What is IFTA?
The International Fuel Tax Agreement is an arrangement made between U.S. States and Canadian provinces for the collection of fuel taxes for interstate or interprovince commercial motor carriers. Essentially, it was enacted to streamline fuel tax reporting for truckers who frequently cross state or provincial lines.
Members of the agreement include all U.S states except Alaska and Hawaii (the District of Columbia also is not a member) and all Canadian provinces except Yukon Territory, Northwest Territory, and Nunavut.
How are fuel taxes paid?
Traditionally, fuel taxes are levied in each state or province at the time of fuel purchase, but commercial drivers hold permits that specify their designated tax rate on fuel, a rate that may differ from the at-the-pump rate. All tax payments made at the pump, as well as mileage, are documented then adjusted on a quarterly basis based on permitted rates.
Think of it as prepayment, like income taxes. The taxes paid at the pump are documented and a driver will either be reimbursed for overpayment or owe more money at the end of the quarter.
Who qualifies for IFTA?
Carriers must acquire an IFTA license if they meet the following criteria:
- They are based in a member state or province
- They cross into two or more member jurisdictions during operations
- The carrier operates a qualified vehicle. A qualified vehicle is defined as any vehicle built to transport people or property, and meeting any of the following criteria:
- Has two axles and has a gross vehicle weight of more than 26,000 pounds
- Has three axles at any weight
- Any vehicle that exceeds 26,000 pounds
Why was IFTA constructed?
Prior to the agreement, keeping track of interstate miles and fuel consumption was a laborious and time-consuming process. Drivers were forced to apply for and obtain a permit for every state or province they crossed and maintain quarterly fuel-tax filings for each state separately. IFTA was created specifically to optimize fuel-tax payment management.
How does IFTA work?
Under IFTA, every commercial vehicle registers and obtains a permit from a single state or province. Fuel tax payments made in participating states are then credited to the driver's permitted account.
At the end of every quarter, IFTA assists in calculating the taxes due or credited for every state and assists in the disbursement of funds. The agreement greatly simplifies accounting and consolidates the fuel-tax payment process, amounting to significant administrative-cost and labor reductions.
How to get IFTA stickers
Acquiring IFTA stickers is a relatively simple process:
Fill out an application with your home state’s department of transportation
Once approved, IFTA decals will be issued and mailed for the current year
A temporary license and IFTA decal permit can be printed in the meantime
IFTA frequently asked questions
How to register for IFTA
Registration for IFTA is done through the state department of transportation where a driver’s vehicle is registered. If a vehicle is registered in more than one state, the driver will have to contact the states to see whether registration can be consolidated under a single license.
How to apply for IFTA
Applications may vary by state or province, but typically require a mailing address, registered business name, federal business number, and USDOT number. Contact the relevant transportation department in your base state for an IFTA application. Applications can usually be completed online or via mail.
How long does it take to get IFTA stickers?
If your account is in good standing, your application should be approved fairly swiftly. Once approved, you’ll be able to print a copy of your IFTA license and a temporary 30-day IFTA decal permit to be used until your IFTA stickers arrive. Mailing may vary by state, but delivery typically happens within 5 business days.
Where do I put my IFTA stickers?
You’ll be given two IFTA stickers. One IFTA decal should be affixed to the exterior passenger side cab of the vehicle and the other to the same position on the driver’s side.
How long are IFTA stickers good for?
IFTA stickers are good for one calendar year, expiring on Dec. 31 of every year, with a two-month grace period in January and February. However, as long as a driver remains up to date on their account with no outstanding balances, renewals should happen automatically.
What is required for tax refunds?
To qualify for fuel-tax refunds or credits, a carrier must keep accurate records, including all fuel-payment receipts or invoices. Receipts must reference the seller’s name and address, the purchaser's name, type of fuel purchased, the number of gallons purchased, price paid for gallon, and unit number of the vehicle. The carrier must also keep accurate records of all trips and associated mileage traveled in each state.
Contact us to learn more about how our fleet management solutions can be leveraged to simplify IFTA reporting.