What is IFTA?

IFTA stands for International Fuel Tax Agreement. It is basically an agreement between the ten Canadian provinces and the lower 48 states. It requires the interstate motor carriers to report fuel taxes except for Hawaii, Alaska or the three northern Canadian territories. Trucking business is on surge, since the online shopping business has grown leaps and bounds, the carriers need to move more often on roads unexplored. This leads drivers to purchase fuel from any corner of the world. With different territories, the tax and prices differ and this has led to a lot of paperwork in order to get the process seamless throughout the way. But since IFTA has arrived, things has got a lot better for trucking business owners as the system has changed the process entirely making it easy for owners to keep a track of their records.

IFTA came into the picture as the replacement of the old tax system that used to require all the trucks to have a separate decal for every state they moved in. The IFTA reporting system streamlined it for the trucking companies as they simplified the process of reporting fuel tax. The owner and operators are now relieved of the excess paperwork as the IFTA jurisdictions have minimized the compliance requirements. 

 

What motor vehicles are required to follow IFTA?

Ifta

IFTA is necessary for the motor vehicles who comply with the specifications listed below :

  • Those with gross weight exceeding 26000 pounds. 
  • Those with two axles and a gross vehicle weight rating.
  • Those with three or more axles irrespective of the weight.
  • Any combination of vehicles with a total gross vehicle weight or weight rating above 26,000 pounds

How does IFTA work?

IFTA application is important for every owner and operator of a qualified motor vehicle. One can either ask for a bookkeeper or accountant to take care of the formalities. Once the application gets submitted, you get eligible for receiving the IFTA license along with an IFTA decal for every qualified vehicle that you own or operate. 

So, whenever the driver stops to purchase fuel, the amount gets logged into the IFTA account of the truck owner. After a quarter ends, you have to submit the IFTA report that has the distance travelled and the fuel purchased. These reports tell about the amount still owed or if their refund is still due. Once the report is submitted, the IFTA office issues the refund or debts. 

As long as the carriers are functional, you should file the quarterly reports, even if the vehicle is not getting used for commercial purposes for one or more quarters. The date of IFTA decals getting expired is 31st of December and vehicles can get registered again by the end of the February of the upcoming year. 

What are the IFTA tax rates?

The IFTA tax rates differ according to the state or the part of the world one is purchasing fuel. The tax rates get revised every quarter. You should keep checking the updates for the fuel rate chart. 

Let’s know about the important dates for filing IFTA reports. 

Ifta Reporting

  • 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

How to file an IFTA report?

There are three ways to file your IFTA report. 

  • Electronically: You can log on to the website with your credentials and submit the application along with the payment online before the due date. The return is considered to be received on the day you submit it. 
  • By Mail: You can mail the application along with the details and the payment receipt to the address. The return is considered to be received on the marked date on the envelope. 
  • Walk-in: You can go to the office to submit the required documents before the due date. 

What happens if I fail to file or pay a quarterly return?

If you fail to file your quarterly return even after 30 days of the due date, your IFTA license can get suspended and a Jeopardy assessment also gets applied. However, if you file the quarterly return, but do not submit the fees, interest, or penalties applied within 90 days after the due date, the license gets repealed along with a Jeopardy assessment. 

To lift up all the suspensions, you have to pay all the tax, penalties, and applicable interests. After the jeopardy gets assessed, you are provided with 60 days to file the return and pay the late fees. If that does not happen within 60 days, one has to pay the full amount of the Jeopardy and you have to re apply for a fresh license reinstated.