portal, you can go through the FLHSMV.
If you would like to access Florida’s IFTA online portal, you must first obtain a login identification (user ID) and a personal identification number (password). In order to receive credentials, complete the E-File Request form, and email it to CVDSSubmit@flhsmv.gov. When the Bureau of Commercial Vehicle and Driver Services receives the form, they will mail your online credentials.
Keep on Trucking Along
IFTA streamlines the documentation and payment of fuel tax for carriers that travel through multiple jurisdictions. To simplify the process, carriers only need to submit IFTA filings to their base jurisdiction. Be sure and follow the requirements and unique portals per state or province to file your IFTA taxes and pay what is owed. Remember, it is important to meet the deadline to submit IFTA filings each quarter to avoid penalties.